Author of The Origins of Efficiency

 

622. Brian Potter

SPEAKERS

Will Bachman, Brain Potter

 

Will Bachman  00:02

Bill, hello and welcome to Unleashed. I’m your host. Will Bachman, and I am delighted to be here today with Brian Potter, who is author of the substack construction physics which I’ve been following for years, and I’ve learned so much from it’s one of my favorite periodicals, and he’s the author of the new book, The origins of efficiency, which I just finished reading. Absolutely fantastic. Five stars. Really amazing book, Brian. Welcome to the show. Thank you for having me So Brian, in the origins of efficiency, you lay out your core model as I understand it, has these five levers of where efficiency comes from. And you define efficiency is like, how do we make something with fewer inputs? And in your core model, there’s five pieces the production method, increasing the production rate, lowering input costs, removing steps or reducing and reducing variability. How did you come up with this model? How did it evolve over time? Were there like levers that you originally thought of and excluded? So I’m curious about how you eventually landed on on the these five

 

Brain Potter  01:16

levers? Yeah, so it’s interesting. I had, you know, I had spent, before I started writing the book, I spent a lot of time trying to better understand, you know, how, why some things get cheaper over time, why some things don’t, why some industries seem to be a lot more resistant to it than other industries. My background is in the construction industry. Hence the name of the newsletter. And this is sort of came from a place as to why, understanding why, you know, construction productivity never seems to increase, and why we never get like, you know, houses and buildings and other things never really get cheaper to build. So I kind of started to explore, you know, all those things prior to the writing the newsletter. And then I got the opportunity to really dive into it and and write a book about it. And so very early on, when I started writing the book, right, kind of really, before I really had the thesis fleshed out, I would say, and it really, and this wasn’t obvious to me at the time, I thought I kind of understood this well enough. But then I would write these chapters and be like, Wow, this doesn’t really, this is not really very good. I would send chapters people and say, Don’t read that. It’s not very good. I clearly haven’t grasped this quite right. When I was trying to explain, like, people ask, like, Okay, what’s like, you know, in conversation, what is like? The very simple explanation of how this works, you know, what’s the elevator version? I couldn’t explain it, like simply and coherently. So it eventually became clear to me that I didn’t really quite have this sort of structure worked out. And how I usually write things is that, you know, from a newsletter, I usually write much shorter things, essays and things like that. And how it usually works is, I like, just read enough about the topic, and sort of think about, you know, write down my list of thing, things that are interesting, things that are like, relevant to sort of the subject that I’m writing about. And eventually I have this sort of collection of observations and thoughts about it, and I’m able to sort of condense that into sort of a, what’s the structure that, like, combines all these things in, like, the simplest possible way that I can, you know, and then that becomes, like the structure of the essay, or whatever. And I realized that I hadn’t really done that for the news for the book that I was I was writing, and so it’s the first six months of writing the book, I was basically like spinning my wheels and not producing anything that was good, and not sort of having converged on, you know, this sort of core thesis. So I basically just kept reading about it, and kept, like working through my understanding, and kept, like coming up with these ideas, and those ideas would, you know, divert me towards more things I needed to read about? And then eventually, so eventually, after a lot of iteration of that process, I was able to kind of do the same thing where I had like, Okay, you kind of realize, like, okay, all these different things that I’ve seen these different companies do, all these different industrial improvement systems that I’ve read about it, these sort of same ideas kind of keep showing up over and over again. And I kind of can classify all these different, you know, strategies that I’ve seen for improving productivity, and kind of put it in just a few different buckets, basically, and then we when you combine those buckets, you get sort of these very efficient processes, which I kind of already, I already knew what the end sort of looked like. I knew what a sort of super efficient process should be. So I was able to sort of connect those observations to what that kind of ended up needed to be. So it was a long it was a long and difficult process, actually, of getting there, because I didn’t realize at the time that I hadn’t quite figured it out. I rushed in without writing before realizing that

 

Will Bachman  04:55

reading it, it felt to me like part of the sort of. Of the reason of the whole book was almost to get to the last chapter on why construction costs for building construction have not decreased, is almost the whole argument of explaining what drives things cost to go down for other manufactured goods like television screens or light bulbs. And then you get to this chapter that really brings it all together, of, why is construction so expensive? Talk to us about that. Why? What’s the argument of, what’s the explanation that you have of, why do building construction costs not go down?

 

Brain Potter  05:36

Yeah, so you kind of, you know, you really hit at it when you, you know, kind of pointed out that, yeah, there’s like, these specific levers that you have to pull specific things that you know, specific ways that you can intervene in a process to kind of make it more efficient. And if you can do those things, you know, scale up your operations and find cheaper inputs and all that stuff your can, you know, reduce your costs, your efficiency goes up. But if those avenues for improvement are like, blocked. Then it’s very hard to, you know, to accumulate efficiency improvements in a process and to sort of make it better, make it cheaper over time. And so kind of what I, yeah, realize, is that all these sort of different strategies you have to improve construction process, they’re all very, very difficult. All these avenues are like, you know, blocked, or at least have significant obstacles in them. So, you know, an example is, like, I talk about economies of scale a lot about in the book, you know, that’s a historic. Historically been a pretty important way that stuff gets cheaper over time. You know, you make more of something, and you can make it cheaper. And I kind of dive into the various specific mechanisms by how that works in the book. But it’s very hard to get economies of scale in construction. It’s, I’ve sort of written a few essays about this, how you really see very, very little in the way economies of scale very, very large home builders have historically not really built their homes any cheaper than very small home builders, for instance. And perhaps maybe that’s now changing now with the, you know, maybe these large home builders may be to the point where there may be capturing more economies of scale. But anyway, yeah, so it’s very hard to sort of get these economies of scale. And part of it is just, you know, buildings aren’t built in large enough volumes to really achieve these, you know, the economies of scale that you can kind of get in in other industries. You know, single family homes are probably built more than any other building in the US, we built like a, you know, something like a million, depending on the year. Single family homes in the US, which is a lot, but it’s way less than something like cars which are built like 15 million, or cell phones which are like in the hundreds of millions, or, you know, aluminum cans which are built in the many billions of years in the US alone. And so even, you know, you’re already starting with like, a much smaller pool, and then that pool gets, like, whittled down even further for things like, you know, different building codes, when different permitting jurisdictions, the US has like, 1000s of different permitting jurisdictions, and, you know, have different sites and different environmental requirements and all this stuff, and then it’s hard to sort of transport buildings or so and houses are so big that you can’t move them very far economically. So your transportation distance can further limits how much scale you can get, like in any one individual building operation. So there’s all these factors that conspire to make it hard to sort of get economies of scale in in building construction. And kind of all the factors that you kind of see are a little bit like this. You know, you talked about like input costs as being another one. It’s very hard to sort of reduce the input cost of construction. Your two main inputs are just building materials and labor. It’s hard to make building materials any cheaper. They’re already kind of as cheap as, you know, we know how to make anything. It’s hard to make labor cheaper because labor costs keep going up, and you can’t outsource the construction, you know, the construction labor, the way that you can, you know, outsource the the manufacturing of something like tennis shoes, where I talk about, like Nike in the book, which has continually pursued low cost sources of labor. And so they started out in Japan, and then they moved to Taiwan. They moved from Taiwan to China to China to sort of a Vietnam and Indonesia and places like that. You can’t really do that in construction. So, yeah, again, all that’s you kind of, that’s the sort of recurring theme that you see, is that these are the specific ways that you have of making a process more efficient and reducing your costs. All those strategies are very difficult in construction for kind of a variety of reasons.

 

Will Bachman  09:47

One insight that surprised me from the book is how reducing transport costs were sort of essential precondition to. A lot of the efficiency gains. And that before you talk about kind of in the 19th century, how the shift, how the railroads in the US allowed factories to access much larger markets and also get inputs from a wider area and therefore gain economies of scale, talk to me about that a little bit, that that’s something that was an aspect of production I never really thought about was, you know, just how transport could unlock the market size.

 

Brain Potter  10:29

Yeah, because, yeah, when your transport costs are really, really high and you can’t ship stuff, you know, a long distance, economically or reliably, it’s, you know, it’s very hard to sort of reach, like these, these very large markets. You just can’t move your stuff very, very, very, very far. And so, yeah, the creation of the railroad in the spread of like, you know, railroad access, like, widely in sort of, like, the second half of the 19th century, really unlocked a lot of, you know, these really efficient, large scale production businesses call all of a sudden, you could, yeah, source your materials from very far away. You could now get them really reliably. So you weren’t, like, you know, your stuff wasn’t getting, like, held up in transit, and you weren’t having these times when, like, production would just stop because you couldn’t get materials. And you could get it out much more reliably and get it, you know, regular repeatedly to these, you know, these, these new major markets. And so after the development of the railroad, and when the country could begin to, you know, tied together, and access to these distant locations is much cheaper and much easier, you really start to see a lot of like large scale production and kind of, you know, and in more efficient production in kind of variety of different ways. So you start to see the invention of these, like, you know, what are called, like, continuous process machines which can just like, you know, it’s a step, it’s, you know, production process which just goes one step immediately after the other, no waiting, no buffering, no interruptions, anything like that. It just continually produces, like, a huge output of goods. And you start to see the development of these, like, continuous processes for like, you know, simple manufactured goods. Once the railroads had enabled these, like, very, very large markets. So like auto, you know, machines were making, like, matchbooks or matches and cigarettes and stuff like that. Start to appear after the railroad is when you start to see like, for these really large companies like Sears show up, which can, you know, reach these really, really huge markets. And it’s also when you start to see, you know, things like it also kind of enables the spread of new and better technology in kind of an interesting way. I think I touch on this a very small amount in the book, I believe, but for most of the 19th century, the way that US homes heated, heated or heated, was with just like, you know, fireplaces, with, like, wood burning fireplaces. And a better technology was like these iron stoves, which were known about and were used, but were, like, relatively weren’t, weren’t, like, super, super widely used. And partly just because it was so expensive to transport this, like, really, really heavy stove, like very long distances and so but once you start to once the railroad comes along, it becomes more economical to sort of move these stoves long distance, and that’s when they, like, really start to take off. And then also, at the same time, you kind of see the centralization of production, and so the cost of manufacturing them maybe drops as well. So yeah, the sort of in, you know, the decrease in transportation costs and make it more reliable was really a big enabler of economies of scale. And we see something, you know, within our lifetime, within the last several decades, with, you know, container shipping, getting reducing the cost of, like, ocean born transportation. And you see, like, you know, the rise of these, like, really, really huge manufacturing operations in places like Southeast Asia, which can now ship their things cheaply all over the globe.

 

Will Bachman  14:01

So the book has such a wonderful range of, you know, examples of products, some of which are, you know, very everyday for us and and, you know, you have talked about light bulbs and paper and aluminum and steel and cement, cigarettes, matches, screws, cans, nails often come up. Breakfast, cereal, solar, voltaics, aircrafts. I thought we could do an exercise where we could go through each of the five levers, and perhaps you could share one story that illustrates that lever to give listeners a sense of what the book’s about. And so maybe we could start with the production method. Give us an example where, you know, changing the production method, you know, unlocked efficiency.

 

Brain Potter  14:51

Sure. So, yeah, production method is just basically, essentially the technology that you use to make a given a given thing, and some technology. Cheese, you know, they require just fundamentally fewer inputs, you know, lower cost, less materials for making a given thing than a some newer technology, as we find better technology, you can reduce the cost of making something. And so the examples for this that I like are like raw materials, where we often find some like, fundamentally better way of, like, refining some material or producing it, or something like that, just because it’s, you know, it goes down to like, just we find, like, you know, the laws of physics allow this, like, other way to do it. It just fundamentally takes it to, you know, takes less, less time and effort. So one example I like is the manufacture of steel, which, you know, is very, very important. Our modern world is, is built on Avid like cheaply and wide of it widely available steel and for, for the, you know, in the 18th century up through the, you know, the first half of the of the 19th century, steel was mostly made by this very expensive process called the cementation process, where you took iron and you had to put it in these chests with, like, a lot of charcoal, basically, and then just heat the chest over like a period of days, and the charcoal would like make its way into the steel or into the iron, excuse me, and turn into steel. But it was very slow. It was very labor intensive. It was very expensive to make steel this way. And so the result is that steel was, like, really not used widely. It was used for like, some things like, like cutlery and stuff like that, but it was very, very expensive, and so you couldn’t use it for, like, large scale construction. But then in the middle of the 19th century, a guy named Henrietta Bessemer invented a new way of making steel, which basically just involved taking molten iron and putting it in, like a big, you know, steel tank, essentially, and then blowing air through this tank. And as he blew he found out that as he blew air through it, it would, you know, basically create a chemical reaction where it would like, convert into into the iron would convert into steel. These things were called Bessemer converters. And this was like a much, much easier way of making steel, because instead of, like, having to, like, go through the cement a cementation process took days to make, like, a pretty small amount of steel, you could make a huge amount all at once in about 10 minutes. And so this dramatically reduced the the cost of steel. And so after, it was only after like the best of our process where you start seeing like steel construction start to become a thing, because now we could produce such steel so cheaply, in such large quantities, they could use it to became possible to sort of build buildings with it in a way that it wasn’t before. And there are other enablers of steel construction as well, stuff like the elevator, but So yeah, that’s an example. Is just this fundamentally new technology. Just make steel just a fundamentally different way than the way it was made before, which just took dramatically less time and less effort, and could be much more efficient.

 

Will Bachman  18:02

I just read, re read your, your sub stack on steel, which was a couple from a couple years ago, and on that there’s, like, there’s this amazing, mind blowing fact about how you write to make one kilogram of steel took, like, 250 kilograms of wood, if I remember correctly, like just imagining how much wood you would have to cut and then transport to to make that one kilogram of steel. I love the way you put that in perspective. Yeah, it’s, yeah,

 

Brain Potter  18:35

it was, you know, it took a huge amount of wood. You had to burn the wood to make charcoal. Took this, like, huge amount of charcoal to make the iron and to to to make the steel. Yeah. So like, yeah, until some of these other processes, the Bessemer process, and there are other more efficient processes for for making that the iron as well. Yeah, these became, you know, made, made these materials much, much cheaper, much could be produced much more efficiently.

 

Will Bachman  19:01

Give us an example that illustrates the second lever of increasing production rate of you know how economies of scale, spreading fixed costs, help become more efficient? Yeah.

 

Brain Potter  19:14

So there is, like, lots of examples of this that you can point to. One is that we touched on a little bit is just container shipping. And you know, it’s become incredibly inexpensive to produce, or to, sorry, to sort of move goods across the ocean via container ships. And in large part, this has become because the container ships have gotten so much more, so much larger that, and the costs have not risen as fast as, like, the size increase. And so, you know, the cost per container or whatever, to sort of move a container across the Pacific Ocean or whatever has, like, dramatically fallen over time as these container ships have gotten bigger and bigger. And that comes down to sort. Of a variety of like, different specific scaling mechanisms. One is called something that’s called, like geometric scaling, where, as you makes object larger, the capacity of it often enlarges faster than the sort of material that is required to sort of make it so as boats get bigger. They they they increase in capacity faster than the material that it takes to sort of build them. So a larger boat will use like, proportionally less steel than like a smaller boat will use. And so as the, as the you know, the ship, cost per container goes down. It becomes cheaper and cheaper. Sort of move these containers across the ocean. And there’s a variety of, sort of, sort of, yeah, different mechanisms you touched on one fixed cost scaling. And what example of like fixed cost, you know, we spread your fixed costs, you know, some cost that doesn’t vary with with volume you spread those, you know, can be more thinly spread over a crust of a wider, wider output. And you kind of see this to some extent with container shipping as well, where it might take us relatively similar crew size to man a small boat as it would a large boat. And so as the boats get bigger, your crew size maybe stays relatively fixed, or perhaps close to fixed. And so those crew costs can be spread more thinly as your ships get larger and larger,

 

Will Bachman  21:23

let’s talk about lowering input costs. And on that one, maybe you could talk about thread, which I think you say that the cost of thread went down by like a factor of 10, and therefore any sort of fabrics made out of thread became so much cheaper. How did thread become so cheap? Like a lot of us don’t think about, you know, spinning wool and so forth, but that was a consumed a huge amount of human labor, until relatively recently,

 

Brain Potter  21:54

yeah, yeah, thread is really interesting. And, you know, thread is sort of, you know, as an input gets cheaper, but an input is often sort of the product output of some other previous process. And so that’s how it is with like thread. It used to take, like, a huge, huge, huge amount of time and effort. People had to sort of spin this thread, you know, manually, either with like, just like, what’s called like a drop spindle, or they would use like a spinning wheel. But it took lots and lots, lots of effort, like millions of people doing all this spinning to sort of make enough thread to feed into these looms to make fabric, to make, you know, cloth. And really, the story of thread is sort of a story of technological change the or the very early Industrial Revolution got was about like, sort of finding ways to sort of, you know, spin thread, you know, and make cloth much, much cheaper than had been possible previously, but, and so. But there’s other interesting examples of input costs that are getting reduced. You often have sort of interesting reductions that are just based on, like the, you know, the factors that happen to exist in, like a given location that are not necessarily easily movable. And so labor is, you know, a classic example of this. Often other places have, like, much cheaper labor, if you can relocate your operations to a place that has, you know, low less labor cost as a less labor as an input, cheaper labor as an input, you can make your thing much, much cheaper. But there’s kind of other interesting examples as well. Like one fun example from the book that I found was that some places that have like, a lot of hydroelectricity often have like, very, very cheap electricity. And because the electricity is so cheap there, they often have end up having a lot of industries that really, really use a lot of electricity. So like Iceland, for instance, they produce a very, very large amount of aluminum, because aluminum production takes a very, very large amount of electricity. And Iceland has very, very inexpensive electricity because they happen to have all this hydroelectricity, and they’re, you know, they have a relatively small population, so, yeah, you kind of see these, like, different like, you know, factors production, factors in different locations can make stuff, you know, less expensive in different places. And you tend to see like, a reshuffling of global production to kind of take advantage of those things.

 

Will Bachman  24:25

How about removing steps? Give us an example

 

Brain Potter  24:27

of that? Yeah, this is a, this is a classic one, in some ways. This is, like the, the main strategy of making processes more efficient that’s taken advantage of in the 20th century. Because you see all these different like ideas, stuff like Frederick Taylor, scientific management, stuff like mass production, stuff like lean manufacturing, all of them have, kind of at their core this idea that’s like, a lot of these steps in the process aren’t actually necessary at all. And if we can cut out these steps all the. Sort of costs associated with them goes with it as well. There’s a very, you know, the classic example, or a classic recent example of this, is Elon Musk, is famously related relayed this story where, you know, he was like, they had some sort of robot that was installing these, like maps in the in the Tesla, and there’s all these problems with the robot, they couldn’t get it to install the maps properly. They were investing all this time and effort try to, you know, resolve this issue. But then eventually, at some point, he or somebody else asked the question, like, why are these maps even in this car at all? And they basically said, Well, they’re there to reduce the noise, you know, to sort of be like a noise absorber. And then they ran a test on the car, with and without the mats, and there was like no difference in the sound in the cabin whatsoever. So this thing that they thought was like adding value to the car, that was like making the experience of riding the car better, turned out to be contributing nothing of value whatsoever. And so they could just take out the robot, take out the mat and just eliminate the entire step in the process. And this sort of strategy is, like, very, very common in, like, industrial improvement methods. A very, very common one is, is like tech, you know, carrying something from, like, point A to point B, and having, you know, you know, or like, storing something that doesn’t need to be stored. This is why, you know, you know Toyota Production System and lean manufacturing and things like that, they place so much effort on minimizing inventories and minimizing buffers, which is another thing that I talk about in the book, which is, like these stocks of partially produced material that accumulate produce between different steps in the process is because all that stuff requires, like, extra storage, extra handling, extra sort of effort to kind of keep track of. And if you can kind of eliminate these inventories and just, you know, have a, you know, ideal of One Piece flow, or something flows from one step to the other without sort of this accumulation and buffers and waiting and stuff like that, you can dramatically reduce your cost. And so a fact I talk I mentioned in the book that I stumbled across that was fun, where, like in the 80s, Japanese factories with like, similar outputs to American factories were much, much cheaper to build because they needed to store much, much less inventory. And so it required a physically smaller factory to produce the same amount of stuff that like these large American factories that were designed for like, lots of material storage needed.

 

Will Bachman  27:33

I think that you say it’s about a third of the size of American factories, which it was just mind blowing to imagine how much smaller the footprint is, give it. Give an example of the last lever, which is gaining control of a process, so you can reduce the variability as almost a precondition to some of the other levers.

 

Brain Potter  27:56

Yeah. So, yeah. So I kind of Yeah, talk about this in the book. But like the a process, any given process, any given you know, series of actions to get some specific output that you’re trying to do, it will never be able to sort of work 100% reliably, 100% of the time. You’re always going to get some sort of like failures to creep in and you know, that are inevitably going to produce, you know, output that can’t be used. Or something like that, you know. You know, nothing can work perfectly all the time, but the more that you can reduce those sort of failures and errors, the cheap you know, the less wasteful of your production you know, the less that you’re throwing away or having to sort of rework. And the cheaper that your sort of production can be a sort of an area that is, like real this is, like, really, really important is semiconductor manufacturing, where, because, like your semiconductors, you’re making these, like really, really tiny devices that require to work require, like, a very, very precise, you know, mixture of chemicals, right? You have, you know, a very, very you’re introducing, like a very, very small amount of impurities into silicon, and reducing the exact right impurities in the exact right places, is what allows, like, a semiconductor to work. But even, you know, you’re talking about like parts per million of atoms, right? And so if you’re slightly off or introduced, like a tiny particle in the wrong place, your thing that you’re making, your chip or whatever, it will not work. And so historically, semiconductor manufacturing often had, like, very, very low yields. You’re talking about, like, in single, you know, line, you know, coming online, you might be getting like single digit percentage of like a good product for like, you know, when you throw in like the, you know, 95% or something away. And so if you can make your process work more reliably, if you can get like the exact right of like, you know, dopants in your in your silicon every single time, and you can absorb any straight particles going. There. If you can, like, perfectly control your process, you can dramatically increase your yields and not be throwing, like, some huge amount of your product away because you introduce a speck of dust in there or something.

 

Will Bachman  30:12

I want to ask you about the evolution of your substack construction physics over time. The the first you started it, I think, in September 2020 and then for about three years, it was very much focused on construction of housing, of buildings. And then in 2023 you started opening the aperture and talking about the energy grid and energy tech, and then it evolved to expanded to look at institutions. You talked about Bell Labs and other institutions, and then you’ve kind of evolved further into even broader topics like innovation dynamics and global production and industrial policy. Tell us a little bit about that evolution. If I had that correct or correct me, and sort of, has it been the initial plan, or has it been more like as you covered topics, you felt all right, your curiosity led you to other topics. How did that path happen?

 

Brain Potter  31:18

Yeah, I think you have the arc basically correct. And I would say, at the core I’ve it’s always just been about, you know, following my kind of interests roughly. And when I started the newsletter, I had just, you know, come from working at this, like, very large and well funded construction startup that had gone bankrupt. And the very, you know, thing that was very top in my mind is like, Why did, you know, why did this company that was so well funded fail? Why is the construction industry so difficult to change? And so that’s what I was like, really, really focused, focused, you know, focusing my efforts on and sort of, you know, I spent lots and lots of time writing about that. But then as I started writing about that I had this I was, you know, exploring these sort of other industries and kind of understanding why they, you know, may have improved or may not have improved more, to sort of import those lessons into sort of better understanding of the construction industry. And so I started, like, gradually expanding my reach that way. And another big one was that, you know, for a while I wanted to sort of, you know, move to from the construction startup that I had joined to, like another construction startup. And I was sort of using this, like this, like, you know, writing a newsletter as a guy to sort of help me on that journey, basically. But then what ended up ended up happening was, like the newsletter got popular enough that it started kind of getting attention. And one of the places that it got attention was these guys that were starting this new think tank called Institute for progress that was just basically about how to sort of stimulate industrial and scientific and technological progress in the US. And they were sort of a fan of my work. And so they, you know, asked if there was any way they could sort of help support it. And what they ended up doing was, they, they, they sort of sponsored it for a year. I forget which year it was. I think it was, it was the first year. Would have been 2022 or 2023 I would have to look but then that, and then sort of that first year sponsorship kind of went pretty well. But as you know, as I was sort of working with them, I kind of naturally became more aware of and more interested in, sort of the topics that they thought were sort of were, you know, interesting and relevant, which wasn’t just, you know, housing and building construction, but you know more broadly about, like infrastructure construction as well. So when I, when I was, you know, joined them. When they sponsored, sponsored me, they sort of, I was, they gave me a title of, like senior infrastructure fellow. So that’s kind of when I started to sort of expand my mandate in writing more about, like infrastructure stuff. And then, after a year being sponsored by them, we sort of had really liked, you know, they said, We like how this is going. How should we what, you know, fashion, should we kind of continue this? And I had really liked how it was, well, it was going. And then at the time I was, kind of, I was essentially, like, in the market for a job, basically a full time job. And we basically decided that would just join them full time to kind of continue to work on the newsletter and kind of continue to work on other infrastructure projects with them. So, you know, so as I joined them full time, it they, you know, it basically became more and more in my in my sort of enthusiasm to write about some of these topics that were more relevant to them. And then sort of as I was writing, you know, on top of that, as I was writing the book, I kind of went down all these, like, different, you know, different rabbit holes of different areas to explore, and that kind of stimulated my interest in more things. Yes. So, like, there’s a very, you know, a very big chunk of the book is, like talking about, like technological progress and how these different processes, you know, the methods of them, get better over time. And kind of since then, I’ve started writing more and more about, like technological progress and what, what, sort of how it happens and what stimulates it, sort of on the newsletter. And so I’ve always kind of just followed my interest, but as sort of my per, you know, and I’m very fortunate to kind of just be able to do that, but I as sort of my personal context has changed as I, like you know, have changed from like, you know, working in the construction industry to, you know, working for this think tank, and as I’ve, you know, written this book and explore these other topics, the sort of, you know, scope of things that are interest me, and I feel like that I’m capable of writing about, because as I research more things, that kind of gives me a foothold to sort of jump off into new topics as that has sort of expanded as well. So that’s kind of how that has evolved over time.

 

Will Bachman  36:04

Talk to me a bit about institutions and organizations as a production technology.

 

Brain Potter  36:13

Yeah, it’s, it’s, you know, it’s interesting, because, like, you know, we think of technology as, you know, like a semiconductor or a nuclear power plant, or, like, some physical arrangement of, you know, matter and energy to accomplish a good thing. But really a technology is, like, you know, knowledge of how to sort of accomplish some given thing with some given series of steps. And that can, you know, be embodied in, like, some sort of physical device, but it also can be embodied in, like, you know, a series of, you know, an organization, or a series of actions that people know they they need to take. And so organizations like learning how you know how to sort of structure their operations and how to arrange their work more effectively is a very, sort of important vector in, you know, productivity improvement, I think, kind of lean manufacturing and sort of, you know, it’s, you know, that’s associated, you know, descendants and cousins and things like that is kind of like a very important example of this, or improved efficiency, Not by, like, creating some new device, necessarily, or like building some like physical machine or tool, but it really is just like rearranging of the way that people sort of do their work and embody in that, sort of those ideas, like in the organization itself. And so, yeah, I think this sort of, like, you know, the sort of way that the work is structured, which exists in, you know, the sort of patterns and behaviors of in organizations is, like, a sort of underrated aspect of, like, technology.

 

Will Bachman  37:56

I wonder if you could talk to us about any field trips that you’ve taken, and kind of if you visited any steel mills or paper factories or or any kind of factories as part of your research, and if so, what did you learn from Those in person visits that you didn’t get from the the second secondary sources, or the read, or the background reading, sure.

 

Brain Potter  38:27

So I didn’t do a lot of research. I’m very much a text guy, you know, I that’s the sort of, you know, the comparative advantage I have is that I can, it’s, I can just spend a lot of time reading a lot of, like, you know, old and out of print and often quite boring, you know, books and industrial manuals and and all that sort of stuff. So, like, you know, I’m, you know, it’s very thematically appropriate, but I’m very about, you know, you know, doing, having, like, an efficient research process. And often I find, like, the most efficient research process is just like, read another book and stuff like that. So I just, you know, I’ve doubled down kind of very hard on that. I would say, I do my, my sort of experience is informed about, like, you know, working in the construction industry, and especially sort of the route that it took within the construction industry, because I worked on, like, a bunch of different facets of the industry. I worked for, like a traditional consulting engineer, where you just, like, design, you know, buildings and those get built by, like, you know, you know, contractors and whatever. But I also worked in sort of a more manufacturing oriented operations, because I worked at a construction startup that was trying to sort of build these things, you know, build houses in factories. But even before that, I worked in this field of the construction industry that was called precast concrete, which is basically making these large concrete pieces in a factory and then transporting them to to. To a job site and, like, you know, lifting into place with a crane and then welding it all together. So that kind of is informed, you know, how I sort of think about these different industries as well, but I would say, in general, my strategy is, like, you know, what’s the most efficient way of, sort of getting, like, the sort of facts about how this thing, you know, something works as possible. And I will do that, you know, you know, by reading books or sometimes watching videos about it. And so I will specifically tailor my sort of research efforts towards the things that like that that strategy works for. So I will do, I will read, read about the things for which there is a lot of information in books and other things like that. So one reason that I write a lot about Henrietta and early car manufacturing in the book is because we know a lot about that and has been written down and documented very, very well. And so you can get a lot of information from that, just for reading or for watching, you know, for, you know, watching videos, not not for, in some cases, not for, not for Ford, but for other things. And so for the things that were that doesn’t work as well. I basically don’t use those sources as much. So when criticism that I got for the book is like, you don’t talk about like China at all, in China, or you talk about it like very little, and China is obviously like the most important the rise of China in Chinese manufacturing is like the most important large scale event to happen in, like manufacturing over the last several decades. And you don’t often mention it at all, and I, and the reason that I don’t, I don’t mention it more, is because there’s just not that many sources that are available to me in text form that I could, like, get a little information for. It’s either not written down at all, it’s all either like, you know, in these factory floor managers heads, or it’s, you know, in Chinese language that I don’t speak and can’t easily find. And so, yeah, I tailor my sort of process to the sort of things that are like, there’s a lot of information available in text that I can take advantage of, and I sort of shy away from things where maybe that sort of text is is not so easily available.

 

Will Bachman  42:16

So on that note, you you talk, you talk in the book about, you know, there’s some more secondary type sources of, you know, histories that talk about the car industry or other industries, but tell us about some primary source that really stuck out to like, you know, an actual user manual For a machine or some kind of that you were just alluding to, that you recall, and was sort of surprising to you or helpful to you, or, you know, one of these, you know, 19th century, 18th century, like user guide to the, you know, to the to the steel mill, Something like that.

 

Brain Potter  42:59

Yeah. So an important, you know, source, important, like, sort of, you know, area of research in the book was this field called statistical process control, which was this, like industrial improvement and method invented, actually, at Bell Labs, and sort of the, you know, early to mid 20th century. And it’s basically this, the idea behind it is basically just like you should study your processes and see how they vary over time and find what’s causing that variation and try to remove it if you can, and then your process will like work, work much more reliably. And a really, really useful source on this, a really, really interesting source, is this. This manual for statistical process control that was for this company called Western Electric, which was the manufacturing arm of AT and T, when AT and T was, like, you know, the biggest company in the world, or whatever. And so they had this manual that, you know, this factory manual, basically, it says, If you’re going to go, you know, this is how you sort of set up your factory operations, sort of do this statistical process control, and how you can, like, do these experiments to sort of figure out what the variation is in these processes. And so that manual, that manual is like, apparently, like something of a Bible, and like the process control world, and it’s like, why it became, like, very widely read by other organizations. And so getting a copy of that, and just like reading exactly how, like, these process control methods worked, you know, and that was explained like, really, really well and really, really clear, clearly, was a really, really useful source that I found and that really shaped my thinking of how these methods work and and what makes them work, and how you can sort of think about those ideas more broadly.

 

Will Bachman  44:51

You were selected into the 17th cohort of emergent ventures winners back in 2021 How did. That help your progress with construction physics or with your research?

 

Brain Potter  45:06

Ah, you did, do? You did do your research? Yes, yeah. I was a Yeah, selected for that. You know, yeah, 2021, and that, what that did was it helped me sort of take the plunge and leave my full time job. At the time, I was working as a consulting, you know, engineer at a engineering consultancy, and just writing the newsletter on the side. And what it did is helped me realize leave my full time job and what actually, at the time, me and my wife were doing, we were trying, sort of to investigate this, this building technology that we thought might be interesting, and could, you know, potentially doing like a construction startup around it. And so what that did is that gave me, sort of the runway, as it were, to to leave my job and kind of pursue this sort of idea, and also, like, expand how I would continue to do the newsletter and that startup. But you know, that idea didn’t really pan out for a variety of reasons. You know, part of which was that that newsletter was getting so popular, it just seemed to make more sense to, like, continue to focus on on that which is already working so well. But yeah, so that is that the transition I made from doing the newsletter part time to doing it like something close to full time was partly due to, sort of like, yeah, that grant, and just, you know, the money, and also just like, the validation of like, yes, these things that you’re doing are valuable and useful, and you should, like, continue to sort of focus your efforts on them to the extent that you Can.

 

Will Bachman  46:39

Last question. Now that the book is out, what are you working on next?

 

Brain Potter  46:45

Yeah, I have a couple different ideas for kind of new books. I’ve increasingly been interested in sort of the shipbuilding industry I started as a I started that as using just like as analogy to to the construction industry, because in some ways, there’s, you know, so similar you build in these large structures that are like inhabited, more or less. So I have an idea like, and I’ve increasingly, like, written quite a bit about it, and I have an idea to sort of turn some of those ideas, maybe into a short history of the shipbuilding industry. And I have some kind of other ideas that are, like, less fully developed, that I may pursue as well, but a day to day, I’m still, you know, I’m still focusing on writing just the newsletter, trying to get a new one out, you know, every, every week or so, continuing to sort of just follow my interests where they lead, which, as you noted, is now quite extensive, lots of, lots of different topics that I’m trying to sort of cover and learn more about.

 

Will Bachman  47:47

And let’s, let’s share the link. Tell us. Where can listeners find you online.

 

Brain Potter  47:52

Yeah, I’m at the construction physics substack. If you just search construction physics, it will be the first thing that that comes up. And the book is origins of efficiency. It’s coming out on October 14, available where books are sold so Amazon and and Barnes Noble and in places like that,

 

Will Bachman  48:13

wonderful Brian, thank you so much for being on the show. And congratulations on the book, and congratulations on the growth of your substack. I think it’s more than 60,000 subscribers now, which is incredible. It’s one of my favorite things to read, and it was great speaking with

 

Brain Potter  48:30

you. Yeah, it was great to be here. Thanks for having me. You.