Lior Susan | Sourcery Summary

1. Key Themes

"Operators with Capital" Is a Fundamentally Different VC Model

Eclipse rejects the label of traditional venture capital, positioning itself instead as a firm run by former operators who actively build alongside founders. This isn't just marketing — it manifests in incubating a third of its portfolio internally and in partners physically flying to fix operational crises.

"We never thought maybe ourself as a venture capital. We call it Operators with Capital because we are operators with capital. We all left industries in order to go and build the firm that allow us to build companies in the industries that we are passionate about." 00:00:31

Physical Industries Represent an Enormous, Underserved Market

Susan repeatedly hammers the scale disparity between software and physical-world markets, arguing capital allocation has been badly mismatched relative to opportunity size.

"85% of the world GDP, roughly a hundred trillion is in the physical world... Agile software, nothing about all of the agile software people in the world, is just combined less than 20 billion... Volcanforms that working on metal manufacturing, metal manufacturing is a $3 trillion industry." 00:00:09

China's Industrial Playbook Is the Blueprint (and the Threat) the West Must Answer

Susan's founding thesis for Eclipse came directly from a year spent studying how China built its physical economy, and he frames the firm's mission as a competitive response.

"China essentially built roughly $20 trillion economy based on the physical world. And they build the entire systems on these five forces, talent, uh, policy, capital, technology, and customer demand... it's actually very hard to compete against them as a standalone company. And my view was if we don't do it in the Western world, we kind of screwed." 00:15:36

SaaS Gross Margin Metrics Are a Misleading North Star

Susan directly challenges Silicon Valley's obsession with gross margin, arguing free cash flow and market size/differentiation matter more — and that SaaS accounting flattered gross margins via an R&D reclassification trick.

"We kind of bullshit the world that SaaS and gross margin is the most important metrics. Naturally, if you are a public company, if you're a real company, what matters is free cash flow... we mechanically move the engineering spend from what's supposed to be in a COGS... to an R&D. And it was an accounting trick." 00:22:12

The "Eclipse Economy" — Vertical Integration Across a Portfolio Creates Compounding Leverage

Eclipse deliberately builds companies that interlock across the AI/physical infrastructure stack (chips → racks → data centers → energy → physical AI), enabling one deal to cascade value across multiple portfolio companies.

"We do a one very large deals and we serve the deals with three, four portfolios. So essentially you have a $1 that became $4, $5 because naturally you are leveraging multiple of your companies." 00:36:58

The "Second Act / Third Act" Pattern in Physical Company Building

A recurring structural insight: physical infrastructure companies naturally unlock adjacent, often larger, business lines once the first hard technical problem is solved.

"First act for Cerebras was to build a chip. Our second act actually was to build a system. And our third act is to build a data center that's running those things. For Redwood, the first act was to do the recycling. Second act was to take that and actually sell it as an energy storage." 00:32:34

Onshoring and Deglobalization Are Structural Tailwinds, Not Fads

Susan frames the return to domestic manufacturing/energy/defense capacity as an inevitable, multi-decade shift he anticipated years before COVID validated it.

"As the world is moving more from globalization to a deglobalization, countries will not be able to rely on their energy manufacturing defense, using from buying from other countries. It was clear to me that it's going to happen. Now I was wrong on the time, took much longer than I thought. Kind of COVID was the really first one that showed the vulnerability." 00:16:36

Physical Company-Building Generates Broad Regional Economic Flywheels

Beyond the company itself, Susan argues physical infrastructure investment creates second-order regional economic effects that Silicon Valley outsiders underestimate.

"When you build a data center in Nebraska, you create thousands of jobs. And it's a circular economy... Then you need housing. You need service providers. Restaurants. The whole flywheel of the economy is actually kicking in. That's actually what China did, again, really, really well." 00:40:34

2. Contrarian Perspectives

Hard-Tech Businesses Can Trade at Better Multiples Than SaaS

Against consensus that physical/hardware businesses deserve valuation discounts due to lower gross margins, Susan argues the opposite is true when market size and differentiation are large enough.

"Tesla is what? Mid-teens kind of trade like the best SaaS companies in the world. Cerebras is like what it is... 40, 50% gross margin is trade way better than most of SaaS companies because they solve a really tough problem and a gigantic market and they get paid for it." 00:24:03

There Is No Repeatable Playbook or Portfolio Construction Framework

Despite institutional LPs demanding disciplined thematic portfolio construction, Susan rejects the premise entirely, arguing forced diversification (e.g., "must have one defense company, one robot company") actively produces worse outcomes.

"My portfolio construction is not to have a portfolio construction... I actually don't must have anything. I must have the companies I'm obsessed with, unrelated to, you know, trying to say, oh, I must have one defense, one chip, one robot. We don't think like that." 00:25:07

The Original Venture Capital Model (Sequoia/Kleiner Era) Was More Collaborative and Has Degraded

Drawing on Pierre Lamond's history at Sequoia, Susan suggests today's VC industry has lost a cooperative, founder-first ethos in favor of competitive posturing.

"He told us so many stories about Sequoia and Kleiner saving companies for each other... can you imagine calling another VC today and was like, I have an issue with this company. I need you to come put capital and help me save that company. It will never happen. You'll probably get the phone call of like, all of my company is doing amazing." 00:04:44

Data Center Pushback Is Fundamentally Misguided

Rather than accepting local opposition to data center construction as a legitimate tradeoff, Susan dismisses it outright as economically illiterate, framing infrastructure buildout as an unambiguous regional good.

"I'm so sick and tired and think it's so stupid on the pushback on data centers, for example." 00:40:06

On-Prem Infrastructure Is Making a Comeback Against the "Everything Moves to Cloud" Consensus

Susan built Oxide on the explicit bet that cloud migration would not be universal — a contrarian call at the time that predates the AI-driven on-prem/sovereignty resurgence.

"Our view starting the company was not everything is going to move to the cloud. There's a lot of industries that will still want to do an on-prem for security, latency, cost. We didn't know that AI will be a thing, to be clear. So getting lucky is important in this business." 00:34:04

3. Companies Identified

Cerebras — AI chip/compute company; Eclipse-backed, recently IPO'd. Cited as proof physical/hardware companies can achieve strong trading multiples. "We just named two IPOs, both Cerebras that we did and SpaceX, both in physical industries that are doing extremely well." 00:00:09

SpaceX — Space launch and satellite company; Eclipse-backed, recently IPO'd, cited as a model of the "first act/second act" expansion pattern (launch → Starlink). 00:00:09

Bright Machines — Manufacturing automation/robotics company incubated by Eclipse. Named among Eclipse's flagship built companies. 00:00:44

Bedrock — Company incubated by Eclipse in the physical AI space; noted as a company external investors specifically seek exposure to. "We must have a physical AI company in their portfolio... Bedrock." 00:25:35

Mitra Robotics — Robotics/logistics company in Eclipse's portfolio; used as an example during Eclipse's "Kids Day" (robot moving pallets). 00:00:44

Mind (formerly carved out with RJ Scaringe/Rivian) — General-purpose mobile robotics company spun out of Rivian's internal robotics team; incubated by Eclipse. "The company is just flying... we're going to show the first product this year." 00:14:00

Peak Energy — Sodium-ion battery/energy storage company incubated by Eclipse. 00:10:26

Rivian — Electric vehicle manufacturer; source of the spun-out robotics team that became Mind, run by RJ Scaringe. 00:12:20

Volcanforms — Metal manufacturing/3D printing company, cited as example of an underinvested but massive ($3T) market opportunity. 00:17:59

Ursa Major — Rocket propulsion/defense company in Eclipse's portfolio. 00:24:44

Vulcan Forms — Advanced manufacturing company in Eclipse's portfolio (see Volcanforms above; same company). 00:24:44

Augury — Industrial IoT/predictive maintenance company in Eclipse's portfolio. 00:24:44

Skyrise — Company in Eclipse's portfolio (physical industries). 00:24:44

Oxide — On-premises cloud-software-experience server/rack company; Eclipse-incubated with a contrarian on-prem thesis that got a tailwind from AI demand; multiple customers doing "double-digit millions" and one doing "many hundreds or billions." 00:33:38

Wave — Company in Eclipse's portfolio. 00:24:44

True Anomaly — Space defense awareness company; example of the "second act" pattern moving into Golden Dome and vertically integrated defense programs. 00:32:59

Redwood Materials — Battery recycling and energy storage company founded by JB Straubel (ex-Tesla); Eclipse led a large round; recently hired Deepak (ex-Tesla CFO) as CFO; pivoted from recycling into large-scale energy storage for data centers as CATL/Chinese suppliers got blocked from the US grid. 00:31:07

Arc — Nuclear energy company in Eclipse's portfolio. 00:24:44

Verkada — Company in Eclipse's portfolio (mentioned in company list). 00:24:44

Anduril — Defense technology company in Eclipse's portfolio. 00:24:44

Solaris — Pharmaceutical/drug manufacturing company visited during Eclipse's Kids Day. 00:28:46

A new gas turbine company (unannounced) — Modern large-scale gas turbine manufacturer built by Eclipse to compete directly with GE Vanova, spun up after Eclipse observed 5-year lead times and full backlogs across the industry. "We're actually deploying a lot of them. We should go build a modern company to do gas turbine." 00:37:52

A new HBM memory company (unannounced) and a new AI data center company (unannounced) — Referenced as examples of Eclipse's ground-up company creation process. 00:11:52

Micron, SK Hynix, Samsung — The only three players in the HBM/memory market, cited as evidence of how capital-intensive, engineering-heavy physical industries naturally consolidate versus software's fragmentation. 00:21:05

CATL — Chinese battery/energy storage giant, referenced as being blocked from selling into the US grid, which created the opening for Redwood's energy storage pivot. 00:32:00

GE Vanova — Incumbent gas turbine manufacturer that Eclipse's new (unannounced) portfolio company is built to compete against directly. 00:27:00

OpenAI — Referenced by Susan as a source of personal inspiration and as foundational infrastructure enabling Eclipse's broader ecosystem. 00:47:02

Anthropic — Mentioned alongside OpenAI as an "amazing company" important to the broader AI-enabled economy. 00:47:02

Tesla — Referenced repeatedly as a valuation benchmark and as the originating company of Redwood Materials' founding team (JB Straubel, Greg, Deepak). 00:24:03

4. People Identified

Pierre Lamond — Co-founder of Eclipse alongside Susan; legendary figure who worked with Gordon Moore, was at Fairchild, helped start National Semiconductor, then spent 35 years at Sequoia Capital as one of its founding partners. Described as instilling institutional discipline into Eclipse from day one and as a personal mentor/father figure to Susan. Turning 96.

"Pierre is discipline, discipline, discipline... he brought a lot of institutional knowledge of investing and managing a board and how you write your quarterly reports." 00:06:28 "For me, he's somewhere between like a father, a partner, mentor, friend, kind of all of the above. And it's probably one of the most amazing person I ever met in my life." 00:05:32

RJ Scaringe — Founder/CEO of Rivian; partnered with Eclipse to carve out the Mind robotics company from Rivian's internal robotics team after years of informal conversations with Susan.

"We can attract better talent that will not necessarily go work today, uh, for that problem inside Rivian. We can attract external capital." 00:14:00

G10 (Gerald/G10) — One of the founding team members at Rivian and a partner at Eclipse; instrumental in the Mind spinout. 00:13:06

JB Straubel — Founder/CEO of Redwood Materials, former Tesla co-founder/CTO; longtime relationship with Eclipse partner Joe. Described as leading Redwood's pivot from recycling into large-scale energy storage.

"We always know that they're super talented." 00:31:07

Deepak — Former longtime CFO of Tesla, recently joined Redwood Materials as CFO, described by Susan as reuniting the "band" from Tesla. 00:32:03

Joe (Eclipse partner) — Worked closely with JB Straubel for a long time; helped originate Eclipse's relationship and investment in Redwood Materials. 00:31:07

Greg (Eclipse partner) — Ran operations and manufacturing for Tesla for its first eight years alongside JB Straubel; now a partner at Eclipse. 00:31:17

Sam Altman — CEO of OpenAI; Susan names him as a significant personal source of inspiration, describing him as building critical infrastructure for the broader ecosystem and as "a really good guy with a good heart and a great builder."

"I spent quite a lot of time with Sam at OpenAI in the last year or so... I actually think he's really special." 00:46:33

Andrew (referenced guest, prior podcast episode) — Described by Molly O'Shea as having named Pierre Lamond as a primary source of inspiration in his own interview. 00:02:41

Tony Kim — Portfolio manager at BlackRock; referenced by Molly O'Shea as a source for cross-validating the theme of physical industries re-emerging in Silicon Valley. 00:15:16

David Friedberg — Referenced by Molly O'Shea as a recent podcast guest who discussed how the US tax system inverts optimal incentives (taxing labor more than capital gains). 00:30:28

5. Operating Insights

Founder-Led Crisis Response as a Retention and Differentiation Tool

Susan personally deploys to physical sites during operational emergencies (e.g., flying to fix a flooding data center) rather than delegating, treating hands-on crisis management as core to the firm's value proposition, not an exception.

"I'm getting a phone call and I say, hey, we have a pool here rather than a data center... I'm putting myself on a plane immediately... I was there 72 hours without my family or anything else just on the floor until that thing got fixed." 00:44:09

Keep Investment Partners' Operating Skills "Fresh" by Continuing to Build

Rather than transitioning fully from operator to allocator, Eclipse deliberately keeps building companies from scratch to prevent skill atrophy — a structural antidote to the common failure mode of VCs losing touch with current technology, talent networks, and customer dynamics.

"When you're doing the transition from being an operator to investor, 10 years into it, you kind of are not fresh operator anymore... keeping us fresh." 00:10:55

Carve-Outs From Large Companies as a Talent and Capital Arbitrage

The Mind/Rivian carve-out illustrates a repeatable tactic: identify a promising internal team stuck inside a larger company's balance sheet and resource constraints, then spin it out to access external capital and previously unreachable talent.

"It's like a Switzerland. You can work with everyone." 00:14:00

Build Adjacent Companies Directly From Portfolio-Company Supply Chain Pain Points

Eclipse treats bottlenecks discovered by existing portfolio companies (e.g., 5-year gas turbine lead times) as direct signals to found new companies, rather than passively waiting for outside founders to bring the idea.

"We saw that gas turbine lead time is insane, five years. I fully backlogged the whole companies and we're like, oh, we're actually deploying a lot of them. We should go build a modern company to do gas turbine." 00:37:24

Use Deal Flow to Fund Ecosystem-Wide Cross-Selling

Structure large customer deals so multiple portfolio companies can co-serve them, multiplying the effective value of a single relationship across the fund rather than treating each portfolio company as an isolated bet.

"We do a one very large deals and we serve the deals with three, four portfolios. So essentially you have a $1 that became $4, $5." 00:36:58

6. Overlooked Insights

The COGS/R&D Accounting Distinction Is a Systemic Distortion in How the Market Prices Growth

Buried in a rapid-fire comment about gross margins is a fairly significant claim about a structural accounting artifact that has shaped a decade of SaaS valuations: that "gross margin" in software is partly manufactured by reclassifying ongoing engineering headcount as R&D instead of COGS, whereas physical companies cannot do this because "an accountant will not let you." This implies that cross-sector gross-margin comparisons (software vs. hardware) that LPs and public-market investors use to justify valuation multiples may be fundamentally apples-to-oranges — a mispricing that Eclipse is explicitly underwriting against.

"Your gross margin is high, but you still need to continue hiring engineers as the business is growing. In our world, you cannot do it. There is a hard COGS." 00:23:35

Eclipse Is Quietly Positioning Itself as a Private, Coordinated Substitute for Industrial Policy

In a single exchange, Susan reveals that Eclipse "helped write a little bit of the AI act and kind of collaborate with the administration," and separately frames the firm's portfolio as replicating China's five-force national economic model (talent, policy, capital, technology, customer demand) at the level of a private fund rather than a government. This is a much bigger claim than it appears on the surface — a venture firm explicitly modeling itself as a semi-sovereign industrial coordinator, shaping both government AI policy and multi-billion-dollar commercial deals across its own portfolio simultaneously. Few funds have this dual lever (policy input + vertically integrated portfolio), and it suggests Eclipse's edge is not stock-picking but literally engineering the market structure its companies operate in.

"We actually helped write a little bit of the AI act and kind of collaborate with the administration on that. And we call it the eclipse economy... because we are so involved in those companies, we can shape how those very large deals is happening or how this policy is happening." 00:36:01