“Our Goal Is to Build an Electrical Engineer.” (Davide Asnaghi, Co-Founder & CEO of Diode)

We design circuit boards, which are the heart of every modern electronic product. This is what Diode is trying to do. Electronics was not a solved problem. Apple has clearly solved electronics at scale for production, but our prototyping cycles and the speed at which we could iterate was a fraction of what I was used to in Shenzhen. I will not trust somebody that tells me, oh, China can do it because the labor is cheap. That's not true anymore. They are incredible at automating things. We have to replicate that type of excellency here in the US. When Amazon started making AWS, available to a ton of companies. Building became incredibly more democratized. This has not happened in the hardware world for many reasons, and I think that we need AWS for electronics. On AWS, you don't own the server, but you do own all the infrastructure. We want to be that for the printed circuit board industry in the United States. If you can bring the speed at which software companies move to the hardware world, in my opinion, we'll see a hardware renaissance. What we want to achieve as a company is to actually put beautiful copper in the hands of our to customers in the form of circuit boards.

Around the 2000s, the West outsourced a critical layer of the electronic stack to Asia: printed circuit boards. These copper and fiberglass planes the size of postage cards may not attract the same attention as silicon, but they are essential to create any kind of electronics product.

From a phone to a drone to a humanoid robot.

Davide Asnaghi is trying to bring that layer back to America. He's the co-founder and CEO of DIODE, a Brooklyn-based startup using AI to design and manufacture circuit boards in the United States.

The company's ultimate ambition?

To build the West's answer to Foxconn, optimized for the AI era.

While there's a long way to go before DIODE approaches that Taiwanese giant's scale, They're off to a strong start.

Since its founding just 2 years ago, Diode has landed Physical Intelligence and Saronic as customers and partnered with Anthropic to help its Claude models become better electrical engineers.

In today's episode, Davide and I discuss the 3-week YC pivot that defined Diode, what Shenzhen actually does better than Silicon Valley, and what it means to build the AWS for hardware.

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Davide, uh, it is a pleasure to have you on the podcast. Uh, you're building a really fascinating company, I think. One of the, the companies that I'm sure people will be hearing more about over the next few years. And the reason I was so excited to talk to you is I think you're unblocking a really fascinating bottleneck in the sort of current, uh, AI ecosystem and, and sort of broader electronics ecosystem. So, Anyway, that's a, a long way of saying great to have you here and, uh, excited to go deep on, on you and Dayot.

It's a pleasure being here. Thank you for having me.

I'd love to start with, uh, the way that you describe yourself, which I think your GitHub calls yourself a, a copper merchant, which is a, a great way of, of phrasing what you do. Why is, uh, that the way that you, you think about your work?

I am first and foremost an engineer. But building a company has taught me in a very humbling way that the merchant part of selling copper is incredibly important and probably the most correlated with my success. And what we want to achieve as a company is to actually like put beautiful copper in the hands of our customers in the form of circuit boards. And this is what I get to do every day by coming to work, designing boards, delivering them to customers and making sure they actually make their way to the product. So in some ways we are shuffling copper from one place to another.

I love that. Uh, and for, for folks that are watching the video version, they can see what your work every day looks like, which is, you know, you're in a sort of cavernous, exciting looking factory, I imagine, in Brooklyn.

That's right. Straight in Brooklyn. We actually have views of Manhattan. There's, it's a bit too bright, but, uh, wonderful place to work.

Well, let's talk a little bit more about, uh, you know, the selling copper in sort of the, the simplest level for folks that, that maybe aren't familiar with, with you or your space, what does DIODE do and why does it matter?

I think every company has effectively 3 tiers of description. Like one is what we actually do. And what we do is we design circuit boards, which are the heart of every modern electronic product, and we manufacture them and ship them to our customers. In this way, we are a very easy business to understand. This is something that's been done for like since the 1970s, really, like since the early days of Apple manufacturing. We design, manufacture, and ship. And our goal is to deliver circuit boards that work, and we will do everything in our power to do it. The second layer description of what Dayo does is we are doing this in the United States. And the reason why we are so focused on designing and manufacturing in the US is that I have had the opportunity to live in Southeast Asia and absolutely appreciated the craft and the efficiency with which that happened. And we think that there is a very important reason why we have to replicate that type of excellency here in the US. So we work with a lot of domestic customers and European customers to design and manufacture these circuit boards in local factories. And the third layer is the reason why we do this and the reason why it's important is that if you can bring the speed at which software companies move to the hardware world, we, in my opinion, will see a hardware renaissance, which is something that I really am interested in, like seeing in the world. So this is what Diode is trying to do. And there's a lot of things that we do to make this happen. Like we use large language models to design the board, removing like a strong bottleneck. We use new, newer manufacturing techniques that take care of the data. I'm happy to talk into details, but at the very core level, we design and manufacture circuit boards for our customers.

I love that. And hopefully we'll go through all those 3 levels and, you know, more besides. Just to put even a finer point on that, that sort of third layer, if Diode sort of succeeds to your wildest ambitions to the fullest extent, how does the world look different in your view? What do you hope is is different.

The best way that I have been describing like what our success path looks like is when Amazon started making AWS available to a ton of companies, we effectively got rid of the tragedy of the commons of everybody having to spin up their own server and building became incredibly more democratized. This has not happened in the hardware world for many reasons. And I think that we need AWS for electronics, like manufacturing layer that every single hardware company can use, feeling ownership, like on AWS, you don't own the server, but you do own all the infrastructure. There is somebody responsible for doing that. We want to be that for the printed circuit board industry in the United States.

You mentioned that you had the experience to live in Southeast Asia and also, you know, other parts of the world, you know, the, the Davide Asnaghi clearly is an Italian name and I know that from studying you. Where did you grow up?

I grew up in a fairly small town between Lake Como and Milan in the northern part of Italy.

What's the small town out of curiosity?

It's called Meda.

Hmm. Okay. My grandmother lives in Fino Mornasco. So not too far.

Oh, no way. Yeah. Oh, that's actually very close. Yeah. That's wild. But, uh, it was a like wonderful place to grow up. A lot of beauty, a lot of aesthetics. Surprisingly, a lot of small manufacturing, but not a ton of science. I think that the moonshot projects have— I've always associated to the US, and I came here for high school, in fact, in Minnesota.

How did that happen?

My grandfather traveled the world. He lived in Peru building infrastructure projects when he was younger, and he basically told me, look, sounds like you're interested in scientific progress. If I were you, I would basically pack it up and leave for the US. And so during high school, the Italian high school gives you like a small scholarship opportunity that you can take and do one year abroad. And I decided, okay, I'm going to try and do everything that I can to actually go to the US. I didn't specifically pick Minnesota, but I'm actually kind of glad I did. It's been a wonderful way of seeing like parts of the US I would probably otherwise not have seen. I've spent the rest of my time in the US in either San Francisco or New York, which are very peculiar cities.

Yes. It sounds like maybe you were the sort of kid that was, you know, building electronics of their own or taking them apart as a, at a young age. Is that sort of how you got started and interested in this world?

So the other thing that Italy gave to the world, which I'm very, very proud of, is Arduino. A large part of my formative year was spent messing around with like small Arduino boards. There's a, The concept of an electronic fair is still alive and well in Italy. You can still go to ERBA, which is actually very close to Fino Mornasco, and buy components. There's going to be resellers because the northern Italian small manufacturing industry is still alive and kicking. You have all these small electronic manufacturers. And so I bought my first Arduino there, and it was an incredible thrill to be able to build things that didn't exist before. and this was apparent. I was kind of the only person that I knew that was interested in this kind of stuff. Um, but my friends were definitely interested in the things I could build with it, which was even more exciting for me.

I'm always interested in, you know, uh, how often it feels like hyper ambitious people, founders often have an experience early on where they go to another culture, uh, and maybe that, you know, opens their horizons in some way. Maybe it scales their ambition in some sense. For you going to Minnesota, like what functionally, what did that sort of, how did that change you?

So I've always been very interested in the academic pursuit, like more like researchy type roles. And like a lot of the things that I did in Southeast Asia were like robotics research and like papers. But when I came to the US, I was in this relatively small town. It's called Winona, Minnesota. And I kid you not, there's like 2 Fortune 500 companies that came out of this like really small town. One of them is Fastenal, and then 3M is very close, like half an hour away. And everyone was either working at these companies or a small company. All my friends had this wonderful drive to do things, and it was very different than back home. It was right after the financial crisis, and so jobs were scarce in Italy. It just painted a picture, like, you know, like statistically, like catch and release, like you random sample a place in the United States and this relatively small town that I had never heard of before has incredible entrepreneurship and people that give back to the community. They donated to the local high school that I was a part of. That was very eye-opening. It was like, oh, you can actually do this and it has a meaningful impact. And if this happens in Winona, Minnesota, I wonder what goes on in San Francisco. Yeah.

On that subject, you know, I didn't grow up in Italy, but Italian heritage, certainly. Uh, why do you think there aren't as many great Italian founders, even compared to other European countries that, you know, uh, it feels like Italy maybe is, is batting under what you would expect from it as an economy?

I think that this is a fairly complicated, multifaceted answer. If I had to give like a single, like, point, it's probably that the financial markets and the way that the pension funds work. Is set up very different in Anglo-Saxon countries like the UK and the US and Switzerland, which is not Anglo-Saxon, but conceptually it's very fiscally liberal than in Italy. Italy has a very specific capital market. So there is some very logistical reason why I think that this does not happen. There are some cultural reasons that we can get into, but fundamentally, You live a beautiful life in Italy and the friction that it takes for you to actually be like, I need to effectively decrease my quality of life by 10x to then maybe have it like better, maybe like, you know, 1% chance of actually like hitting it big. The incentives are not like super aligned. And I like, maybe this is a weird opinion to have. I think that this is perfectly fine. I know people that are truly happy. It's just not for me. But I believe that it is a beautiful world because there are places such as Italy where you don't have to keep running for you to feel successful. There is a space for this in the world. But I also know very strong founders in Italy, like Bending Spoons come to mind. There's a lot of people that I truly respect. And of course, like, if you look at Bandit, there's a really interesting part about the financial markets, the way that they structure the acquisition business does go through Switzerland, the US, and like getting potentially public. So there's a lot to unpack there, but I think it's a, I love Italy. I still like go back. My family lives there, but to do what I like want to do, I think that the United States right now is a wonderful place.

Well, I agree with both those sentiments. I'm going back to Italy next week. So, um, I always, I always like an excuse to do that. You eventually come back to America for, for more sort of studying for, for university and then have sort of these stints in, in Asia. I, I'm curious. Yeah. When you think about, you know, you've lived, I think Italy, Berkeley, Shenzhen, and, and maybe Hong Kong also.

That's right. I was mostly in Hong Kong and then like going commuting to Shenzhen.

Okay. Got you. And, and now New York. Which of those cities do you feel like changed you the most?

I think Hong Kong is probably the largest amount of learning rate I have done in like a compressed period of time before starting this company. In many ways, starting this company has helped out like what it was feeling in Hong Kong. I think the reason is that up until then, I was one of the most knowledgeable people about electronics around me. Back home in Milan, like I would effectively hold all my small embedded projects. But going to Hong Kong is an incredibly humbling experience. I think culturally, China and Hong Kong both have a very strong preference for the hard sciences. So there's actually fewer people that go in pure computer science. Your parents are more proud of you if you are a physicist or an electrical engineer than just like a pure software major. And this is changing in many ways. But so many of my friends were just 4 standard deviation above average knowledge in electronics, people that had been building electronics for years and they were immersed in this culture. And I think that that left a profound impression that this not only can be done, but also there are people that are immensely more knowledgeable than I could ever hope to be at that point in my life. And they are incredibly graceful at teaching this kind of stuff. There's this person specifically, Alex Huang, him and I worked on a couple of papers on robotic hand for prosthetic devices. And he was 19 at the time. And to this day, he's probably at that point in time of his life, one of the best electronic engineers I've ever met. And I've met a lot. So it was just a really interesting time to to absorb from people like this.

What was it that had drawn you out there? Was it to, you know, do specific types of research? Was it, you know, just to get that sort of different experience?

It was really like, I truly enjoyed my time in the United States. And I knew at that time that electronics was a very important part of my life. And it seemed wise to sample what the rest of the world has to offer. In a domain that I truly care about. Arguably, Shenzhen to this day is one of probably the most lively hardware hotspots in the world. And you want to be close to these type of centers to at least learn. And there's a lot of learning, also negative learning that happened. For example, starting a company in Hong Kong and China has drawbacks. IP is more complicated. The legal system is slightly different than the United States. And these are all things that are very hard to learn if you don't live immersed in the culture. Like, I was an exchange student in Hong Kong, and a lot of the exchange students are there for like a semester, and they effectively create their own social bubble. But because I was like a full year, the idea was I was actually like hanging out with people from either mainland China or like native Hong Kong, and the cultural difference was just staggering. Like in many ways, and it was a wonderful experience to learn that.

What are some of the things that Shenzhen does much better than Silicon Valley in your experience?

It's very hard to say better. Uh, I think that like Shenzhen is a fundamentally slightly different beast. Like in Silicon Valley, you had these wonderful network effects because if what is limiting your productivity is a keyboard and a computer, The network is largely composed of social relationships and social proof, the ability to know that there is vouched talent at the fingertips has been an incredible engine of Silicon Valley. What I see in Shenzhen is a radically different thing where it's not necessarily just about social relationships. It's actually about the community as a whole, dividing complex manufacturing processes into a divide and conquer approach, and then each of the individual manufacturers brewing manufacturing expertise and then being able to hand it off to the next step. And so the knowledge of how to make things permeates and percolates through the various layers of the stack in a way that Silicon Valley, I don't think, has been focused on achieving so far. It's not that it couldn't, It's just that it didn't seem like the right problem to be solving because a lot of the other problems were how do we improve productivity by unlocking new software, like new computing paradigms. And I think both of these type of realities have been very successful. And I think that there's a lot to learn from both. I think that it's very hard to replicate what Shen Chen has, but not impossible. And in fact, I am seeing a lot of what I used to see with my friends and people that are starting companies in the manufacturing space.

To put a finer point on that, like what, what sort of things are you seeing? Like, is it cultural things? Is it sort of operational things?

I meet somebody for coffee in Silicon Valley, and then 4 weeks later, they need a board made fast. And this is not like the exact service that we provide. Like what we provide is we will design and manufacture. And because we can co-design these 2 things, we are massively more efficient at the manufacturing. But if you're my friend, I'm just going to do this for you. And if you are happy with this type of service, I'm happy to basically expand this to a proper business relationship. Or I have a customer that needs motors, and I know David Hanson in Silicon Valley who's building a motor company. Hey, you guys should talk. And so because the stack is very wide, printed circuit boards are very hard to build holistically, but also incredibly narrow in the stack of what it takes to actually build a full product. I get so much more reward from being able to introduce my customers to the people that will fix their pain points and everybody wins. Like, and this I am seeing more and more and more and more. And it's quite wonderful to see.

You come back to the States and you sort of spend quite a lot of time at Apple in their sort of special projects division. I'm sure there's a lot of things you can't talk about, but what did you learn from sort of being part of, you know, the best hardware company in the world, arguably?

So Special Projects is a very unique part of Apple. So I don't want to pretend I understand Apple as a whole. Like, I had a very peculiar experience. Um, and the experience was largely determined by working with some of the best people in the world, whose relationship I cherish to this day. I like, my manager at Apple was a wonderful person that had a ton to teach from an interpersonal relationship perspective. The thing that was missing for me from that experience is that you are, like, if you work at Apple, you own a very, very narrow part of the stack, but you do own it incredibly deep. And that is like very good for honing a very specific skillset. But the moment you want to own a little bit more, it's very hard. And for very good reason, like the, there were folks that were owning a larger portion of the stack with lower depth. And these people had done it all. Like, These were some of the best engineers in the world that had like a system engineering background and were responsible for requirements and capturing. And I think that apart from many technical things I learned, and it was a wonderful experience, the thing that I learned the most is that electronics was not a solved problem, even for a company in the US that is largely the best at doing this. Like Apple has clearly solved electronics at scale for production, but our prototyping cycles and the speed at which we could iterate was a fraction of what I was used to in Shenzhen. And I think that that was a fairly shocking realization. It felt that this is a systemic problem, not an individual company problem, or an issue that comes from lack of resources or lack of knowledge. I think that that was the key learning I made.

Psychologically, you know, people who become founders, I think, often struggle to be in as structured or as large an environment for, for such an extended period of time.

I think that you might be spot on with your read. I was there for about 2 years.

There was a part of you that was itching to, to, to take on some of that more, some of that responsibility.

I think so. And in fact, um, like when I left Apple on paper, that was a questionable decision. Like I left Apple for a much smaller company. I left Apple in the middle of my like visa proceedings. And this was not out of frustration. Like it was a wonderful place to work. It's very hard to work in an environment that does not reward you basically killing yourself over your job. And like, this is not good for everybody, right? Like you don't want everybody having to like work to the max. But in this specific period of my life, I generate such a high amount of personal enjoyment from dedicating myself 100% to this one thing. And Apple was a great place to be, but it's not structured so that you basically have a tapered-off reward the more work you put in. You can stop working at a certain point and it's mostly fine and everybody will be happy. And it just felt like I wanted to be in an environment where I could put as much of myself as I could. Into the craft.

Have you always been that way, that you want to sort of kill yourself for things that you're passionate about?

My fiancée will be very mad that I say kill myself. Let's say being very passionate about something.

That's better language.

It just feels that I have incredible privilege of loving something that is perceived as valuable in the modern world. Like if I were like a musician, for example, it would be much harder for me to just dedicate 100% to my craft and also pay bills, right? But because the things that I love are very, very aligned with what the modern world deems financially rewarding from, as an engineer, you can make a living, no problem. I just feel like an obligation of basically like, this is the few set of talents that I have. I want to be able to pour myself into it. I also find it super fun. I would do it for fun anyway. I studied biomedical engineering in my undergrad because I think that biology and physiology are a completely different tier of complexity than electronics or even silicon. It's just a language we don't understand yet. And I wanted to learn more about it. But my personal thing is we're in electronics even during undergrad. I would do it even if I weren't paid. So it feels like the optimal use of my time. I just get a ton of like joy out of it.

That's amazing. You mentioned, you know, you, you go to this smaller startup, uh, Chromatic, and it's there that you meet, uh, your, your future co-founder Lenny. Yeah. What was it about Lenny that you saw something that, that, that you felt like maybe this was a larger partnership or, or someone you hope to, you know, work with for hopefully many years to come?

So funny enough, I actually met Lenny on my very first job out of college. So I started working for this company called Butterfly Network. Wonderful, wonderful people, incredible product. It was a custom silicon ASIC that would allow you to do ultrasound imaging in the space of a handheld ultrasound machine. This is revolutionary technology. Very, very fun to work on. Lots of technical challenges, very smart people. And I had a master's degree at that point. I did my undergrad in 3 years and my master's at Berkeley. And then for some reason, I think that that counted as work experience. And so they assigned an intern to me, even though I had no, like, no reason to need or like deserve an intern. And that person was Lenny.

Oh, wow.

And it was very clear that he was way smarter than I am, incredibly capable. He had done an internship the year prior on the iOS team, which is very different than like hardware. And he was incredibly well-versed in machine learning, frontend, like just like a true full-stack engineer. Like while I go like embedded software down to the metal, he goes embedded software up to the cloud. And so it felt like a super fun set of combination. It's a very complimentary technical skillset, at least in software plus hardware. And I just enjoyed working with him. And then when I joined Chromatic, everybody knew Lenny and liked Lenny. and we lobbied very hard for Lenny to work with us.

And so purely coincidental that you ended up at Chromatic at the same time after that experience at Butterfly.

I think it, like, we, like, I was part of why Lenny, like, came and joined. I think that, uh, there were two people, like, uh, one person that also worked with Lenny and we were like, yeah, he needs to join, like, he should join Chromatic. And Chromatic is also, like, probably the most fun I've ever had as a employee. Like it was just a wonderful company to learn. Also incredible founders. We are still very close to these days. We learn a lot from them and like, it's quite humbling to see how many things they got just right. And as I like build a company, it's just like, how did they do it? Like, what can I like learn from, from them, from their experience? Incredible people, very, very grateful to have met them.

And it was at Chromatic that you sort of have this sort of first inkling of this need that becomes Diode? How did that sort of come to fruition or, you know, come into your frame of vision?

I think that it was a culmination of observing the same problem over and over and over at different, like completely different scale of companies. Like Butterfly was a pre-IPO company, Apple, obviously, like largest company in the world by capitalization at the time. And then Chromatic, like a fairly small, like startup company. And every time that we had to spin a circuit board, despite that not being the most complicated thing that we were doing, like, as a team, it would just go wrong. Like, the manufacturing would take weeks more than it was supposed to take. The boards would come back and have a yield rate that was abysmal, like less than 50%. And you would ask yourself, like, is the problem in the design? Is the problem in the manufacturing? Like, what's going on? And it felt just wrong. And so, like, I started diving deep into this and it turns out that a large reason why this is the case is that a lot of smart people have poured their hearts and souls into making silicon design, like, more efficient because the cost of getting silicon wrong is in the millions of dollars. The cost of getting software wrong is virtually zero. Like, you just risk, like, you just like push a patch. There's some caveats, like obviously if you get something wrong on a security, like that can be very strong. But let's say during prototyping, you can basically just fix it as you go. And PCBs or circuit boards are just in the middle. They're like this weird middle child that hasn't been loved enough. And a wrong spin may cost you between $10,000 and $80,000, which is bad, but it's not destroying your company bad, especially with US companies. And so a lot of very standard problems that you'd think, sorry, but this should be solved, they haven't been solved. And I think that it was incredibly apparent when we taped out this incredibly beautiful piece of silicon that a way smarter engineer than I put together. And this guy got it right first time. He designed the entire silicon and the silicon just worked. I was responsible for a small part and I was sweating bullets. I was like, if this goes wrong, the entire silicon is not going to work. I was responsible for the bootloader in the my advice. And then the silicon comes back and the circuit board that it was on was like full of mistakes. And it was like through nobody's fault. It was not like that you could say, oh, the person that designed the circuit board made a mistake. No, like the tools were not helping. The manufacturing was not helping. Like we had to diagnose like yield problem, like all these like little things that slowed down the most beautiful moment of you get back your chip, and you know that it works. And like the chip worked first try. I am still amazed that that was the case and it was absolutely wonderful. And it's really a testament to how good the team was and also how good the tools that were designed around that were. But it, it felt that we deserved better tools around those circuit boards as well.

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Just to restate it in the sense that to make sure I understand it, it's like, you know, so much effort, investment, intelligence has gone towards optimizing the silicon because it's so important and expensive to get wrong. And then software has these fast cycles that are sort of forgiving. And so there's, you know, plenty of architecture around that, but the circuit boards are in this, weird middle zone where it's not that forgiving, but it's also, you know, not catastrophic to failure. And so it sounds like it's sort of remained almost, I don't know, artisanal ad hoc where, um, there, there's really not this infrastructure around it. I guess one, you know, am I sort of, uh, capturing the contours of this correctly? And then two, why has there not been more effort dedicated towards this until now? Because clearly there's been plenty of investment in this ecosystem. Why has this part just been sort of overlooked beyond that maybe structural issue?

So I think that you captured it beautifully, but there is one important, like, and huge caveat. This has been solved in Southeast Asia, which was the geography where this mattered the most. Like, effectively, Western countries around the 2000s, collectively abdicated a part of the stack that they perceived to be, you know, not catastrophic failure, not necessarily my core IP, like the same way as the silicon. They abdicated it to geographies where they could outsource it or offshore it for a cheaper price. And if you look at like a modern circuit board factory in China, there is nothing artisanal about that. The artisanal nature, which I think you capture beautifully, like it's quite beautiful because you can actually build a circuit board by hand. Something that like you obviously cannot do with silicon. So it is truly like, if you have a good artisan, you can build a fully working circuit board by hand. There's some caveats, of course. But the thing that is more interesting to me is why do we not have like the level of precision and quality control that we have for silicon for circuit boards? And like, if you see the machines behind me, these are industrial machines. These are machines that are meant to address the gap between artisanal product and mass manufactured product. And it's not true that people have not solved it, but where it hasn't been solved, especially in the US, is a fully autonomous pipeline that takes you from your design to a manufactured product. Effectively, like the case that it's like the US market has been optimized around is I have a design, we have iterated on it, Now it's time to build 100,000 of them. There's a lot of incredibly competent shops that will do this in the US. And this is not true for circuit boards only. It's true for CNC machining, like really any type of manufacturing. The best manufacturing shops stateside thrive in volume because variance is the enemy of yield. As soon as you need variance, there's a lot of complicated calculations that you need to do. Like for a PCB, it's like, You need to figure out how to place the components. You need to figure out how to place the solder paste. You need to figure out the optimal reflow profile of your oven. You need to figure out if your optical inspection machine is calibrated correctly to spot mistakes, because this is a manufacturing process. There will be mistakes. It's just how do you minimize them? It's not like this is like always going to work. And I think that because China started with cheap labor, and then effectively like labor progressively became more expensive, they truly invested in wonderful automation. Say, I will not trust somebody that tells me, oh, China can do it because the labor is cheap. That ain't true. That's not true anymore. They are incredible at automating things and automating them in a way that makes them cost competitive. And yes, there are a lot of things that are, you know, there's an 80/20 of automation where the 20% is filled in with cheap labor. But if you look at a modern circuit board, like factory, it is incredibly automated. And I think that this is very hard to replicate the novel if you don't do something radically different. And our bet is that that radical difference is that you co-design the circuit boards with the assembly line in mind. Like if you have these two concepts in your head at the same time, which is a very painful process to have, it will make design harder to know that like if you place a via with an annular ring that is not like to spec of the machines that I'm using to drill the bare boards, it will cause a problem during manufacturing. It is very restricting. But the bet that we are making is that the models don't care. Like you can let the model iterate until the design is as manufacturable as you possibly can. And so this yields a much more like amenable path to full automation design to production.

In a way, it sounds like you're sort of uniting these two pieces of the input and the output. You know, you have the ability to have the, you know, the system understand the inputs you need to make, but also how those get translated into the actual outputs and the sort of capabilities that you have on hand.

And like, I'll go one step further, which is like, if you look at the cultural stance that like my friends in Hong Kong used to have, every board is designed thinking of, oh, I'm going to make this one-sided, even if it costs me like a little bit longer design time, because this way it doesn't have to go twice during assembly.

I see.

I would ask them like, why? Like just designing both sides, like who cares? They're like, no, no, no, no, this will have to like go twice during assembly. Like the yield will go down because you're reflowing the components twice. Like, if I can do it, I'll just do it like one-sided. And that like cultural mode is just like, has been diluted in the US because it's so removed, right? In a lot of ways, when you send your design to Southeast Asia, they will tweak it to make it more manufacturable without necessarily telling you, which is quite interesting in my opinion.

Yeah, that is interesting. What are the, the companies that sort of dominate the industrial-scale production of this in China? Is, is it sort of like actually a market that's relatively diffuse or are there a few sort of big players?

I think that there's two clusters. There's Foxconn and Pegatron. Like these companies are huge companies. They don't do just circuit board production. They really actually do the full stack. We would classify them as EMS, electronic manufacturers. These companies are incredibly successful. The story of these companies is wonderful. Breakneck by Daniel Wang has a lot of really interesting tidbits about how these specific companies were founded and generated. And I think that these companies are one end of the spectrum, but then you have other younger companies. There's a lot of mom-and-pop shops, by the way. It's not true that PCB manufacturing is a monolith in China. Of these, I think that some of the more famous companies in the US are like JLCPCB, for example, which is this Sequoia China-backed company. Incredibly interesting company that doesn't do just PCBs anymore, but they started with circuit boards. And if you look at the way that they are automating a lot of the stack, it basically makes the same bets that we are making. I don't want to claim ownership of these ideas that we are putting forward. I'm just looking at what's working and basically saying, okay, they do it in this way. For example, they have a wonderful library of components. They hand annotate it. You cannot do it if you don't have very cheap, highly skilled labor, which we don't have in the US. The electrical engineers in the US are incredibly talented and very expensive. You cannot just do that. So how do we do that with a large language model? Like a large language model, if you make it capable enough, will be able to replicate some of the mix of ingredients that make something like JLC very successful, in my opinion.

You've taught me a ton in the last 10 minutes that I, after a ton of research, didn't fully understand. So, um, that's, that's really helpful and really interesting. To jump back into the sort of Diode story, you have this moment where you, you know, sort of realize how little has been invested in understanding, you know, in, in making circuit boards. Really have the sort of level of fidelity one would want, uh, in the US at least. You and Lenny apply to YC, but with a sort of a different approach. What was the sort of initial version of it?

The pain that we were feeling back then was I want to catch mistakes before they happen, right? So, like, large language models, if you teach them, like, electronics very carefully in a very calculated way, for example, by representing the schematics as code, representing the layout in a way that multimodal models understand. There's a lot that you can catch. But, and I think that this goes back to the comment that you made about being a copper merchant versus just an engineer. This was a pain point as an engineer I was feeling. But if you try to sell just this small part of the solution, you are selling vitamins to companies that don't have an express pain point right now. The pain point that this company had was not, how do I marginally make my designs less mistake-prone? The pain point they had is, I cannot hire an electrical engineer. I need a board now. And I need it fast. And so, in the exploratory space of the technology can do this, I know that this is a problem because I've had it myself. Can I sell this? We effectively stumbled into, huh, in order to train the model that would catch the mistakes, we built a model that would generate boards. And so we effectively use the same infrastructure, but basically say, oh, we can actually generate the board that you want. A lot of the boards that we, in San Francisco, there's a lot of robotic startups and these robotic startups maybe need some tweaks on some existing off-the-shelf boards. And this is relatively easy to do. And so it turns out that people do want this. And I think that this was another incredibly underrated thing about YC. It was basically like, you should follow what people actually say they want. And it has been very humbling, but also incredibly rewarding because in the process of switching from a solution-oriented mindset to a tell me your problem, let me see if I can fix that, like first. We also figured out another like beautiful things about like companies, which is incentive alignment. Initially we were thinking about this design platform, right? Like just like make the design streamlined and more efficient. But if you think about a design company that has no stakes in delivering a product, you're not held accountable to the same standards, right? Like if you as a company, will suffer the pain of having to rework 150 boards that were designed in roughly the wrong way, your incentives are incredibly aligned to make the best design software that will not do that. And so we live by this tenet. Incentive alignment with our clients has been a wonderful thing.

And you mentioned robotics companies. You've, you know, have some impressive customers and partners that you guys are working with. To understand the customer journey from sort of design to getting the board, what does that look like through DIODE? Like, are they entering your software first and sort of doing, you know, some part of it themselves? Maybe sort of just going through that journey would be useful.

Of course. So this is something that's in flux and the, like the current process is we will capture a specification document with you. This is partially done on a call. Right now, every one of our customers is incredibly dear to us and we love them very much. And so whatever it takes to make them feel like their spec is being captured correctly, we will do. We also have a version of this where you can effectively explain your specifications to the model, and the model has incredibly high context about parts availability, parts that are already being designed, and so they can be reused with minimal Likelihood of failing, what is in our library? And so we have this, we call it the spec builder. So the first step is as a customer, we will build a specification with you. That specification becomes our Bible. That is the source of truth. And then what we do is we have multiple agents that take the specification and do a first approximation of the design. We work with Anthropic to effectively bake some of our design language into the general availability models. We are very invested in large language models becoming better at electronics because our goal is to effectively automate as much of this process as possible. And schematics are on their way to be fully automated. I estimate 90% of our schematic that we do is the model can one-shot it now.

90%? Yeah.

Schematics are like they're beautiful because they're very ideal. They're like a logical graph. It's very, very similar to code. Then one of our engineers, we hire incredibly talented engineers because our goal is to actually build boards that work. We'll review the output and then we have a platform where our customers can confirm that this is what they wanted. Maybe like they realize that they said they wanted A, but they really wanted B. This is the platform that we expose at app.diode.computer, for example. I am very proud that this is just a visualization of the code. This is pure— if Yellow Lamp touches the code, you will see it in a human-readable way. We generate schematics, which the models have a hard time— visual reasoning is hard. So we use the code as a hook for the models. We generate schematics for the humans. And then the next step is the layout. So here is where we do a lot of research. Layout is not 90% automated. I estimate it's closer to 40% and 50% for us internally. It's very good at placement, less good at routing. We have a few companies that we really look up to, like Quilter is working on this problem. There's an entire company just dedicated to one thing that we do, which is routing. And there's another company called DeepPCB that we actually have worked with in the past. And both of these companies are wonderful. And I like hope that they succeed because our goal is to automate everything end to end, but we do a lot of research in-house and some of it is non-public sadly, but, uh, our goal is to let large language models become much better at routing. And I think that this will unlock the next like layer of productivity for us.

You know, it's the, the sort of partnership with Anthropic I thought was super interesting. And it makes sense that, you know, the way that you talk about this, that you want these for LLMs to become amazing at, at these parts of the process because it, you know, just, just makes your sort of full stack approach more effective. What does that sort of say about where you think value ultimately accrues in this business? Like, does it become the manufacturing side? Is it just sort of, I don't know, all, all, all these things sort of concatenated together and managing that full process?

It depends on how AGI-pilled you are. If you truly believe that the models are going to become radically better at anything that has to do with a computer, there is a reasonable belief that you can hold that the design portion will eventually be just the cost of the tokens that it takes to design this specific part. And the bet that we are making is that first, this is a non-trivial problem to solve. Like today, this is not something that just works, right? The models are getting better and we are very happy about this, but this is something that we like think will take a couple of years at least before you have full automation on the design. The spot that you want to be is a one-stop shop where you can let your model design and then you receive a board. And this is really like, I think where we eventually will want to be.

You said, you know, depending on how AGI-pilled one is, how AGI-pilled are you? Like, what, how do you build your business around these sort of horizons?

The beautiful thing is that this is a great business even at the current stage. Like the thing I bless my lucky stars for every day is that like, first, this is what we are good at. We design boards, we bring them up, we make sure they work and we ship them to customers. And this has a very large amount of value, even if you're just like 50% more efficient. Like our schematic automation allows us to be 50% more efficient, which translates to radically faster design timelines. So this works today and I am very AJ-built. In fact, we are building the company by effectively assuming that a lot of these problems are just getting better. And we saw it like day by day, like things that were completely out of the question 6 months ago, are now table stakes. All of our library management, which is a very, very sensitive part of electronic development. There's like dedicated person at large companies, the librarian, which will religiously take care of symbols and footprints and data sheets and everything else. This is all done by the model. And maybe you'll see something coming out soon in this domain, but this is working. This is something that lifts hours and hours from our timelines. And we can do it on demand. So I'm very happy to see that progress is being made. We are very far from being able to build RF board that is very layout heavy. This still needs a human touch, and we do it for some of our Fortune 100 aerospace customers, and they can compress their timelines from 9 months to a month, including the factory delivery. And so this has been just an incredible amount of value that we get out of this.

With these LLMs, with writing or with code, maybe, you know, a better example, uh, it's capable of producing performant code or competent code that sort of hits the bill, uh, or meets the brief, but it's not always necessarily the optimal code, right? Like, you know, a truly exceptional software engineer would find a better way to solve a certain problem. I would assume that's the same dynamic for you, but because it's less forgiving, you know, maybe the stakes are higher. How do you sort of deal with that? Like, I imagine there are circuit boards that are viable that an unbelievable electrical engineer would say, like, yeah, sure, it works, but, you know, if I was doing it, I would do it in XYZ way.

The usual telltale sign of this behavior is in the routing. The schematics, it's arguably more correct than what— the schematics are, so first of all, they are easier to verify. We have incredibly strong simulation harnesses that give optimization function to the model. This is a core part of what you need to do to validate a schematic is good. The other part is that schematics are largely They're a much simpler domain than pure layout. The ability in which you can compose code is massively easier. The tooling around electrical engineering has not evolved so that there are shared libraries of a lot of these things. People have tried, but there are a lot of complicated gotchas that can be solved, but they're fairly hard on the schematic side. No one complains about the validity of the schematics. Everybody complains about the aspect, like the visual elements of them. It's a very human thing. People are very receptive to how good a schematic looks, even if it's correct. You can have a correct schematic that looks bad and people will perceive it as poor craftsmanship, for example. The way I like to put it is that the universe of boards that we can tackle is always expanding. And today, If you start from individual components, the librarian is great. And the librarian can also generate reference designs, which are, you can think about as the minimum viable board that you can build around a single component. And now the models are starting to be so good that they can stitch them together and also build the layout. And our bet is that this will just keep expanding to the point that the universe of boards that you can build is so vast that you can just do it all.

Super interesting. I love this idea that often things that look wrong to humans are actually sort of the best version of something. You know, it's like the chess move that makes no sense. And then, you know, 10 moves later actually turns out to be right.

To be clear, we spend an unbelievable amount of time to make sure that our schematics are very palatable to humans. Like, this is a decision that we made at the beginning of the company. It's like, You can take the stance, which is basically don't look at the schematics, just trust the model. And we have a trust but verify stance. Our customers will get schematics. They basically get the same output that a human would give them, right? Because there is a human at the end of the day cleaning up the little edges. And this is what gives them the most value, even as just archival format. So we do spend a lot of time on that. It's not just that we blindly trust the model.

I see. Humans otherwise would have trouble trusting it, essentially. Like, there might be a version in the future where, uh, oh, for sure. Yeah, that's less necessary, but for now in this transition, it's sort of important.

Yeah. And I think that this is like the difference between building a research project and something that your customer can actually use in production. Like you need to deliver it to them, a small package that they can open in their EDA tool of choice. Like if they use Altium, they should be able to open in Altium. If they use KiCad, Kicad, they can open in Kicad. Cadence, the same thing. We work very hard to make sure that we are not just a, like, helper tool, but a proper, like, productivity suite that we actually, like, can deliver good results on.

You mentioned Kicad and Cadence. In the long run, I would assume your goal is to devour that workflow within your platform, right?

We have a slightly different stance on Kicad, like our, like I cannot speak about Cadence. Cadence is like a closed, like, software. I'm pretty sure that Cadence cares much less about their PCB software than they care about their ASIC software. That's where most of their revenue comes from. But KiCad is a wonderful piece of software, which is free and open source. Say that you are an Italian stonemason in Florence or an Italian leather craftsman. The tools are not necessarily what makes the artifact important. Like the artifact, the end product is really what matters. So our goal is not to devour KiCad or Cadence, it's to build an automation layer that becomes something that you dispatch work to. You can think about it as like we are a layer of automation on top of KiCad. And in fact, all of our designs are built in a way where the agent can use KiCad as a tool and we contribute back to mainline KiCad. If you go on the repo, like we have a lot of patches that we have contributed about manufacturing, fixing like some of the problems that we had internally. We are about to contribute another like tool, KiCad, and the tool should be open source. In fact, our compiler is open source. It's called PCB, github.com/dioding/pcb, fully open source. Our goal is not to gatekeep the compiler. Our goal is to build an electrical engineer that uses the compiler to build boards.

I'm curious where you see sort of like the, the most natural early adopters here. It sounds like robotics has been one, but. Yeah, well, where do you expect Diode to sort of make most headway over the next few years?

In many ways, like we work with a lot of enterprise customers, which are wonderful and were an important part of the initial set of hypotheses we were testing. It's like, can you deliver value at large enterprise corporations? This is like an important part of building a lasting company. It's like incremental adoption is so important. Every, like a lot of the founders I respect the most have given me this advice. It's like, If you try to build a radically different system by throwing away everything from the old system, you are gonna just face an uphill battle. But there's another, like, lesson that you can learn from Stripe. Like Stripe in the early days had a wonderful product market fit with a lot of developers that did not already have a payment provider. These were folks that effectively were building wonderful things on the internet. And needed a new solution that would work for them, with them. And you could spend a lot of time trying to retrofit Stripe into an existing solution, or you could go after all these new universe of players that just expanded immediately. We want to do both because we think that it is important to make sure that we are good with enterprise customers. But the most fun that I personally have is with some of our wonderful clients in the Series B to Series C range. Where they have an incredible appetite for boards. They just need to build so many boards. And it's so hard to hire like 100 electrical engineers because the United States just does not have this talent. And the people that are incredibly good electrical engineers are kind of like, they became incredible electrical engineers through a long career. And now they are deservingly resting and vesting. Or if I am at SpaceX, I'm gonna be waiting for the IPO. Like I'm not gonna join a, grinding startup. I've already made it. There's a lot of these archetype of people, and these are incredibly smart people that you want to learn everything from, but maybe they don't want to be going back to square zero, build 100 boards from scratch. And so this is where we come in. These are the people that we have a ton of fun working with, and we will do whatever it takes to design those 100 boards with them. And then we hope to become the best partner to bring them from like new product introduction to actual large-scale manufacturing. We have a lot of partnership with people that are set up for the world of here's one design that's done, let's build 100,000. And so even before we have the ability to do it, this is very largely like a prototype line. This is not a line that will scale to millions of units, but this is something that we can do for our customers. And we want to be that type of provider. We want to be the new generation like Stripe, but for electronics and for hardware.

I think every great company ends up having at least one near-death moment. Have you had to go through one of those yet with Diode?

I am very fortunate that, like, I think that the near-death, like, moment was in the very first few weeks where, because Lenny and I were just, like, we are very deeply, like, the engineering mindset is very deeply ingrained in both of us. And as an engineer, a large portion of what you are trained to do is someone will give you a problem statement from A to B, and your goal is to get from A to B in the most efficient and optimal way possible. Like what I have found, like building a company is like, is you are given A and you are asking yourself, what is B? Like, not even where it is. It's like, What type of shape will I have him be? And so, figuring out a business model that allows us to go where I want to go, which is I want to see the United States be as nimble as it is in software. The United States has such wonderful software talent. This is probably the thing I'm most in love with about this country. It's just like you come here and you walk around Berkeley and you see people that are so talented in the software domain. and they just find hardware unapproachable enough that they find it hard to actually go and apply those talents into that domain. I need that to not be the case. I want the US to become as nimble as hardware as it is in software. This is the third-tier description of Diode. If Diode wins, what we will see is much larger portion of talented and smart people being able to whip up electronics, the same way that they can spin up a SaaS server. This is what we want to achieve.

So in that sense, you know, every, every company is unique. So making comparisons isn't always helpful, but for the sake of sort of clarity, it almost sounds like the ultimate goal is an American Foxconn for the AI era. Is that like, how close am I there?

I think that you're incredibly close. I think it's also It's very flattering of being compared with Foxconn.

These are the aspirations, right?

That's right. There is a lot of work that needs to be done. And the work that we are focusing on today is wonderful design and design for manufacturing platform that holds these two ends of the problem together.

I'm curious about you and the way you run the company as a CEO. What is the sort of culture of Diode that you care about? And what are the things that maybe you've chosen to do differently than some of the other places you've worked?

I think that there's actually a lot of like other places that I've worked. I don't know that I have anything reactionary. There's a lot of like picking the parts that I love the most about different places that I've worked. I think that, uh, I am obsessive about the talent that we bring in. I spend a lot of time here, and when I spend time here, I love doing it with people that are engaging and I respect incredibly highly and are fun to be around. And I'm very proud of the entire team. So I think that we have been very deliberate about hiring in a way that the bar is very high. And we have so much work and it would be so easy to just give in and be like, okay, we'll just hire 20 people because there is enough work. But I think one of the things that we have been doing slightly differently is we have been focused on where is the pain? Where is the pain coming from? Where is the thing that is not scaling? It used to be schematics and now schematic is gone. And now we see layout as the next big hill to climb. And that signal has been very strong, but we are hiring. And in fact, I am hiring very aggressively. So if anybody listening is incredibly excited about electronics and you are either a very talented electrical engineer or a super smart software engineer that loves to dip their toes in the hardware pool, please, we'll fly you to New York. Come see the factory. This is truly I think like a hallmark of building a good company is like, how excited are you to see your coworkers? And this is something that I have like been blessed with, like being very excited about it many, many times in the past. And this is the number one thing that we want to hold true. I think that the differentiating factor is in like how high we keep the bar for hiring.

Well, hopefully we book you a few factory tours from us. Please.

Also, living in New York, big perk.

There you go. Yeah, absolutely. Where do you find you come up with your best ideas? Like, are you still, I don't know, fiddling around with, with electronics in your spare time to, to understand these things? Is it on a walk, uh, you know, sports, whatever it might be?

I would like be a truly unhappy individual if I did, if I stopped building boards. There was a, uh, like a mandate of building at least one board per week. Uh, like I, I need to be the least productive. The most active electrical engineer at the company with one board a week.

Okay, there you go.

I am the low bar. I am the worst EE at Diode and I still need to build boards. And I think that this is starting to be harder because like we have incredibly high-stake customers and we want to deliver a wonderful experience. So what I'm doing today is I'm building a lot of the hardware that goes into the factory. Like a lot of the problems that we find is that the machines that you see are mostly meant for manual operation. And we need to figure out a way to truly automate them from figuring out the right data model, figuring out which piece of hardware can talk to what, even the conveyor belts, they are not particularly smart. How do you make them smarter? How do you stop them, take pictures, stuff like this? So I still build a lot of that hardware. And I think that the best ideas actually come from talking to Ami. It is truly underappreciated how much talking with somebody much smarter than you kind of unlocks new modes of thinking. I think that I am more prolific in the set of ideas that I generate, and Lenny is much better at discriminating which ideas are worth pursuing. And so this dynamic has helped me so much because he will basically say, okay, you have 20 ideas. The rate at which you're generating it is probably going to kill the company. Let's focus on like these 3. And I'm like, no, no, but I really like 5. And he's like, why do you like 5? And then we discuss, like, 90% of the time he's like, you were right, 5 is probably something that we can kick to later. And 10% of the time I'm like, oh, actually we get to do 5. That's fantastic. And I think that that has been like, I have, I bless my lucky stars that Lenny is my co-founder because it's a wonderful person to have on this journey. Amazing.

Well, Davide, I've enjoyed this so much. And I always love to end with a few sort of more thought experiment questions for you. If you had the chance to run any experiment with no operational constraints and unlimited resources, what's an experiment you'd like to run?

Is this in the realm of just like Diode as a company? Because there's a lot of like larger experiments that I think like should be run.

No, no, it should be, it should be as large as you'd like.

Dogpatch in San Francisco needs to be the new, like we, this is the Brooklyn Navy Yard. It's like a, It's a part of New York that was developed in the, I think, '50s, and now it's like an industrial space that just overlooks the city. I need Dogpatch to become like the Brooklyn Navy Yard of San Francisco. I think that largely there's a lot of companies that we know in the industrial sector that are there, and I think that Astranis is there, the American Industrial Center is there. One experiment I would love to run is you take the entire surface and you make it like an industrial city. I think that that would be incredible for like bringing Silicon Valley closer to what Xinjiang is. And I think it will happen. And hopefully we are a part of making that happen eventually. Okay.

Final question for you. If you had the chance to assign a book to everyone on earth to read and know that they would understand it, what would you want to assign?

There's really two. And I think that they should be like done in sequence. So like if I have to pick absolutely one, it's going to be Chip Chip Wars.

Yeah, it's so good.

It's just like no flaws. Before starting the company, I spent the year prior reading a ton of both domain expertise books like Chip Wars and science fiction. I think it's tremendous how much science fiction actually captures what the ethos of progress felt like, like 1970s science fiction. What did people 50 years ago think? But I do think Chip Wars is a wonderful primer to understand truly and deeply how much American government, like the American government has had this outsized influence in developing silicon and how and why like RAM production was outsourced to Singapore and Vietnam and like Taiwan and like how it happened and how like Japan was like this incredibly strong powerhouse. And then like, the balances of power that have shifted over the last 60 years. I think that if you do not understand the geopolitical angle, it's very, very hard to understand reindustrialization. Like, it's very easy to devolve into like us versus them mentality, like for many reasons. But I do think that if you do understand the incentive structure that operate at a nation state, you can understand why, even if you like are a full pacifist and you don't care about rivalry between geopolitical rivals, having a strong industrial base is just important for your long-term prosperity. And this is something that I think Europe has not done particularly well. And I would love to see more. I think that Europe has such— all these machines are European, by the way. It's wild. Yes, it's wild how many like high-end industrial machinery is still made in Europe, but there's this weird middle ground where it's like, I want to transition to a services economy, but then I have like this, um, like small and medium businesses that do manufacturing. Like, I think that this is not a contrary opinion anymore, but like understanding the geopolitics is just very, very important to understand how the next 50 years will play out and why China has been largely so successful. Which is, I think, something that it's worth learning and admiring the good parts of and recognizing where there are bad parts that you can avoid.

Okay, so Chip War is recommendation one. You said there's two. What's the second one?

Breakneck is just like, in order to— and this goes again, demonizing a country like China is bad for everybody. Yearn to understand it. And then once you understand it, you can have a nuanced opinion. And there's things that you can denounce and there's things that you can admire, but you truly need to understand, like the idea of an engineering culture and an engineering nation is very profound and very powerful and like very scary in like some ways, like social engineering, for example. But like Breakneck is, I think, like a wonderful book to begin and understand that. And like be able to capture the good parts without like throwing the baby with the bathwater type of thing.

Well, those are two great recommendations that I feel like capture a lot of the spirit of this conversation. So thank you again, Davide. I really enjoyed it.

I enjoyed it too, and thank you for having me. This has been wonderful.

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