EP #37 How The Founder of Oculus Plans to Save America w/ Palmer Luckey

0:00You sold the Oculus to Facebook. You were basically a kid and you offered you a billion dollars and you say no. So in the end it ended up being a 2 .3 billion dollar deal. How do you turn down the billion dollars? How old were you then? I'm at the time I would have been 20. Yeah, would have been 20. I didn't know anything about AI. When we started the company, we didn't even know what product we were going to make. In 2019, we won Bloomberg's most controversial company in tech award. In 2017, we won Wired's worst company in Silicon Valley Award. You're doing something very different now. We need better weapons if we are going to ethically engage in warfare.

0:37People are like, oh my god, you've opened up Pandora's Box. How are we going to deal with that? It's basically already solved. We're just waiting for the products to go out. That's how they're going to make VR cool. It's not engineering. It's marketing. It's a virtual reality headset that kills you when you die in the game. This is a science fiction concept that has existed for decades. We build robotic submarines that can dive to depth to over 6 ,000 meters. I mean it may be down there right now. We just don't know I could tell you but but then you'd have to have me play your headset This was gonna be the future.

1:03It was gonna be not just the next computational platform with the final computational platform

1:11Welcome to moonshots and mindsets my conversation today is with Palmer Lucky the incredible inventor entrepreneur the creator of Oculus, who famously turned down a billion dollars from Mark Zuckerberg to go on and ultimately get 2 .3 billion for selling Oculus to Facebook. But today the conversation wasn't a different subject. It was on a conversation that was titled rebooting the Arsenal democracy because after Palmer sold his company to Facebook and exited, he didn't go and start another VR company. He started a defense company of all things combining AI robotics drones and machine learning to create a new layer of Defense for the United States an extraordinary pivot So I sat down with Palmer at abundance 360 to talk about his company where it's going and it buzzed the entire audience He was probably read the number one conversation and it really surprised me so So, depending on how you feel about our military, is it something that makes you proud and excited or you don't like talking about defense?

2:21This is a conversation to have because in the world today, defending democracy is a critically important thing and how our exponential technology is going to be used. My massive transformative purpose is to inspire and guide entrepreneurs to create a hopeful, compelling and abundant future in humanity. And that's what I'm doing with this podcast to open up every relationship, every conversation I have with you to inspire you, to support you in going big in helping uplift humanity. If that's of interest to you, please subscribe to this podcast, allow me to share with you the wisdom that I'm learning from the most incredible moonshot entrepreneurs on the planet.

3:03Let's dive into this conversation with Palmer Lucky, the CEO, founder of Andral, and get ready to hold on. Hey, buddy. Very high energy. Very high energy. Well, you got to be. Come on. It's the most exciting time to be alive. Come on. You bounce head of bed in the morning excited, don't you? Most mornings. No, mornings. So I have to start with a couple of questions just because I have to. So you sold the Oculus to Facebook and you go and meet with the Mark Zuckerberg and he offers you a billion dollars. Now I mean you were basically a kid who had this sort of working prototype and he offers you a billion dollars and you say no.

3:54And then he offers you how much? So in the end, it ended up being a $2 .3 billion deal, plus $700 million in performance bonuses, which we actually achieved all the performance metrics years ahead of schedule. So that was pretty cool. So how do you turn down the billion dollars? How old were you then? I'm at the time I would have been 20. Yeah. I would have been 20. That's kind of life -changing amount of money. Like seriously, why don't you turn down the billion dollars? Did you really think he would come back? Well, the main thing is we weren't looking to sell the company. So we had this first discussion.

4:29We were actually, by then, quite a ways beyond having just a work, you know, a proof of consul. We had sold our DK1, we had sold about 55 ,000 virtual reality headsets to game developers around the world. So you were on the path. Yeah, we were on a path to launch a consumer product. We had a lot of game developers that were supporting us. We were true, like, religious zealots of VR. We believed that this was going to be the future. It was going to be not just the next computational platform, but the final computational platform, the only one fully capable of encompassing every other form of media and human communication.

5:01You know, we really bought into this. And so when it came in with it, a billion dollars, like, look, that would make us a lot of money, but I think that we're going to be able to do what we need to do on our own. There's no reason for me to sell this to another company. And so the thing that changed it wasn't really the offer going up to two billion dollars. It was the fact that that was paired with an offer to continue spending billions of dollars every single year For a decade plus until we achieved mainstream adoption and that that's the thing that really gets to you as an entrepreneur Like well, I could do this on my own I might even make more money in the end if I maintain ownership in this thing as it becomes a multi -hundred billion or three billion Our company and I'm on a much faster timeline than I would ever be able to do and Facebook was in a different position and almost 10 years ago, then they were today.

5:53I mean, there were other companies interested in buying us. And I won't say necessarily who they are, but because I don't want to be that kind to kind of guy, nobody's gonna want to talk to me anymore. But there were companies who are interested in buying us, but the problem is these other big tech companies. VR was an interesting side show for them, not the way they saw their entire business pivoting for the next decade. They were gonna change the name of their company for that. They would change the name of the company, they'd use you to sell more game consoles, they'd use you to kind of be an interesting marketing gimmick.

6:19But their Facebook was one of the only companies that came in and said, this is our future. We believe that we are going to pivot the entire company. So when people acted surprised, when Facebook changed their name to meta, that wasn't something that happened overnight. That was the culmination of 10 years of, of, and really part of the pitch that got us to sell to them in the first place. So you're doing something very different now. Explain to the group what Andral Systems does. Sure, so Andrew is a defense product company. We build weapons. It's obviously pretty different from working in the gaming and entertainment and virtual reality space, but it was something that I really felt was going to be very important.

7:01The reason I ended up in the space is because in short, I looked out at the world and I realized there was this fiction taking holds in the minds of people, even smart people, that we lived at the end of history, people called it, that there was never going to be any more or a large scale conflict. The economic intertanglements precluded the idea of large scale warfare, and therefore it was not something that was worth investing in. We didn't need to get better at it. We didn't need to be more efficient at it. We didn't need the ability to increase our precision in our military action because at the end of the day, it's an outdated thing that was a thing, you know, part of the past.

7:35And so you had a lot of tech companies that were also hugely dependent on China and thus unwilling to do anything that would upset the Chinese government. You had a lot of tech companies refusing to do work with the Department of Defense. A lot of defense companies that were totally incompetent in areas like artificial intelligence, sensor fusion, high end networking and processing robotics. And then startups didn't get into the defense phase one because it's not cool, two because they couldn't raise money to get into the space. And three, because the government is so bad at buying from startups that they shouldn't raise money to do that even if they wanted to.

8:07And I realized that this was something I was pretty worried about. There's never been a point in US history where our best technology companies have refused to work with the military. So imagine if in the run up to World War II, if Westinghouse in general electric had said, you know, I don't think that we can work with the United States military. Imperial Japan is just too big of a revenue opportunity for us. Imagine if during the Cold War, if you had had general electric or Bell Lab saying, you know, we love America and all, but I think that we need to be a transnational corporation that doesn't really pick a side up between things like democracy and authoritarianism, because because we really think that Soviet Union, they've got a really good concentration of energy resources that we just need to make sure we have unfettered access to.

8:47That really spooked me. I felt like we were in a similar situation today, and I wanted to do something about that. So that's how I ended up in that. I get it. I get it.

9:00You got even a substantial, a fairly up -laws here. I will say, I've just got to do a quick detour to say this. This is the Palmer Lucky I told you so to your 2022 now into 2023. Because people are cheering. When we started this company, we were vilified. People were told the most charitable interpretation we got from those people was that it was a waste of time. It was somewhere between your evil and what you're doing is irrelevant to the future and you're just wasting your resources. And like in 2019, we won Bloomberg's most controversial company in tech award. In 2017, we won Wired's worst company in Silicon Valley award.

9:39I mean, I want to put it in respect. Now that we've had large scale conflict, return with a vengeance. Now that people understand the dynamics of China and Taiwan in the near future, it's easy for everybody to say, oh man, this is great. I love what you're doing. But man, it was not popular. I remember my first web summit. I'd been a web summit twice at Oculus. I came back with Andral, just glares, just brutal. This episode is brought to you by levels. One of the most important things that I do to try and maintain my peak vitality and longevity is to monitor my blood glucose. More importantly, the foods that I eat and how they peak the glucose levels in my blood.

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11:43Eventually, this stuff is going to be in your body, on your body, part of our future of medicine today. It's a product that I think I'm gonna be using for the years ahead and hope you'll consider as well Where's the name and real come from? This Warner Brothers legal here No, all right. Well in that case unofficially It's named after under real which is the sword the aragorn Wheels in in the Lord of the Rings There's a few reasons it's named the flame of the West in Elven The idea being that it is the sword that allows the kingdom of man to stand against the oncoming thralls of Mordor. And there are two quotes from the books that I think really drove us naming the company.

12:27One is the man who bears this weapon wields a sword more deadly than any that has ever existed. I'm like, okay, that's pretty sweet. But then there's a better one that actually drove it. And it is, I love the sword, not for the brightness of the blade, nor the keenness of the edge, but for that which it protects. And that was what we wanted to get across internally too. The idea, I wanted to reinforce this to my employees. We're not building weapons because it's cool because of the brightness of the blade, the keenness of the edge, the fastness of the drone. We're building it because of that which it protects, which is America and our allies around the world who believe in self -determination, democracy, freedom of speech.

13:12And I thought that that was important. We're not an inanimate object. We are conscious sword that fights for a specific side. So when I was looking to try and find a faculty member here to talk about exponentials, it's so challenging because there's so many different technologies. But what I loved about your do -pombers, you're converging so many of them, right? You're bringing them together in extraordinary systems. Can you just talk a little bit about the various games and toys in your toy chest? They're the Android toy chest or my personal. Actually, they're probably toys very cool, but... I have a submarine, so that's pretty cool.

13:50But Android also has a... So my submarine, you put people inside of it, because I want to be inside of it. But we... I mean, we build robotic submarines that can dive to depth to over 6 ,000 meters. One of them is actually the longest range electric vehicle in the world of any kind. It is a range of thousands of miles, totally autonomously on all electric power, totally silent, possible to detect, non -nuclear. That's impressive. We've got some good stuff in there. So robotic submarines, advanced autonomous aircraft, autonomous ground vehicles, we're building things that are in space, we have a few space force contracts that I can't talk about the specifics of.

14:23And we're working on something that is not a domain that has been here to for unexploited, has been the underground domain. The thing is nobody since the Cold War has conceived, they're called subterrians. So subterrines that go into terrain. Subterrines, they're not practical to put people into and you can't communicate with something that's deep underground. But autonomy and artificial intelligence allow you to, for the first time, have payloads that can do useful things, operating autonomously deep underground for long distances. I mean, it may be down there right now, we just don't know. Yeah, I was interesting.

14:59I could tell you but but then you'd have to have me play your headset We'll get to that later

15:10Drones how many drone designs? I mean that seems like the most interesting place to play we've got six aerial vehicles That we've announced and then we've got another half dozen that have not been announced They're all purpose built for specific use cases some of them are protecting military bases from incoming drone threats right now So I mean, overseas in combat zones right now, some of the we're doing it here in the United States, we have other drones that are providing targeting for long range precision fire systems, so you don't have to move. Like right now, the way that you put, guide it, a laser on a target, a lot of time you have a J -Tack, you have a guy who literally has to get close to them, point a laser at them, and then he's the one guiding it.

15:47The problem is the enemies that we have, all have sensors that detect that laser, and the second you start lasing, they're gonna try to kill you. If you can replace that job with a drone, You can take a person out of harm's way that had a 50 -50 shot of coming back from any real conflict. Amazing AR and VR. What are you doing in that world? I mean, that's your your legacy or your starting point I should say not your legacy. You have plenty of legacies left How far has that tech gotten? Are you happy with the advances and what are you doing in andro? I'm happy and I'm unhappy. I don't want to complain too much because everyone who gets blown out of their own company, I was fired, I didn't leave Oculus.

16:27Everyone who gets blown out of their own company looks at it and says, oh, I could have done it better, I would have made different decisions. And I of course would have, and I think that meta has dropped to the ball on quite a few things. I think Magic Leap dropped the ball on quite a few things. It really pains me as if we are enthusiasts. At the same time though, my fundamental outlook hasn't changed. like we are clearly on a path to where we can make virtual reality devices that provide matrix level immersion within our lifetimes. And we're going to be able to replace at least the sense of vision perfectly within the next 10 years.

16:59And we're going to get very close in the next three years. And it's an incredible thing to allow you to virtually experience anything that you can conceive of, that you can imagine that you want another person to experience, whether whether it's practical or for entertainment, or for any other purpose. I'm still a big believer in it. Is the tech there, or do we need to invent something to get to, I guess, resolution of the visual cortex? So we're gonna be fine. The great thing about VR is it's not, it's like AI. I say 10 years ago, it was not clear when the breakthrough would happen, what it would look like.

17:34How would we get to AI that scales to something that if not AGI, at least it, you know? It appears to be JGI for many use cases. It was unclear what the path was. For VR, it's a very clear path. You can literally chart it on the road map of every major contract, manufacturer in the world. You know exactly what's going to happen, what resolution you need, what nanometer processes you need to use to make it happen. So it's just this march towards implementing things that have already been invented. We don't need any new inventions. We don't need any new technology. We just need to keep iterating on what we already have and we'll brute force our way there within a few years So if I were gonna be critical of the VR world right now because I've got a whole bunch of Oculus headsets Unboxed and box still it's It's still the cumbersomeness of wearing it for any length of time.

18:23Yes How are we gonna deal with that? It's basically already solved We're just waiting for the products to come out so like quest pro is over 700 grams and it's pretty big It just came out. It's pretty advanced, but it's not using a recent advancement that has been made possible which is called Pan Take Optics. They reflect the beam inside internally a few times. They've been around for actually decades, but only recently have displays become bright enough that you can emit polarized light that is high enough brightness to overcome the optical inefficiency of pancake optics. There is a headset that just came out.

18:55It's called the big screen VR headset. Highly, it suggests you guys check it out. it is cost less than a Quest Pro. It's $990 instead of $1 ,500. And instead of 750 grams, it weighs 179 grams. It's a fifth of the weight. It looks like a tiny pair of the smallest ski goggles you've ever seen at its super close to your face, better tracking, higher resolution. And the Apple headset that's coming out soon is the next generation display from the same company that makes their displays. So, like, there's some stuff coming that is extremely good. It's not sunglasses, but it's very close. and Apple is going to market it well enough, they're gonna pay to put it on all the celebrities, and then everyone's gonna believe that it's cool, just like with shutter shades, and those big giant lady Gaga glasses.

19:37They were really dumb, but people loved them because they were on famous people, and Apple's gonna do it again. That's how they're gonna make VR cool. It's not engineering, it's marketing. Amazing. Amazing. You know, I remember the human interface labs up in Seattle used to talk about these virtual retinal displays where you would paint with a laser on the back of the retina. Sure. Is that tech ever gonna see the blades? Yeah, so VRD is virtual retinal displays. There's a few companies that have been working on it. I think it's a really cool technology that made a lot of sense. It's a company called Microvision that was working on it.

20:06Hey, Microvision was one of the first three stocks that I bought. I had just $500 in the stock market. It was Apple, Lockheed Martin, and Microvision. And Microvision didn't do as hot as the other ones. But I think that basically that technology is interesting, but I think it's been supplanted by other technologies that take advantage of these multi -hundred billion dollar investments into semiconductor manufacturing, silicon manufacturing processes. Making high -end micro displays is actually very similar process wise to making high -end micro processors. So, I think that in a vacuum, scanning laser displays might win, but in a real world where there's hundreds of billions going into a different path, that's the path that's going to win.

20:51All right, let's go beyond the headset. Brain computer interface, BCI. How excited are you about that? And are you gonna be one of the first people in line or never? Well, the thing about brain computer interfaces, it's all dependent, it's kind of hard to define what is interfacing with the brain. You know, there are people who would argue that your eyeballs are interfacing with the brain. I'm not one of them. There's other people that say that looking at your brain through your skull is interfacing with the brain. Maybe, what about laying on top of the brain? You need to go into the brain. What if you're hooked up to the spinal cord right at the base of the brain?

21:25What if I'm a little further down this final cord? What if I'm tapping into median nerve cords in my arm and I'm using neural plasticity? Let me define this. To feed data in that way. Let me define this. Hi, Ben. Hi, Ben, with a connection to reneocortex where you can think in Google and you can see imagery that bypasses your optic nerve. I not only believe that's going to happen, I think you won't even need to go directly into the neocortex. I think you're actually going to be able to do it through your peripheral nervous system. You have enough spare bandwidth on your peripheral nervous system.

21:52People do this where, like, you're from the brain port. Brain port was a company that was building an imaging, it was an electro -haptic pad with a resolution of, I think, 124 by 124. It went on your tongue. And it actually gave it, and it allowed you through neural plasticity, to learn to see through your tongue. There's actually a lot more bandwidth in your media nerve cord, which is the one that handles these fingers. There's a plenty of spare bandwidth on there. They make peripheral cuff electrodes that go on there. People who are amputees have learned to control artificial limbs using it.

22:22They've learned to feel from touch sensors using it and they've even learned to control multiple limbs from a single media nerve growth peripheral Cavalectrade and I guess I'll close it with this. Yeah. I believe that the long -term future, not for VR because VR is going to be very much about mimicking all of the senses with high fidelity, but for AR. I think AR is not going to be visual. AR is going to be entirely based on brain to computer interfaces or peripheral nervous system interfaces. I don't want to have my AR experience limited to the limitations of the human visual system where I have a fobeated region where I have to concentrate on to know any real information about something.

22:58I just want to subconsciously perceive the pose of where my car is, where I'm going. I want to have these things at the level of proprioception. If I make a funny pose, I know exactly what the pose of my body is because of all the mechanical and nano receptors feeding into my brain. If I can teach myself to perceive things out in the world through my peripheral nervous system as just part of my proprioceptive system, you can now have a much more valuable AR system that is not constrained to the limitations of the vision system and allows you to fully use your vision on other things rather than just data IO.

23:30So that's why I think it's all going. AR is going to be a tiny implant. So you have tiered inputs into your perceptome. VR is always going to be about strapping a bunch of stuff to your face. Getting past the optical nerves pretty tough. Speaking about strapping stuff to your face, you also very famously about two or three months ago came out with a brand new headset design, which I'm not going to let my kids play with. Can you describe what you did? It's not just a design. It's built. It's in a worse. Yes, it's just to write. I really want to really make sure people are sufficiently afraid. So it's a simple concept.