From PayPal Intern to Starting 4x Billion-Dollar Companies - Joe Lonsdale Interview

0:00You have now created, by my count, at least four billion dollar companies directly, probably more than that. What would you say you are doing different than the average good founder? So I have some unfair advantages, right?

0:23Hey, Joe, thanks for doing this, man. And thanks for inviting me into the morning workout, the cold plunge, and everything in between breakfast. It's good to have you here, Sean. So I want to start with lessons learned. One of them that we were talking about this morning when we were doing a workout was making decisions on blended reasons or having like a blended strategy for how you're, we're going to win doing these five things and why that sounds like a good idea to the average person, but it's actually a very bad idea. Can you explain that? Yeah. And I wrote this piece online, like nine lessons from Peter Thiel.

0:51I sent to all of Palantir. That's been like sent to my other companies as well. And it's one of my favorite pieces. And that's one of them. And it's one of these logic things where usually there's like one reason that dominates everything else. And that's just the nature of the world is that when something's successful, it's kind of like the power law rule, right? Like in a venture capital fund even, there tends to be one thing that's successful that's like bigger than everything else. And that's true inside of companies as well. It's very unusual, like extraordinarily unusual for there to be like two similarly equal like products or revenue lines or something like that.

1:23Right. Especially early on in the company. So usually if you think you have like two or three reasons for doing something or five reasons for doing something, what that means is that you actually haven't figured out the actual reason. You have no strong reason. You have no strong reason yet. Yeah. That means you have five weak reasons, which is not good. You want to find like what's like one really strong thing you're driving towards. And that's how startups work. And this is, it's a really seductive trick. I mean, first of all, you have to be taking a big risk to even do a startup, it feels like, rather than like, you know, most people, a lot of people like do incubators because they're like, oh, I don't want to do one company.

1:51I'm going to do 10 companies. And like, by the way, that's like much less likely to have big success because you're not focused. And then, but so even within a company, they're like, they're trying to do the same thing. They're trying to be like, well, here's five ways I'm going to make money. And like, no, no, no, man, if you really want to do a company, figure out the way you're going to make money. And that, and that tends to be how it works, you know? And that applies to revenue streams. So eight revenue streams means you probably don't have one awesome revenue stream. Growth strategies. If you have seven things we're going to do for growth means you haven't figured out which one's actually the one that's going to work.

2:17That's going to just compound like crazy. And it may change. over time, but what's the thing that's working now that you're pushing on? And then the other version of that is blended reasons for doing something. I think I read once that Reid Hoffman uses the same philosophy and he said, he gave the example of, oh, if there's like a trip to China and I'm deciding, should I go to China? It's far away. It's going to take two weeks. And should I do this trip? He's like, my chief of staff came with like a list of pros and cons. Yeah, it's like multiple pros. Multiple pros and then a couple of cons. That's almost impossible.

2:44It's a guaranteed way to make mediocre decisions is to do long blended lists of pros and cons. If you don't have a key reason to be there, like stick to your work. Yeah, exactly. That's what he said. He's like, if we don't have one reason that that alone is worth doing, then we should just say no. Is that something you do? Reid was one of the key minds at PayPal, of course, with Peter Thiel and others. So who knows who actually came up with these ideas? It may all be Reid's ideas. And I'm just like, he's a very smart guy. Well, I save the message for mine now. So I think that's the best way to, you know, the highest compliment is to meme an idea and to let it spread.

3:14And so Peter's helpful with that. he's um well what are some of the other things like do you remember i mean even at the beginning one thing i i kind of wonder is you've been around a bunch of special people peter teal elon musk all this stuff is it clear in early like in the early days like do you remember the moment where you're like oh this person's kind of different they are that five standard deviations yeah no intelligence or conviction or whatever one of the i mean we all try to like set strategies for ourselves and goals and whatnot and like i remember in college i thought wow this is a really good opportunity at Stanford to reach out to a bunch of successful people and kind of learn from them, see who I admire, see who I want to be like.

3:51And, you know, I've met some of the legends of global macro finance who I'm still in touch with. I met a bunch of other big business people and run Fortune 500 companies. And Peter, to me, had by far the most interesting intellect. He was clearly just one of the smartest people I'd ever met. And he was interested in some of the same things I was interested in. He'd taken some of the logic farther than I ever had. So I always learned the most from conversations with him. So that to me was one of the reasons he was the most attractive to try to work with and try to build with. And so before you start multiple other companies, you do Clarium, which is his hedge fund, I guess, is the lead.

4:21Global macro fund. Yeah. It's like the most fun part of finance. There's lots of parts of finance. Finance is like all sorts of areas. Global macro is looking from like the highest possible perspective that everything going on in finance is like the bond yields around the world, the flows of money around the world, how equities are being valued. Basically, it's like just from very top down, like what is happening in the world of finance and how do you map it out how you and you look at relationships you understand you know of course like you know the australian currency is going to be really correlated with the price of metals and there's different ways in which they can get way off and you can create a regression trading system if they're way too far off where you can make money based on the reversion right but then you say oh normally i would trade this but actually this is happening because because china just like you know invaded this thing over here so actually it's not a good time to do it and it's just it's this really really fun map of the world and we were really interested in like long dated oil prices, what was happening with oil.

5:09We're very interested in how Fannie Mae and Freddie Mac, which are the two big giant housing groups, they'd gotten to be much, much bigger in the US in the early 2000s. And they had these giant mortgage-backed security portfolios that are worth trillions of dollars. And they had to hedge these portfolios, basically. And I won't go into all the details. It's a little bit esoteric. But based on how they were hedging their portfolios, it was completely changing the global fixed income market. It was completely changing the pricing of bonds. We found some really interesting ways to do things there.

5:34I do my favorite story though I'll give you it's just to give so so we're working at the hedge fund the market's open we're in San Francisco we're in 555 California right it's that yeah big building downtown like uh after after 9 11 I think Peter had a parachute in his room I always told me she had parachutes for us too but anyway there's one parachute okay that was just a joke but it's probably anywhere but uh no so it's like school office on the 42nd floor and and the market's open at 6 30 so the traders are supposed to be in at 6 30 except the first Friday of every month you had to come in at 5 30 because the non-farm payrolls come out still now the first friday of every month at 8 30 a.m on the east coast and it turns out this is a very important number because it shows you what's going on in job growth in the whole economy uh you know based on the bureau of labor statistics numbers and and what was really cool is kevin harrington was our head of research he's like genius crazy physics biology interesting guys who's uh and he ended up being on the national security council later like super interesting smart guy and he like had mapped out this thing helped them with where we realized that they were adjusting the numbers wrong uh based on seasonal adjustments and so we were able to predict whether the number would hit or miss and this thing would move bond markets like crazy like like hundreds of billions of dollars and move around based on this number and we figured out they're systematically misdoing it this is totally legal you're allowed to do this in finance so we figured okay this is a mistake 75 percent of the time we can make money trading this and then we can adjust it make it even better based on where the market was positioned so the market's going to be surprised and we can kind of tell there's a good chance it might be but you take a big position right like the night before or whatever and then like make a ton of money that morning when it worked and it was at 4 30 in the morning it's like it's about 75 chance and so if you do it enough you're going to do it well over time and it was the most fun thing because we take these like giant positions on this thing and you'd be there with like peter and kevin is this just like the highest stakes game of poker it's the most fun is the game of poker and you're like literally personally have like a few million dollars running on it at a time as early my 20s these guys you know peter probably had 100 million dollars riding on every time and you're like high-fiving if it goes right or you're depressed if it goes wrong it was the most it's just most fun high stakes game is he sweating or what's his uh like everyone's like what's gonna happen it's like so exciting and then you're like i remember so many like celebrations we'd all like go to like our favorite breakfast place afterwards so it worked out it was pretty cool yeah what'd you do if it didn't work out yeah sometimes we go there anyway but yeah but for some reason my mind this is maybe who i am i remember all these times it worked out i barely can remember the times it didn't i know it didn't sometimes but like maybe this is like a serial entrepreneur sort of thing where you just have the good memories you know right so it's like but i remember it was it was it was a fun time that's a entrepreneur survival uh tactic you have to block out the traumas all the traumas because if you know if you remember how hard something is you're very less likely to start it again or do another thing way i would have built all these companies if i had to force myself to like think about that too much you know the way you just described like the global macro fund you're pretty young when you're doing this and that's not what you were doing just before.

8:17So it's not like you had tons of experience. My little brother got me reading like a bunch of economics and finance stuff when I was young. So I kind of had a weird, both computer science and finance background. So, and I had opinions about it. So I just think it's a weird, those are like my two things. And so, you know, so I knew that world pretty well. And yeah, you learn a lot being in it. You just do, you just have to be in it to do it. But I mean, credit to them for betting on you to be able to do that. You know, they could have hired somebody who's been doing that for 20 years in New York.

8:43We talk about lessons from Peter Thiel. I think one of the most important ones I've seen from him that I've definitely taken to heart and what I've done is I'd much rather hire for talent and ambition and hard work than hire for expertise. So almost, and there's exceptions, right? So if you have a company that's already really working and already really scaling, and there's like a machine that has to be run, you want to hire the guy who knows how to run the machine. That's fine. That's like, that's like, that's the operator who knows what they're doing already. But when you, before you've actually built the machine, or when you're doing something with a group in like kind of high finance or whatever, you want to hire for raw IQ and hard work and just iterating and figuring it out.

9:20And that's a different skillset than the people who run the machines. What's your way of filtering for that IQ? Well, you know, how do you interview or what are the signals you look for? This is like super hard. I think you start - Is this a hard math problems at people? What are you doing? We used to do that at Clarion. We had these really hard problems. I remember my friend, Studio, ran Dropbox, one of his partners there at his new, his new ventures, Chen Lee, was like the highest scorer on this test I gave. He's a smart, smart, smart guy. Yeah, we had to do really hard tests. But you know, once I already had around me a bunch of people who were really top talent, it's like they knew people like, oh, who is the smartest guy in your physics PhD at MIT?

9:55Who is, you know, things like that. So it's like you kind of get a network that's already really solid and then you go out from there. And so let's go more on that. So two things. One, Ben told me something that like, there's some number, I don't know the exact number, 20, 30 people who have worked at your companies that have then gone on to start like unicorn companies? Dude, what is that number roughly? Oh gosh, you know, I don't actually keep track of the official number, but there's over 20 people who've worked directly for me who've started huge companies. And it's something I'm really proud of is that we've had a lot of super talented people.

10:24And, you know, in some ways, it's like, I like to like back my mind, like, oh yeah, I'm a great guy. I take credit for shaping them. But in some ways, it's like they're already really amazing. And, you know, and so I was like, maybe I'm just going to convince them to have work with me ahead of time. You know, so it's like, there's a well there's a nature nurture thing right so yeah there's there's some of both i do like to think that we've given them useful frameworks just like i learned from peter they might have learned some of these things for me too but but uh i mean one of the one you know not all of them i've even backed like some of my back some of them went off and then did it themselves and right you know which you know usually they let me back them yeah yeah that's the worst when you don't you didn't get the call actually i'm still proud i'm still i'm still proud of like i will tell you the the guy who came right out of school to help run out of par with me and and i I was like, he was PM president of the company, super talented guy.

11:06And I did not know what I was doing. Even though I just already done Palantir, there's always mistakes I was making because there's like things I didn't realize I had advantages of Palantir. And, you know, I had a part of a multi-billion dollar company. Now it's great, but there's things that took longer. There's mistakes, but there's also obviously good things we did because the company worked out really well. And I think he had like one off on his own and he had like, you know, his own tough time or whatever for a little while afterwards. And then he ended up partnering with someone and he started the company that became worth$3 billion in like four years and he sold it.

11:31wow which i'm like oh wow that's pretty fucking cool but i was like and you know and i and i he didn't have they didn't bring anyone else into that company but i was still really proud of the fact that i'd work with this guy and then he'd gone on and had like crazy success i mean it's a cool feeling you know but for the record it's always i'm more proud if i got to invest too right no come on take care of your buddies yeah exactly it was mostly like 95 of them it's like people will bring me in and i'll still like help and we'll coach and work with them together so let's big hit number two, Adapar.

11:59You explained in layman's terms what even is Adapar and then I have some questions for you. But let's first explain like I'm five years old, what is Adapar? So Adapar is the leading wealth management technology company in the US. And so there's people who work at what are called RAAs, Registered Investment Advisors. There's tens of thousands of these and they will help you or your parents or whoever kind of manage their wealth. They'll give you reports. They'll do your trusts in a state. They'll just do everything around kind of the wealth planning man it was really freaking hard we built all this stuff and we like hooked up to schwab and fidelity because those are like two of the biggest everyone's heard of those right the biggest custodians and we had all this wrong data in the reports like what are we doing wrong and it turned out the data coming from schwab and fidelity was oftentimes wrong i'm like what is wrong with this space it's like the whole thing's a mess so it was it was a hard company to build took about three or four years before we really got to the point where it was useful to people and so you didn't give up though during that time um oh no that's like the last, like you have to have a personality where you're not going to give up.

12:54I mean, I'll give up. If it turns out someone else has already solved it perfectly. Like if Adapar already existed, it would have been a stupid thing to do. And I learned that then, then maybe you give up and pivot. But the fact that it's just a hard problem, you're not going to give up. You're just going to like double down and like fix it, you know? Interesting. So you're, you're a, you don't give up if it's too hard, too messy. It's like, that's better. That means once I do solve it, it's going to have this giant moat. Like Adapar has the biggest freaking moat. We were talking earlier about guys like Rocket Internet will like go around copying things and annoy people.

13:19Like good luck. If you want to try to copy that you gotta take a billion dollars in 10 years you know like no chance no chance you talk about hard work i when i was doing research for this i called somebody who works on your team and i said tell me about it what's he like what's it like to work with him one of the things i said was like he's always on i've never seen him just go like go dark go off or just like turn his brain off or be like i just want to chill on the beach and just drink my ties and not do anything is that well this is like accurate for you this is like my game though i mean i think you have to love you're doing right so like you shouldn't play games you know you don't like right if you're not playing you're not enjoying the game you gotta switch it up yeah so this is this is this is what i'm doing this because i really enjoy it it's really fun i'm really good i think one of them you know aristotle would talk about how like one of the highest pleasures is like is like using your mind in its highest capacity right so let's explain like you actually enjoy chess more than checkers if you're good at both because chess is it has more levels to it it's more complicated game so you you want your mind to be engaged in interesting complex useful things that are getting anything's done.

14:16It's like a positive part. I think it's how humanity works. Right. How do you still recharge or just get clarity of thought? Because one of the challenges is if you're always on, you might not have that chance to step back and reassess. You do need open time for creativity. I've noticed when I over-schedule myself, I'm not nearly as creative then. And I think the cold plunge helped, right? I don't know if that's a creative line. That was a quick 60 second, 51 second reset we had. I think I stayed in for the full minute. Yeah, you actually did two plunges. that was pretty good what is a typical schedule like uh what's a day in the life because you got your fund you got companies you got all kinds of stuff you got your podcast my number one my number one is 8vc and 8vc has a build program which is my favorite part of it a third of our money now goes towards building new companies so my favorite thing is like the strategy for recruiting talent and then strategy sessions with you know to figure out what we're going to build right and so when you you said strategy for talent what was the other one strategy for building the company yeah you're basically strategy when you're the way i look at the way i look at opportunities for new businesses is you're looking for conceptual gaps in the world.

15:15You're saying like, here's where this industry is now. Like here's how this thing is working. Here's how this process is done in the economy. And here's where it could be if it was using like the right new technology or the right new incentives or this right new effect of cultures or whatever it is that like could be better about it. And the question is not just, it's actually very easy to find conceptual gaps in the world. I'll put forward, if you spend some time with like a few smart friends and you like study in industry and talk to people, you're like, you usually will find, oh, wow, this thing could be done this way.

15:41And so the harder question is not just what it could be done, but like, what's the path to get there? What can we put in place that would allow us to get it there? How do we build this thing? How much is it going to cost? How do we make the people want it? So there's a lot of things, for example, on like healthcare and hospitals that are done completely wrong, but it makes the hospitals more money. So even though it's like clearly not the right way of doing things, they're not going to just fix it. You have to find some way to get from here to there with the actors being willing to do it. Right.

16:07So let's do an example. So give me an example, either maybe something that you're just top of mind because you're thinking about it right now maybe it's not all figured out or a recent one yeah so a recent one gap and a path that you kind of figured out 100 so uh it turns out that there's tens of thousands of loading yards around the country and logistics these are places where trucks come they get in line they drop things off they move things around they they pick things up and it's just it's a pretty interesting area and like the biggest warehouse company in the country is prologis and it turns out the founders investor with me is based in nearby California.

16:39We're back there. And then it turns out there's like a handful of the biggest carrier companies like Ryder, you've probably heard of and others. And we've actually sold a company to Ryder. So we're close to those guys too. And so because we knew a bunch of these guys, we started analyzing what can we do with AI to make your yards better? And what we figured out is that if you put just a couple of cameras in, at first, we thought we need six, but just a couple of cameras, you can kind of watch and map out where everything is, map out how efficient the gate is, map out the processes, create accountability incentives people to go faster uh create ways of pinging the carriers if it's backed up to like to use other loading errors nearby just like basic little ways on the margins of like making these things work better and and timing them and creating because you want a little bit of competition people always respond well you know if you do it properly and so we've mapped this out and we ended up founding a company with a really strong ai team uh and and we ended up kind of co-founding it with this these like you know the warehouse companies the carriers and others based on their needs and it's really cool because the way we built it with them is we have like a few million revenue already built in that we can scale up into their yards they already own.

17:37And then we can have something all the other yards want to use as well. Let's do more detail. So you're already kind of adjacent to that world because you've done stuff. But how does the brainstorm work inside your office or wherever? When does somebody ask the question, hey, could you use AI for these loading yards? Like, take me all the way to that. Like, where does the question like that even come from? Where does the nugget of insight come from? So my partner, Jake's in charge of logistics and supply chain. He's the kind of biggest driver here. and he's you know done some strategy sessions with you know our friends running these different companies we're close so we'll get together i have a vineyard in napa valley and we like bring every year like the 100 top logistic ceos and we'll like you know drink and strategize to hang out you know it's like a good way and you're kind of asking them questions to try to find their what are your problems what works are you spending money on what are you seeing and we'll bring like new entrepreneurs and we're backing and like get their take on things and we'll bring what are called eirs entrepreneurs and residents you know who will talk with them and iterate on the idea right so we kind of knew loading yards is a big thing let's go talk and iterate an idea is what we could do to apply new things to it and uh you know in this case there's a really strong ai team that happens to be in the uk that we'd met through other friends that like had worked on some really cool visual problems we thought was very very good for this and ended up recruiting them as co-founders which which worked out really well so we're constantly on the lookout for like separately for some like napkin math you're like okay so if we can improve the loading yards by this that's the size of the prize and then that kind of clears a hurdle for you yeah this is this And you know, the other thing here, which I don't love, but it's definitely helpful, is California had some new regulatory rules about things you had to actually map out as well.

19:04So they're going to have to do something anyway, but why not create more value based on – but then be the thing they put in when they're going to have to do it anyway in the next year. Right. Yeah, the rule's coming up. There's like – you know, logistics has had a few of these things. There had some rule on telematics where you had to like – I think for purposes of not making people drive too long, you had to like record things differently, which was kind of an insertion point for a couple of telematics companies we helped back as well, which is the thing that tracks the trucks and stuff. So there's things like that where the regulatory thing was helpful too.

19:27and then yeah you just you sit down you map it out you know you've known people for a long time i mean the one of the unfair secrets of business is the more success you have the more it's like a platform for a bigger thing you can do next time and that's just the way it is you just got to keep in the game because like it's like the i think when i was really young i used to think oh i could start a business and make a lot of money and then go to the beach and then that'd be like fun and that's like that's not nearly as fun as the fact that once you've already started successful once now you get to do like bigger things more easily right so it's like it's like and that's why like think when you're young partner with someone else who already has that unfair advantage help them use their unfair advantage right build something with them now you have all these extra unfair advantages you could do it again so this is this is like there's like this naive thing where like you're like this lone business founder i think you can do that but it's so hard right why play the game on hard mode yeah why play game on hard mode why not why not find and there's so many places in the world there's unfair advantages and like an unfair advantage what i mean by that is like every time you have a success you now have the respect and attention and understanding of all these people who will then help you do the next thing right and once you prove you're competent once then you know there's you know i have a bunch more things i could be doing now if i have more competent like young people around me who want to be entrepreneurs and partner with me we have a bunch of them but we always need more because there's the thing we lack we don't like ideas we don't like money we lack really talented hard-working people with persistence you know i love that um that was so good can i come back for seconds can we do another example another gap or another origin story of one of these uh ideas that that i think is it makes i'll give you another crazy guy i mean these these are these are i'm taking big swings right now so these are gonna sound a little crazy but like i was pretty bullish on china like 15 years ago a lot of us were i'd like i thought i was opening up a lot of my friends there were like reading milton freeman and your free economy stuff i'm like this is gonna be great there's so many smart people there so we start making bets there we start working there doing a bunch of stuff and then this guy xi jinping takes over and then like i'm told by all these different senior people they're like joe yeah none of the stuff that you want to work on here is going to be allowed it can't be foreign and like oh that's too bad so i just stopped working there as much and then i kind of hear from them like terrible things are happening and then a couple of them disappear then i hear he's making all these engineers work on defense like okay this is pretty effed up i'm kind of i'm kind of nervous about this now right and we can't map you start mapping it out at the same time you know we've done palantir started in 2003 so this is now like 2015 2016 and i wasn't i'm not running palantir anymore but i'm still an advisor watching it and like a few of my guys there are noticing that the fence the defense world in the us has gotten to be like a lot more dysfunctional a lot more broken there hasn't really been so what happened in defense is all these companies consolidated the 1990s after the cold war spending went down so they all merged and became like these giant primes and these primes started acting a lot more like government agencies themselves like not super nimble not super adaptive kind of like the way they get the contracts is by having the right lobbyists not necessarily but you have to have to convince con we call it innovation theater they have to pretend they're innovating but they're not necessarily great innovating because that's not because they're so big they have no competition and so we're like oh this is kind of scary all this stuff like none of the best engineers are going into these primes their stuff's getting worse meanwhile china has the best engineers they're getting better this is we better do something and so so three of my best ex-palantir guys they partner with palmer of course start andrew you've talked to him before so i backed them early along with peter and i'm like okay guys we're back in defense let's figure out what the hell else to do here so we so we basically mapped out like what are 20 new possibilities in defense i want to find 20 from just to see and then we're going to choose what's the most important one and by the way is that something you tell your team like come to the table i want to hear 20 ideas well you put you have to have like a guy whose job it is you have to have the guy who's helping him you have to have like advisors who are able to like get them into the right places to talk and explore but let's yeah let's talk to our let's talk to our smartest friends in this space let's talk to our network i want to hear you know you only hear you know about 20 ideas of new things like and i want to see where we think gaps might be and we come back and there's like eight or nine pretty good answers a few things that i thought are bad answers but but you know we find some interesting stuff and one of the areas that's pretty cool is it looks like there might be new possibilities in uh in in emp in electromagnetic pulse space and it's really directed emp of course you don't want to one of these off and screw up all your stuff but what this what an emp does is it fries electronics right and so it turns out that if you can direct these what it is that you're taking microwave energy and you're shooting it in the blast you can actually turn things off and the government has spent billions of dollars on this stuff but they hadn't really applied any of the new uh any new chips basically at all do you want that to protect against like drones for example that's one that's one of the really good ways of doing it so basically you can have a chip you can you can basically control power on very small time scales you could take you know take you know the gallium nitride emitters and you could build this correctly with the top talent there turns out there's like a co-founder who's a friend of a friend of mine from stanford who's just a genius who helped figure a lot of this out also and and you could shoot down things like 10 times farther away and then you know theoretically you could use this against missiles and turning their guidance systems off you could use it against a truck coming to your base really fast you just blast it you know it might be that the truck has a terrorist coming to shoot you and you want to turn it off it might be there's a pregnant lady they're trying to get to the base to give birth like you don't want to necessarily have blown it up right so it's good to blast it and you're not turning a truck off you're not killing the person so right pretty cool like non-lethal way of like stopping stuff that's giving you trouble right and and long story short we were able to put together money put together a prototype and you know with about with less than 30 million dollars in this in the second round we got to the point where we were we fought our way into a contest against the other primes and so so basically one of the key things in government is like we're always trying to get them to have contests the primes do not want contests how do we compete on merit not on exactly longevity relationships i'm not going to be better at playing golf with the senator right But if you can let me into the contest, then maybe we can win, right?

24:42How do you convince them to do the contest? You push the Congress to make laws to allow competition. There's competent generals. There's competent admirals. Thanks to Palantir and SpaceX, people had seen outsiders massively outperforming, and they're more open to the ideas. So we're pushing things in the right direction. Gotcha. And so you do this contest, and they didn't really take it seriously because the other guys really spent billions of dollars on this. What can you kids do, right? That's kind of like the old mindset in the U.S. in the 1950s, 60s, is like innovation is expensive. outsiders aren't going to be able to do and that was true 50 60 years ago but long story short uh we ended up shooting down the hardened drones nine and a half times further away than the other guys they actually had to have they used to use binoculars to like watch right like shooting them down really far away and and people were just like flabbergasted like everybody was lined up and it's like okay we'll see who who performs like you're going to need binoculars to see ours because it's going to be out of range compared to whatever else i think i think the people were just totally shocked in in yes that's the same amount of power is that the name of the company Epirus.

25:36Epirus is a cool name. Epirus was a name in legend of the bow of Theseus. Theseus started Athens and his bow had infinite arrows. And so this is kind of like a bow with infinite arrows because you can keep firing the pulses. That's cool. They're 10 ,000 of a second pulse. Wasn't Palantir like a Lord of the Rings reference? Palantir's Lord of the Rings. So Epirus is more real mythology. Palantir is more in the fake mythology world. But no, we have quite a few things named after Tokyo and stuff. It's an inspiring story. The idea with Palantir, Palantir is a seeing crystals, right? And in the story, this is super dorky but in the story they're built by like the elves of the uttermost west and they're basically this thing created for the humans to get rid of the bad guys but then 2 000 years later a bad guy takes over the technology right and is using it for evil and so the idea with palantir is we thought we're very civil liberties obsessed we wanted to build it in a way that would like go after the bad guys but then we're going to watch the watchers and be really careful about how the technology is used because it's very obvious if you're doing something to kill the bad guys, that a bad guy could use this for something horrible.

26:31Right. And so it is a dangerous area. We believed it was a necessary thing to create. And we, you know, we ended up eliminating thousands of terrorists. So we were happy with the results. So what's fascinating to me is that not only have you had multiple hits, but they're in areas that are different, but also just hard areas where I don't even, those are not even ideal. I don't think about these, like the logistics yards or EMP pulse technology. like these are so in different domains i'm curious um is that uh is that intentional meaning do you like because most of the entrepreneurs around me in silicon valley were like oh b2b sass you know what's a problem oh let's make a to-do list app because i know that problem i'm so familiar with it is it a strategy for you to go where to fish where other people are not fishing or is that just what happened no i think it's definitely definitely a strategy of sorts where you don't want to build like yet another like restaurant app or yet another to-do list app because it's like that's what every other 21 year old is thinking about like it's probably why i missed stripe early on as we've been at paypal and i had to like see every payment app there's like literally hundreds of payment apps i was like oh god you know because it's like because peter would make me take the meetings after i didn't want to anymore so it's like no you want to listen there's there's parts of the world that are big parts of the economy that are very important that are not as exposed to technology cultures and so you want to kind of take your our advantage is we have a really top technology culture is figure out how to expose it to something that's not likely to have seen that before and then find ways to work together to fix problems.

27:55And what are some other ideas? Either I want to either hear ideas that you're not doing just because you can only do so many things at once, or it might be that would work, but it's too small for me. Or it's not like kind of using my current platform can do bigger things. But this happens to me all the time. I see ideas that somebody could do that. I'm tempted to do it because it's so clear to me. but it's like that would be not the right game for me to be playing right now there's there's so many things if i had the right talent i'd be doing more um you know i do a lot in the wealth management world i think that the process of starting a trust and like the actual legal work around this stuff could be very automated with ai you can have like a smart lawyer and like a few smart engineers you could like have a whole new trust company and a whole new like estate management company we have we have sas software for estate stuff you'd plug into and have a lot of distribution for this ready but i would need like the right engineers and AI people.

28:45And I'm not sure if it's bigger than a billion dollar or$2 billion business, but it's like, it's still worth it, you know? And it saves a lot of time. So, but I'll give you a really big one I want to do, but I don't have the right people around me. Local government. So we just sold OpenGov for$1.8 billion. And local government, there's a lot of lessons from this company, a lot of mistakes. It took us 12 years. Zach Bookman, the CEO, my co-founder, did a great job. We learned that you only can really do things they already have a budget for. There's about 90 things local governments pay money for software to do.

29:12And OpenGov does about 40 of them. So we learn this space really well. Like it's like a big, right? It's a lot of processes. And anyway, the idea is that there's trillions of dollars spent by local governments. And a lot of them can't find the right staff for certain processes. And a lot of them have people retiring soon too. So I think a BPO, a business process outsourcing thing for certain tasks for local government that are augmented by AI could be like just a huge business to basically help them with this. And right now it's not a standard way they work, but I could see if you do it really well, it could become a standard way.

29:40And that's the kind of area where you can make tens of billions of revenue before anyone even notices you because it's such a big part of the economy. So that's another idea. So what would the first like six to 12 months of that company look like? You'd basically have to find early partners willing to trust you and work with you on outsourcing some one of those 90 processes. And it'd be something like where you're like augment their ability to do licensing and permitting faster, or you're augmenting some of their grant work on tracking their assets and asset management, or you're doing something for their budget for them automatically.

30:07It's way faster. This is a CFO doesn't have to hire three people. They can only hire one person, which is you, or something like that. But you have to go in and figure out what processes are cities even willing to let you do. And it's a very unnatural thing because it's not how they work right now. But it's one of those things where there's like a secular trend towards like, you know, local government not having enough money. So if you can find ways to save the massive amounts of money and make a higher quality service, there could be something there. Right. All right. I want to play a little agree or disagree game.

30:32So I want to say a statement. I want to hear you agree or disagree with it. So the first one is on this idea of big swings that are solving like huge problems, mission-oriented things versus like getting your first win under your belt. A guy came on the podcast and he said, my theory is first you go get your nut and then you work on your noble mission. And he's like, you go and you develop your skills, you make a few million bucks, you get personal autonomy, and then you should pick a noble mission, a noble quest and go on that. Agree or disagree with that philosophy? I agree. In general, I think it's a really good thing to do.

31:07You want to have a solid base before you do something that's like a huge, crazy, risky quest. You don't want to be like poor for 12 years while you're doing something if you can help it. I mean, I'm not saying that's going to be the path for everyone, but if you can do what he said, that's a really great way to do it. Okay. Another one. A lot of people say that ideas are cheap. Ideas are a dime a dozen. Execution is everything. And I agree that execution is very important, but I think ideas really matter too. I think that project selection, picking the right market to go after is a huge lever.