Barry McCardel on Why Everyone Is Copying Palantir’s Playbook (And Getting It Wrong)

9:42Barry McCardel:And the whole model of forward-deployed engineering that really, really worked. And the thing that people kind of miss is it's a radical deference to the field on what to build. Most organizations, they're like, okay, we've got our roadmap and all these slides. We know, we know, centrally, and I think especially a lot of founders, like I'm like this sometimes, like, I know what to build. We got to go build this thing. We just got to go find the customers.

10:06Eric Newcomer:That's part of what you're selling the investors. It's like, I have the vision.

10:09Barry McCardel:And the reality is like what really worked, at least in my time there, the way it worked was you just hired a lot of really smart people, kept the bar really high, gave them freakish, irresponsible amounts of ownership and autonomy. We were a bunch of like mid-20 somethings being put in charge of these like really high stakes deployments. and budgets. And it was just like... In some ways,

10:28Eric Newcomer:you know, McKinsey's good at that too where it's like you speak for the firm, right? Kind of. I mean, the McKinsey model

10:33Barry McCardel:is much more pyramidal

10:34Eric Newcomer:and like command and control.

10:36Barry McCardel:It has to be approved

10:37Eric Newcomer:at the top, but you get to speak. You set up a way that sort of your youngest people can sort of say the firm says blah, blah, blah.

10:43Barry McCardel:I guess, but those people are parroting the firm's talking points. Right. No one's hiring a 25-year-old. No one's hiring McKinsey to get a 25-year-old coming in and telling you what you should do about your business strategy. You're hiring McKinsey because they ostensibly have this centralized expertise and they've got a practice around your thing. You're a telco. You're hiring someone from their telco practice to come in and they've got best practices. And there's a lot of different ways to interpret what you're hiring.

11:06Eric Newcomer:The partner has inside information and then everybody else is slowing down, dresses it up and sort of process. And it's like, I know the answer we need to get to. Like explain why we got to the answer.

11:16Barry McCardel:Well, there's a lot of different mental models of what job to be done consulting actually does. there's like the like one that they'll advertise which is we're the strategic advisors we're here to provide our insider business insight and business expertise to help our partners make

11:30Eric Newcomer:better decisions like okay yeah but like there's different mental there's different like sort of

11:35Barry McCardel:different versions of this there's one that's like they work with kind of everyone and yeah the teams don't talk to each other but it all kind of gets distilled into best practices and you know it's kind of like how you can go get make sure if you're an executive you're doing the right things. The other version of it, and the version I saw in my brief stint in management consulting before Palantir was we were hired one time onto a project where we came to learn there was another consulting team from another firm working for another one of the VPs of the company on effectively the same problem.

12:07Barry McCardel:These two VPs both had, they were fighting about what to do. They both hired consulting firms and we were basically told this is my theory from the VP like I need you guys to build a deck basically build a deck like a slide deck to back that up and then we came to learn there was another VP who had told their firm that and it was like we were both like the proxy army for these like warring warlords you know like these factions and it was very weird and it was kind of like what are we doing here and

12:37Eric Newcomer:it says something about like intelligence it's in the world of models you know yeah it's just like You're just accumulating your argument when really the argument is not about the reasons. So you can kind of drive.

12:48Barry McCardel:I actually thought about that more subsequently. And I'm like, there is something kind of pure about it, which is like, it's a battle of ideas. And, you know, but I don't know. Anyway, the whole point is that Palantir, we were going in and, you know, we would get attached to these problems and then try to work backwards to like, well, what's the product that could solve this? And sometimes it was kind of a hacky thing. We just threw together this dashboard that lets you see this joined data set we have. So now you can correlate these two things. But what actually wound up happening in mid-2010s is we had a lot of cases where we were coming into these commercial companies.

13:23Barry McCardel:And they wanted some higher order thing. They wanted, well, we want to see an analysis about this. Or we want a machine learning model that shows us the correlation between this. Or we want to see whatever. And then we would have to go build. And the four deployed engineers would have to go build and kind of hack up a lot of infrastructure behind the scenes. to be able to try to pull all that data together. Then you turned that into a product. Then we turned that into a product. There was a team at a deployment in Europe that famously started productizing this. We were writing these same shape of Spark job orchestration things over and over again.

13:55Barry McCardel:We should build a thing to help do that. Then that started snowballing within that deployment and then spread. One of the really cool things about the forward deployed model at Palantir that I saw was it was almost like a community-driven adoption. adoption. You would see things go viral. You'd have one deployment go and invent something. And then another deployment would pick it up because it's on GitHub. Once we had a core platform and we got better at that, oh, your deployment built that thing. Cool. You could just install it and it would work on your platform too. Sick. And then it's open for PRs so you can be contributing code back.

14:31Barry McCardel:And then these things would gain momentum. And someone who started a project working as an FDE on a thing and they built this thing just to solve this customer, maybe six months later, they're basically a dev team now that's kind of delaminated from the deployment. And now we're like the dev team. So you got too good at this.

14:50Eric Newcomer:All right. Now you're building. Yeah. You do a different thing.

14:53Barry McCardel:You see the cycle. So there was a product some very close friends of mine built. They were over in the Middle East working with a customer there. and they built a product to be able to do this drill down data analysis to solve a problem there. A very esoteric problem, signals intelligence problem. That product was sweet. A lot of people, including my deployment, were like, that would be really useful. We lobbied and got them to deploy it for us. It was great and then it spread and spread. Now it's a super core part of the Foundry platform.

15:26Eric Newcomer:Does it have a name?

15:27Barry McCardel:It's called Contour. Like everything there, I went through multiple names. It's been named four things. And there's so many examples like that. And there's so many wonderful things about this. Like Contour is sick. And it was never on anyone's roadmap. It's just like three guys went and invented it because they needed it. And it caught on and spread. And it was never on some central roadmap. Like in Q3 2016, we're going to go build this thing. Now, the downside, the sort of invisible downside that's easy to ignore is, There was also a ton of shit we built that went nowhere. That was a complete waste of time.

16:03Barry McCardel:You had deployments where we were flying super expensive people, first class, every week somewhere. Just tons of time and opportunity cost and just piers of money.

16:14Eric Newcomer:Basically, customers were paying for it, right?

16:16Barry McCardel:Customers were paying for it, yeah. They were paying for the service version of it in the short term. There were customers. I actually met someone recently who was a customer of ours in that era. and she was she kind of was like yeah we were we felt pretty burned by you guys and i i just think it's almost like this kind of necessary downside i hate to be so glib about it but like of having this high rate of innovation in the field like you know people say you don't people say fail fast fail fast move fast and break things like these these ethos things in the valley it's really representative of what we what anyone who's really done this well really knows which is the rate of iteration and learning is everything.

16:54Barry McCardel:And one of the big problems in enterprise software is a lot of enterprise software is built by big lumbering teams who are working from 10 to 345 in air-conditioned offices in the valley with ample ping-pong breaks and blah, blah, blah, blah, blah, working off of these long multi-quarter roadmaps. And they're very sparsely talking to customers. And what you're going to get from that is you're going to get consistency. You're going to get predictability. You're going to get all these things that companies value as they get bigger. You're not going to get amazing. But you're not going to get that innovation.

17:28Eric Newcomer:Sometimes here, we didn't really figure it out. Other times, it's like, this is so valuable. In fact, these structures. We're going to spread it to the rest of government.

17:34Barry McCardel:Yeah, these structures wind up being almost designed to squash high-variance innovation. What all process does, the whole point of a process is to reduce variance.

17:45Eric Newcomer:So you're an evangelist and defender for the forward deployed engineer, but your own company doesn't do it. What is your heuristic for what company should use a forward deployed engineer?

17:58Barry McCardel:And then why did you decide at Hex not to? We have a lot of former FDEs at Hex. So what you see is a lot of startups now adopting the FDE model where they're like, we have forward deployed engineers. Well, when I critique this, it's not like to gatekeep the title or whatever. It's really, do you understand why this works for Palantir? Because I think a lot of people are cargo culting. They're saying, oh, Palantir did this and look at their revenue multiple, look at their success. If we do forward deployed engineering, we'll be as successful. And they kind of go through the motions and then they're not getting the same results.

18:36Barry McCardel:And they're like, why? Well, you don't really understand the physics of it. And for us, when we were starting the company, we had obviously lived that. But we were like, we actually want to kind of go the opposite way. We want to build one consistent piece of software that we can deliver and scale. Super out of fashion right now. Super out of fashion right now, I know.

18:56Eric Newcomer:But they're racing around Sequoia's an investor,

18:57Barry McCardel:but not on some of the narratives. But no, but there's a synthesis here, right? What we do is we just talk to customers. I'm in New York right now. I'm visiting customers. I'm bouncing all over town the next few days, just visiting customers, getting up close. And I'm doing my best not to just meet with them in a conference room. But I want to go by someone's desk. I want to be like, great, what are you up to? What are you working on? Can you show me, Hex, can you show me what you're working on? Go get up close. I'm bringing individual, I'm not bringing my sales people on those visits. I'm bringing the engineers and designers.

19:29Barry McCardel:I'm like, I want to go see this stuff. And I try to get our whole team doing that and go get in front of customers, really understand what they're doing, really understand what they're asking for, really understand what they want and what they're using as an alternative. Like go do a great job at that and talk to customers. And if we actually have a problem at Hex, it's like, I think some days it's like, I worry our EPD team is, our engineer product and design teams are talking to customers too much. Like it's like, guys, at some point we got to go write the code.

19:55Eric Newcomer:You know, it's like we talk, we talk to customers a lot and some of it's just you're a smaller company and so you can't just have everybody spinning yeah but it's a cultural but it's a cultural thing it's like i think it's really

20:05Barry McCardel:important to have people really build empathy for customers i mean i i don't i think the worst engineering in the world is done via ticket if you want to have some tickets to like manage your work

20:17Eric Newcomer:yeah i mean a core y combinator you know principle of building companies is like what it builds something people want know your customer you know that's yeah but a lot of most people don't do that

20:26Barry McCardel:They said they had the roadmap.

20:28Eric Newcomer:But what startups do you think, or smaller companies, non-Palantir companies, are doing forward deployed engineers in a smart way? I mean, the only one I know who's doing it, the Palantir version,

20:38Barry McCardel:which is basically, we don't really know what to build. We're just going to go in bed with customers, get them to pay us some services thing to cover the time, maybe, and have some exchange of value. And we'll just build the platform, depending on what we learn, is my friend Arjun at Distill. Distill with a Y. I think there may be other companies now doing some version of this, but he's the one who I know is doing it the most pure. Is he super charismatic? I think he's very charismatic. Not like insane. Which is funny.

21:07Eric Newcomer:You refer to Alex Karp earlier as Dr. Karp. He's like a philosophy PhD, right? How dare uniquely has this sort of like, we're like a wizard of Oz, we're going to do a magic thing. I'm like, can anyone else really sell that besides that company?

21:24Barry McCardel:you know in the sort of he's just called him dr carp he's just he's doctor it's like when you it's like when you grew up and your neighbor is like mr mr smith you know to you and like later in life you run into them again you still call him mr smith it's funny you guys i'm jim i'm jim now son

21:38Eric Newcomer:it's all right he talks about it like you know it's a culture of you know people will tell him like he's totally wrong or whatever but that's just a very deferential way to refer to him i

21:46Barry McCardel:don't know yeah but it was it is a very dissent people you know they're very open very transparent best idea wins. Not a lot of job title at sure. I had the same job title all five years I was there. I had people reporting to me. I was doing IC stuff. I was doing big lead stuff. It didn't matter. When you're in that environment, you forget about job titles for a while. You squeeze the balloon. The problems emerge elsewhere. There's going to be shadow hierarchies and stuff. Every cultural thing has trade-offs. I thought the culture there really was designed. It was very sharply designed around getting a very specific thing, which is maximum pace of iteration and learning.

22:30Barry McCardel:And that meant there's all these negative trade-offs. But culturally, I think we always acknowledged them and accepted them. And there was a time, I remember we had a period when I was there where a lot of people had left because they felt like there wasn't a growth path for them. Because we didn't have a job title ladder to climb like a lot of people are used to.

22:48Eric Newcomer:Was it hard to raise money without a clear title where people knew? Hard for me to raise money? I would imagine going off and starting a company, you want to be able to say, I was important here or something. It's just sort of a vague title.

22:59Barry McCardel:It was actually interesting because I did another thing in between Palantir and Hex. I went to a really cool biotech company here. It was called TrialSpark at the time, now called Formation. I remember interviewing and I was like, what do I say I do? I'm a deployment strategist. What's that mean? And I think people who were hiring from Palantir kind of knew. they were like okay we kind of knew that that was a thing um when i was raising money it wasn't a big i don't that didn't really come up it was just the product just sort of the it was just they we clearly had a sense of what we were doing and what we wanted to do say what hex does just

23:31Eric Newcomer:you know we don't make this about the company but just so people know where you're coming so we're

23:34Barry McCardel:build ai data analytics software like sometimes people call us cursor for data or um things like that it's basically you can use natural language to go asking i feel like you should just list a

23:46Eric Newcomer:We had a bunch of highly valued companies. Cursor for data, Anthropic for data. We were called Figma for data.

23:53Barry McCardel:The first arc of the company really was like, there's all these local fragmented data analysis things. You spend all this time bringing your data together and you're just putting dashboards on top. We wanted to build this cloud-based front end for all of your data work. It was very similar to what Figma had done. When we started the company, Figma was on its way north and was really taking off. and sort of an inspiration of like, oh, you can take these local fragmented workflows, bring them to the cloud, make them collaborative, and in the process of doing that, bring more people in as participants.

24:24Barry McCardel:Those were the initial thesis of Hex. And then a couple years into the journey, like GPT-3 came out and then ChatGPT came out, and this was a thing we really got entranced by. So the second half of the company, or more than half now of the company, has been figuring out how to really apply AI and now agents to work for data analysis, which is the holy grail. The holy grail, the reason people buy data tools, ostensibly invest billions and billions of dollars every year in data infrastructure is because you want to know things and you want to make better decisions. We make that really easy. We do a very different set of things well than what Palantir did.

24:59Barry McCardel:We don't do data integration and infrastructure stuff. We're very much like the app and collaboration layer.

25:03Eric Newcomer:Where do you sit relative to business intelligence? We think of ourselves as reinventing that. People don't like that space.

25:11Barry McCardel:You don't use that term. I didn't want to use that term because it had so much baggage. For a long time when people think BI, they're like, okay, I think of all the features that Tableau has built for 20 years. I think about dashboards and I want you to do that. We actually originally were very insistent on we actually think that the old way of thinking about BI is super low value. We think dashboards raise more questions than answers. This is something I've said a lot. Most of the valuable data work is not happening in these dashboards. Instead, people are trying to do it in this melange of other tools, Jupyter notebooks and SQL queries and spreadsheets and screenshots of a chart pasted into a PDF of a deck attached to an email.

25:56Eric Newcomer:You're more rooted in the role. You're hiring these smart data analysts and we want to make them out of there. Originally, our initial beachhead landing thing was like,

26:05Barry McCardel:we're going to come in and we're going to revolutionize your way your data team works right and very similar to figma coming in and we want to revolutionize now you're like you don't

26:12Eric Newcomer:need to hire them or how do you every ai embracing company has this trade-off between supporting the role versus saying oh we're helping i think we're helping to reinvent and evolve it

26:22Barry McCardel:and we have a great data team at hex it's almost like over provisioned in the sense of we just have really wonderfully and talented people on it but also hired people that have been thought leaders and writers in our space for a while who were amazing collaborators for us to build the product, but also collaborators just thinking about what are these roles becoming? And it's interesting to see our own employees disrupting their own job a little bit. And it's probably similar to what it feels like to be an engineer at Cursor or something. You're trying to reinvent the way your job works. And so we see ourselves as fellow travelers with that data audience of how we're helping reinvent the way their job works and what that looks like and what it looks like to fulfill the mission.

27:03Barry McCardel:they've always wanted for their organizations. You want data to be useful and help solve problems. Now with AI, the fastest growing part of our user base is all these other people in these companies that are now able to use data in a way they weren't able to before. In that way, we are fulfilling what BI always wanted and purported to be and what people thought they were buying with their billions of dollars of BI spend. We want to make everyone data-driven. You have a lot of dashboards. Are you feeling data-driven? Are you able, you know, is everyone able to ask their questions?

27:35Eric Newcomer:Because if you can't interrogate the dashboard, you don't know its limitations. They're really good. Look, dashboards are fine.

27:39Barry McCardel:People, there's this big discourse now, dashboards are dead. Everything has to be dead or broken or, you know, whatever. Dashboards are dead. I'm like, dashboards are fine.

27:49Eric Newcomer:They're fine. But they've always been fine. To the extent they're dead, it's because people want to ask a question directly of data in plain language.

27:57Barry McCardel:Same as when we started the company. It's like, dashboards are great for seeing what happened. this KPI, blah, blah, blah, whatever. It's a collection of these charts. Great. Fine. But often what you look at is you look at that chart and you go, okay, well, I want to ask the next question. Why did that happen? I want to drill down on this. And are there other times something like that has happened? That's what we built Hex to really excel at. And now, like the architecture and a lot of the things we built, we kind of feel like, man, right place, right time. Because the way we even structured the product is really conducive to these agent workflows.

28:31Barry McCardel:which are about depth a lot of times. The magic of these things is you can ask a first question, get an answer, and then you can ask follow-ups, and it can go now and drill in and have multiple different tool calls and paths is exploring. All these things we built, even going back to the very beginning, that we didn't know were going to be useful because we have magic robots that can talk to us now is all very useful now, now useful for way more people, which is really, really cool.

28:57Eric Newcomer:Are you using Claude, or what is the intelligence?

29:00Barry McCardel:We use Claude and the GPT models, and it's very interesting. We have good relationships with both companies. We spend time with their research teams. Who's doing better right now? They're both doing great. I think the GPT 5.4 models, which are the latest ones to come out, are really fantastic. And we have a quote. My co-founder, Caitlin, who I think you've met, has a quote in their launch blog post, summing up our findings. But they're really, really good. And getting better. I think what we're seeing is these models, the main focus of the labs right now appear to be kind of hill-climbing the models on coding tasks, which is you can kind of squint your eyes and look at Hex and be like, oh, it's like coding.

29:40Barry McCardel:It's like you guys write SQL and Python and DataViz. And the improvements on those models at coding tasks does make our performance for our domain better incrementally. But surprisingly, actually, we even saw with, I won't say which one, but one of the latest new model releases from one of the labs, it was actually a regression for the evals we have. We have a really extensive set of really rigorous data analytics evals that are not the naive ones. How many widgets did we sell last quarter? But really brutal, the real world shit that people ask of data. It's interesting to see the models sometimes even regress because clearly they've been trying to be a hill climbed on something else.

30:19Barry McCardel:One of the big problems is in data analysis it's non-verifiable. There's actually different ways to answer a question.

30:26Eric Newcomer:Right, coding has this sort of code worked, it built this thing. Yeah, you can verify it.

30:31Barry McCardel:Whereas the sort of analysis. Yeah, it's a little squishier. And so this is why we spend time at the labs. It's like trying to help figure out how can we make the bottles better for this? Should we be RLing our own models? I don't know, there's a lot of even conflicting opinions internally.

30:47Eric Newcomer:Are you spending money on your own models?

30:49Barry McCardel:We do. We run some of our own inference for some specialized tasks. We are using the GPT and Claude state-of-the-art models for our main agent backbone. We see some interesting opportunities, and it's not impossible that the lab, those Anthropic and OpenAI even allow. They used to, in the older era, had a lot more fine-tuning tools. I think they may come back in some places, too, where they allow you to do these RL regimes on top of their base.

31:16Eric Newcomer:Where are you on agent mania? Are you going to be like, are agents as representative as humans in your product? You're going to be selling seats to agents? Or you think that's sort of out of control?

31:29Barry McCardel:I think it's probably overshot a little bit. I mean, we've talked, you know, the pricing thing is interesting. You're selling seats. We sell seats. Another not cruel thing. We sell seats.

31:42Eric Newcomer:You're supposed to be usage pricing right now. What's going on?

31:45Barry McCardel:We're adding usage on top because one thing that's crazy is our weekly actives chart and our messages per week chart is like straight vertical now. It's like gone fully parabolic. Like the product is really working. The agents are really good. People are loving them and using them. Yay. They're costing you more money. The unfortunate part is our cost chart looks the same. And if you're a company today that has working agents, these things are expensive to run and you need to charge for them. So we're going to do it with our seats, have like a base amount of tokens and then our credits and then you can get above.

32:15Barry McCardel:It's pretty standard now for a lot of tools. It's like a lovable replica, et cetera.

32:18Eric Newcomer:Why seeds at all?

32:20Barry McCardel:It's a good question. I think in some ways it allows a base of predictability for customers. We're a product that wants to get really wide in your organization. And if we can say, yep, it's however many,$50 or whatever for a seed for a month, and that comes with this number of credits, and the average user, their usage is going to be covered by that. That's really nice for predictability. I mean, that is a big thing. People who have never sold or bought at-scale enterprise software know. So having it be fully variable, that is tough for a lot of companies. And generally, I do have these funny conversations sometimes about seats where even with smart VCs, which is funny, that are like, well, there's going to be pressure on the number of seats you're going to be able to sell because customers are hiring less people or whatever.

33:05Barry McCardel:And I'm like, we've grown a lot and we're doing really well. But we're still, you know, the amount of revenue we make today is still very, very small to, you know, the incumbents and where we want to go and all the tan we think we can capture. And I'm like, if there is not tens of millions, hundreds of millions of dollars worth of seats for us to sell because everyone's been laid off. The world's like ending.

33:26Eric Newcomer:Like, I need to own a lot of guns.

33:28Barry McCardel:Like, I'm like, the least of my problems is my fucking SaaS business. Like, there's going to be riots in the street. And so I think it's kind of funny, this conversation about this. Yes, on the margin, is it possible that some of our customers will just be small or in absolute terms a number of people? Yes. Are there still a lot of seats to sell for our products like ours? Yes. Do a lot of customers still want to buy seats because it makes sense for what they're doing? Yes. Can I layer a consumption model on top that helps me both cover costs and also capture upside from real power users who are getting excess value?

34:02Barry McCardel:Yes. And over time, we may tweak those dials. I don't know. A year from now, maybe we turn those seats down to zero. Maybe it goes back. Elena Verna at Lovable has this blog post that we talk about internally where she's like, I think the token cost is going to come down significantly and we're all going to be back to selling seats. Who knows? So we like having the options. Ultimately, our job is to actually meet our customers where they're at. People always joke, customers don't want to pay anything. I actually disagree. I think customers understand the value and want to pay for something that's going to provide good value for them.

34:34Barry McCardel:They want to support you. They want to be supportive. I'm a buyer of a lot of software at Hex now and I'm very happy to pay for stuff that works well and if I feel like there's price to value and if I see the bill for what we're paying for something and I'm like, yeah, but we love it.

34:46Eric Newcomer:I'm like, great, cool. Where are you on this, yeah, white collar works about to get decimated and our country's gonna be, I don't know, going for the guns. Like I literally was talking to a, you know, very respected person, you know, who was like, oh man, we're gonna enter like an insane political moment. Like every, you know, democratic cities, you know if you know all the goldman analysts or something are getting about to get fired you know then you're gonna have this sort of weird class you know just like you're gonna have pockets that people are very resentful about the new economy like i don't know how you already see it

35:18Barry McCardel:i mean downward mobility downwardly mobile elites is right the most dangerous force in america is the leading indicator well i mean forget about america just study history right like that is a bad thing. That will lead to problems. I don't know for sure what the future looks like. I would say I applaud Dr. Karp. I'll still say Dr. Karp, who I think has been a very bold voice in saying we should all be thinking about how we're using AI to increase employment and productivity. I agree with that. Now, I'm building a tool that you can look at and be like, ooh, do I need as many data scientists or data analysts as I have?

35:57Barry McCardel:Sure. I also see a lot of the data scientists and data analysts we have using the shit out of it, doing a ton, being way more productive, being more valuable for their companies. And often now starting to work at these higher levels of strategic insight and maybe their roles are starting to evolve. So it's not at all clear to me. We build an AI product. We use a lot of AI tools internally. I'm trying to hire as fast as I can. So we'll see. The other thing I think about is like where is the productivity? I mean, I can look within our own customers and see them doing more in all of this. I think a really interesting question is we're a year and a half now into coding agents being mainstream.

36:32Barry McCardel:And we're billions of dollars of revenue into tokens paid to Claude and Codex and Cursor and other things that start with C.

36:44Barry McCardel:And where's the explosion in software? We're getting a lot of vibe-coded stuff. We're getting a lot of sort of slopware. but if you look at the the software companies you buy from it's like where's the where's the like cornucopia like why am i not getting new features every day right it's so we've built a

37:00Eric Newcomer:bottleneck elsewhere i don't know my my business lead has built us you know an internal like ticketing tool that he vibe coded we're we're about to see you know when the metal meets yeah the pavement or whatever the uh uh whether you know we can accept payments and everything

37:15Barry McCardel:safely through it but um but like why like you did that but i guess that's right you can't

37:20Eric Newcomer:it doesn't need to be perfect is that riley yeah yeah that riley can do that is cool it's huge it's pretty but but like should he be doing that yeah he has a lot of things to do but uh the uh i think it'll be good you know we'll keep track of everyone um but to your point i mean do you feel pressure as the at a startup your investor was want to hear this story of like yeah we're

37:42Barry McCardel:moving so much faster because of

37:44Eric Newcomer:you know, cursor or whatever and you're saying, oh but it's not like sort of...

37:49Barry McCardel:I do feel like we are. It is also interesting. We are living you know, I've got, I've just came from our office I've walked by any engineer's desk and they've got cursor or cloud code or codex now. They've gotten very popular up on their screen. They're using it. I think we're still figuring out how to use these things. Like we're setting up cloud dev environments to make it easier to have multiple different agents that can work in their own dev boxes. Then it's like, okay, so now our engineers are just bouncing between five different agents working on different tasks at a time? Who's reviewing all this code?

38:17Barry McCardel:Who's initiating the thought on what we should build? I mean, I'm almost like really excited about the idea of just getting this torrent of PRs from all of our engineers. I'm also slightly worried because we're a product that's prided itself on design and consistency and fit and finish and feel. And our designers are busy now, like trying to do polish commits onto all these PRs. And it's, how do we even get all this out into the product in a way that our customers understand it's going to be changing fast and that's exciting but also stressful it's like i think we're all still figuring out how to

38:48Eric Newcomer:metabolize all of this something tells me there's just like a pace of that humans can absorb the

38:54Barry McCardel:products change right i think it's literally like if you eat too much food like your body can only metabolize so much of it right um and uh like i think we're still just figuring this out and so I don't know that these things are going to happen overnight. If your model of a Goldman analyst is that they're just doing this really rote, repeatable work that an agent can replace, sure. Is that all that a Goldman analyst does? It's the same I think about this for data people. If you're like, how do we understand those jobs? What are actually the bottlenecks in companies doing certain things? I don't know.

39:30Barry McCardel:We're still so early in figuring this out. Empirically, it's interesting to me. I've observed almost like coding agents have disrupted product management faster than engineering because the engineers are almost becoming PMs in a funny way where it's like, it's kind of unintuitive, but like a lot of our engineers, you know, are now, their job is less like, okay, I take the product spec that was written in English and I translate it to code syntax. Like that used to be the thing. It's like your engineering candidate, oh, you know how to take English and turn it into TypeScript. great, welcome. That was kind of like at least the first order heuristic of what we're interviewing you for, like coding interviews.

40:10Barry McCardel:Well now there's magic robots that can do that.

40:12Eric Newcomer:And so instead of that, so we're gonna keep our smartest people, the engineers and shift them to sort of the strategy rather than,

40:20Barry McCardel:yes, it's not like a product manager,

40:22Eric Newcomer:I would never be an engineer, but I mean, that is sort of, it's like, okay, if they're not writing the code, they're still very smart and understand sort of the product. And so they're gonna become the product managers.

40:32Barry McCardel:By the way, the type of engineers we try to hire are those that like talking to customers and like thinking about what to build and enjoy our product space. It's a cool product space. So, yeah, those people have always liked that. Now they just have kind of more time and brain space for that. And they can be thinking about what to build and how should this work and the architectures and all this. And it's really cool to see. So we'll see how these roles change. What designers do. Our designers have coded for a long time. But now they're like coding a ton. They're like mostly coding. it's like well are you what what do you do you're just like are you just an engineer that has like really good taste and more tattoos like what's the it's it's it's very interesting to see happen and i internally i'm just trying to lead everyone through it saying we're all learning this together and um if you don't disrupt your job someone else well and don't worry we how many people do we need to get to a huge exit a hex i don't know more than we have today so and more than our competitors so We want to get good ones.

41:30Barry McCardel:You guys are all safe. Let's all figure out how we can all use our time really well. And then we'll go build this thing and have it be really valuable.

41:36Eric Newcomer:I wanted to go back to Palantir and some of the – I mean, you know, obviously we just had this – Anthropic took the headline because they were the ones sort of fighting with the government over – Yes. Fighting with the Department of War or Defense, depending where you sit on things. I'm not going to take a position on that. I've gone back to defense. I mean, defense was established by Congress. So it is sort of a branding exercise. You don't need to weigh in on this. But I think core to the conflict, you know, Anthropica had two concerns, right? One was this autonomous targeting, and the other was this piece that we are going to do domestic surveillance.

42:14And I think embedded in the domestic surveillance is that fundamentally, because of how much better their technology and technology generally has gotten,

42:22Eric Newcomer:The government can just acquire publicly available data and then come up with this NSA dragnet that wouldn't have been possible when Congress was writing laws about domestic surveillance. And obviously Palantir fits into this. So what is your view of what's possible in terms of what?

42:40Barry McCardel:Exhibit A in a tech company that lives in that gray area. I was there 10 years ago after the 2016 election. and it had been not so long before that that we had like an, it was like an all hands or some sync version we had of this that was like doing a, like a win, like the deployment team lead came up on stage to like talk about our work with ICE, which we're really proud of because we were working with this team called HSI. It's like the really good guy, you know, whatever else you feel about other parts of the government, he's stopping human trafficking and like drug smuggling, like go, go HSI.

43:16Barry McCardel:Yeah. and then like you know that election the vibe shifted and all of tech shifted 10 years ago is kind of a long time to remember back but like and all of a sudden this became really tough and we had internal concerns we had protests outside the office we had applicants not wanting to come people not people not applying or pulling out of interview processes because we were evil and there was a big clamor internally to get dr carp alex carp to to say something publicly say something engage on this and i it i was i was among the frustrated on that i'll confess like you know i'm interviewing candidates who are like half the interview they're just asking me questions about how i like i can sleep at night or something i'm like it's also so secretive that it's hard to even necessarily know even inside the company and inside we knew and and i think we had an appreciation and i still have a deep appreciation for like this was a company that recognized that to serve the government, to serve the government in these spaces.

44:15Barry McCardel:You have to be comfortable in the gray areas. And that doesn't mean moral compromise. It actually means moral clarity and having principles, even when they're hard. And in retrospect, I think he was totally right. And they're much more public engaging in the forum now. But I think at the time, the right thing for us was to just stay quiet, not engage, not inflame this and say, let's focus on our work and let's focus on doing the best we can and also embrace the fact that we live in a democracy.

44:43Eric Newcomer:But do you have a view on this Anthropic blow up specifically?

44:47Barry McCardel:Well, yeah, that's my, yeah, that kind of segue. It's, I love Anthropic. We're partners with them. They're customers of ours. I don't, I say this with love, but I do think it's like the heart and the head. Like, from a heart, you understand some of these concerns. Like, would I like, would most Americans vote for doing mass surveillance? You know, you can go gather up all this information and figure out where everyone's loyalties lie or something. Like, no, I think most Americans would not want that. But that's why we have a democracy. And you can vote, people can vote for that. And I think what we came to appreciate at Palantir in sort of respects is like, well, okay, we're going to have red lines in what we're willing to do.

45:27Barry McCardel:Does the government have to call us every time they want to use Gotham, which is our product every time there was a new Palantir, to use this thing?

45:33Eric Newcomer:Isn't this an extreme deference to the executive branch specifically? I mean, it's not like Congress has passed a law that said, oh, we love Palantir. Like, you could have a belief that, like, our product is so significant.

45:46Barry McCardel:But they have.

45:46Eric Newcomer:I mean, Congress sort of yielded power, but they haven't, like, expressly said, this is great. I mean, I'm not like a constitutional scholar.

45:55Barry McCardel:I'm just a guy.

45:56Eric Newcomer:But I do think, and I don't want to, you know, you're just the one here talking about it now. But like, I do think there's this argument that it's like, oh, we're deferring to democracy. It's like you're deferring to like one branch that's taking on a lot of power and saying we represent democracy.

46:12Barry McCardel:This is what it looks like to live in a republic. It's messy.

46:16Eric Newcomer:Right, so it requires on the part of other actors to sort of interpret what the will of democracy is beyond just like deference to the executive branch.

46:24Barry McCardel:You described a republic.

46:25Eric Newcomer:But the argument that Palantir is making and trying to suggest anthropic embrace is sort of like yield to just the executive's interpretation of what the will of democracy is.

46:36Barry McCardel:Yes. Yes. Yes. And that will of that executive is bound. That's Article 2 is bound by Article 1, the legislative branch and the laws they pass. And look, I'm not going to get into like debates on like current Supreme Court issues or all that. But at least if you read the Constitution, it's pretty damn clear. The legislature passes laws, including the power of the purse. They control what money is spent, and the executive executes on that. And there's all these unitary executive and all these things. I'm not going to get into all that, but I will just tell you, even you see this play out now, there is a funding bill issue in Congress right now for Department of Homeland Security where there appears to be a legislative majority or a controlling legislative majority that is not comfortable with funding climate security at the way that they have been.

47:30Barry McCardel:And that is the democratic process working out. And you can look at this current Congress and say, well, they've been overly deferential to the executive and whatever. And that may well be, but you see this happening. And now people are looking forward to the midterms and people are worried about that. And they're going to react to the public sentiment. And if the public doesn't want something, great. What a wonderful opportunity for a political entrepreneur in Congress to get up and propose a bill banning this type of mass surveillance. Just outlaw. You can pass a law to do that. That is a thing.

47:59Barry McCardel:That's your job, actually. That's literally their job. If this is a thing we don't want to happen in America.

48:03Eric Newcomer:We both want Congress to take a more active role in saying what they support and what they don't. And I agree that, I mean, ISIS and Homeland Security is a good example where Congress is stalling on it. I mean, we also live in this liberal democracy where unless it is a, I understand in a war, people get drafted and summoned into government service. But in normal times, I think the belief in America is that you don't have to do something for the government if you don't want. You know, you're not like obligated to. Oh, they pay taxes.

48:32Barry McCardel:Right.

48:33Eric Newcomer:Besides sort of making the whole thing work with taxes, you don't have to like go work for the government.

48:38Barry McCardel:You don't have to. And Anthropik doesn't have to.

48:40Eric Newcomer:No, no one does. But the criticism of Anthropik is they sort of need to be summoned into it.

48:48Barry McCardel:Maybe, but they could just, an option they have is say, we actually don't want to work with you guys. We're going to withdraw from the contract. Best of luck using other AI providers. Like that's allowed.

48:58Eric Newcomer:They're not, there's not the, there's a War Powers Act.

49:01Barry McCardel:There's a War Powers Act where the government can mandate, like I think it's called War Powers. I think this is like we saw some of this during COVID.

49:08Eric Newcomer:That's one of the ones they floated. But they ended up saying, oh, man, it's a supply chain risk. It's more dangerous, apparently, than DeepSeek.

49:15Barry McCardel:But that's almost doing the opposite. They're almost cutting them out. I mean, I'm just saying that an option they have is just to not do it. Now, going back at Palantir, one of the things we talked about that I do believe to be true is if we're not engaging on this issue, other companies with less scruples, with less principled point of view, and by the way, less effective software, are going to. and we have a privacy and civil liberties team at Palantir that I loved. I thought a lot of them are still there. They're incredible people, very thoughtful, that we worked with very closely on a lot of these things.

49:49Barry McCardel:And you kind of look down the street at the other defense contractors and you go, they don't have that shit, or they do. There are a lot of lawyers. It's like would we rather be the ones engaging on this and thinking critically about it and trying to find the synthesis of how you have robust defense with civil liberties or would you rather cede the field? And for us, the calculus was we would rather be here, even if it's a little uncomfortable, because that's our role in this pluralistic, messy democracy we have.

50:17Eric Newcomer:I mean, I agree that there was sort of a misguided time where the tech industry said, we shouldn't do, you know, Google didn't want to work with the government or, you know, there was like, we're not going to work with the Department of Defense. We've moved to a point where it's patriotic to support the government. Yeah.

50:31Barry McCardel:But I think there's nothing like multiple wars breaking out to kind of get Americans to like wake up and be like, oh, maybe we need good capabilities and weapons. Like Anderil was like super unsexy, off spec, not a sexy VC thing. And then all of a sudden a war breaks out in Ukraine. It's becoming like a drone war. And everyone's like, Anderil's amazing. But I've always thought Anderil's amazing. I know all the founders. And, you know, but it was funny to kind of see them going from these like black sheep to now these darlings on the other side of a war that kind of reminds you it's not the end of history.

51:02Barry McCardel:Like the Ukraine war is a reminder that like, no, this is that we live in a dangerous world. But the argument that you're making that Palantir, you know, we're so it's so thoughtful about, you know, sort of civil rights or whatever, or like understanding the effect of its technology.

51:18Eric Newcomer:The argument right now is that tech companies shouldn't be the ones deciding and the government should have total control.

51:27Eric Newcomer:That's the line from what Hex said, Palantir seems to say, whoa, we're not creating contracts that limit you.

51:35Barry McCardel:But they can just choose not to engage in a contract. There was work. I can't talk about it. There were things at Palantir that we just decided not to do. Countries we decided not to work with. lucrative lucrative deals where we sent teams out to go diligent something and came back and said this is this is not an area we are not comfortable here we don't think we can actually have our software to be deployed in a way that we think is going to preserve the things we want we're just not going to engage that's an option but anthropic you know

52:04Eric Newcomer:had a contract they liked and then the defense department I've read their stuff I've read Emile Michael's interview with

52:12Barry McCardel:Empirate Wires. I don't want to... The last thing I want to do is get in. I'll just say that...

52:20Eric Newcomer:You said you want to be spicy. It's just of the moment.

52:23Barry McCardel:I'm not trying to get nuked. Are you neutral on it? You're supportive of the department. I was raised at Palantir. Part of the reason I was there and part of the reason I still am supportive of is I think the West needs the best capabilities. and one of the things that defines the Western society and the Western alliance is democracies and these republics we have. And the United States, this wonderful republic we have, that in every generation has felt broken in some way. I always think it's funny when people, we've never been more divided. Bitch, we fought a civil war. Like, this is just what this looks like.

53:00Barry McCardel:And no one's ever going to be totally happy with the current state of it. And that is kind of just how these things work. And I don't say that to be fatalistic or even like, oh, well, just whatever. Government use the software however you want. I just think it's like the voters take – there's a saying I like, which is people deserve to get what they voted for, good and hard. And you know what? They're getting it good and hard right now.

53:28Eric Newcomer:I just think we're still a liberal society where people participate or don't. And Anthropic is being bullied into participating. like the government is using the tools and you control whether you're supportive of them or not you know it's it my my issue is not yes the defense the department of war is in charge of making war and anthropics in charge of using their technology how they want and my my issue is them using every lever they can to coerce anthropic to acting against their moral beliefs i mean this

53:57Barry McCardel:administration has um has been not been shy about employing coercive techniques look at law firms i I mean, there's a lot of examples. And a lot of people want to abstract away the current administration.

54:07Eric Newcomer:Like whenever we're having this argument, they're like, oh, the executive, whoever they may be. And it's like, it's executive with a track record.

54:13Barry McCardel:People had critiques of the last administration and the way that they were acted coercively toward private enterprises in some sectors as well.

54:20Eric Newcomer:By not inviting Tesla to electric car. There's other examples.

54:23Barry McCardel:People have stuff around crypto.

54:25Eric Newcomer:I mean, I'm just saying, like, you can point these.

54:30Barry McCardel:This is not a novel new, like, criticism of government. You are right. We live in a liberal democracy. One way you could look at this is Anthropics getting bullied. Another thing, something I will say I admire, is Anthropic is saying we're patriotic Americans. We want our government to have a great capability. We are proud of the product we make. We want it to be employed. And we just have some concerns and limitations on where it can be employed. That is a perfectly valid place to be. And the government, if you them at face value is saying we're we want to work with private enterprise but we need to have the flexibility to go engage in the things we have to engage in to do the things we want to do emil michael in that post was like you know we do a lot of stuff with guns if you're not comfortable with it as i'm paraphrasing but if you're not comfortable with that maybe maybe you can work with us and like i do think that's one of the things you kind of have to stare into like again going back to the time at palantir like there's things we did and worked on that you kind of look at you like oh not because it's like morally repugnant but it's like does any you know no i would certainly never stand up and like celebrate like people dying like even if there are adversaries there's something there's just you know people kind of look at that and it's like you the the reluctant warrior right it's like the and these to engage in these areas is to have to engage on the reality of this, the gray areas, the grisly on the ground way that the sausages kind of made.

55:59Barry McCardel:And I think you can try to abstract that away, but it's -

56:03Eric Newcomer:I just think, Atterapic picked this fight at a very savvy time. I mean, we just went to war with Iran. We bombed a school. It's almost like no - It was all in Claude's - They have no plan. It was all in Claude's plan for us.

56:15Barry McCardel:They were about to be wrapped into this whole thing.

56:17Eric Newcomer:I don't know. I just think that - It's almost as if Claude planned it.

56:21Barry McCardel:These people we're deferring to are, anyway. I don't know. I'm not trying to get overly involved. All I'll say is I have a lot of optimism and hope this gets worked out. And I have a lot of optimism and hope for how AI can just improve the way our government works and improve the way our military works when we need to unsheathe it. and I think that it is our job as citizens to be engaged, to vote, to lobby our representatives, to make sure that if there are limitations we want to add around that, that those are done. And I think we're going to see that play out in the democratic cycles ahead as we always have.

57:00Barry McCardel:That's how this process works and we will watch it work. That's my take.

57:06Eric Newcomer:I want to move on to another topic. I mean, our last topic before I let you go. Just raising money from venture capitalists. I feel like I have a lot of VCs on the show. They tell their story about how things work. As a founder, I'm curious what you really look for in VCs or who you think is doing it well right now.

57:26Barry McCardel:One thing I try to do is when I do rounds of VC catch-ups, either current investors or prospective ones, I try to have the same conversation each time, pick a topic. It's very interesting doing the side-by-side. and not like it's not one dimensional like one is better or worse just like a lot of different dimensions and one of the things i feel like i've come to really look for is like first principles understanding of things so like we were talking about pricing until about pricing like the kind of like thin vc version is like kind of regurgitating a blog post and sort of well these other people are doing this and these guys are doing this and here's what margin they have and all this i'm always trying to figure out like the first principles version of it of like Like if we really strip it back and understand the technology and understand our customers, what do they want?

58:13Barry McCardel:And you can kind of tell when a VC has been like really involved and very thoughtful with one of their portfolio companies where they can say they're like, oh, well, at this company, the way we looked at it is this. And what we found is this. And we had this one customer told us this and that made us think about this. And, you know, like they can really like unpack it. And it's very different from like sort of the blog post version synthesis. us so that's something i feel like i really really look for um and someone who's like thinking about things clearly and with fresh eyes and people you know there's like a sort of criticism of vcs like the herd animals or whatever and there is a lot of that look but i i'm always interested when when i talk to someone who's got like a really novel insight or opinion or a contrarian take because at least i know i'm getting like fresh thinking it is i feel like i used to roll my eyes at

59:03Eric Newcomer:first principles thinking. I think now that I have a business, I mean, you know, media is its own sort of animal, but there are things where it's like, if you apply generic principles of like well-run media companies, some are lessons I should definitely learn. And some you'd say, oh, you really don't understand some of the core things that might make my business work. And you really do need somebody who has like empathy for like, what is working about your business and what is sort of like the core sort of non-negotiable. And if you have someone just sort of sloppily applying like just like heuristics without understanding like what's really working, it could send you on a total detour.

59:43Eric Newcomer:Totally.

59:44Barry McCardel:I do a lot of angel investing. I love it. It's like a great, I'm busy with my day job, but it's actually like a great kind of like mental stimulus. It makes me think more about Hex. And I try to be really careful. Like if you're a founder coming to me asking for advice, you have to sit through my five minute like disclaimer. This is why you

59:58Eric Newcomer:trust anyone else you are in it end of one like i'm probably wrong take it with the greatest

1:00:04Barry McCardel:thought because i just i like i and what i try to do as best i can is tell people i will tell you what we did and why i think it worked or didn't work i will try to unpack from first principles the facts on the ground what we've seen the data to back it up and then you can draw a conclusion on whether those like ground facts how well those map to you because that i think is the thing you're trying to do. And I find this experience myself. I'll go talk to founders and get advice. Talk to three really smart founders and get five different opinions. And it's like, well, they're all really smart. Like Dylan at Figma said this and Kesar at Applied Intuition said this.

1:00:41Barry McCardel:And I'm like, oh God, they're opposite things. What do you do? And it's like, well, did you really understand the grounding thing and the path dependency? And the other part of this job is like, it's a lot of luck. And it's a lot of circumstance. And you ask, well, how did you find that great executive? Oh, well, I did the search like this. But also, someone happened to be available on the market. And it's always the survivorship bias thing too of like, well, this worked for this person, therefore it'll work for me. Or the failureship bias thing that you also hear from a lot of VCs, which is, well, this other company tried to do that and it didn't work, therefore it won't work for you.

1:01:20Barry McCardel:And so, well, what was the first principle of why it did or didn't work? And can you really understand that? That's like a thing I'm always trying to grasp for as best I can. And usually failing, but sometimes getting right.

1:01:32Eric Newcomer:Barry, thank you for coming on the show. Thank you. This was fun. That's our episode. And thanks for sticking around to the end. Please, if you've made it this far, you've got to like, comment, subscribe. Excited to grow the channel. And of course, you can find our writing and reporting on startups and venture capital at newcomer.co. We also host events. You can check out what we're doing at newcomer.events. Share other podcasts. Help us get distribution. Support the channel. Comment. Support. Like, comment, subscribe. You know. You know the deal. Thanks. Thanks for being on the journey with us.

1:02:05Eric Newcomer:All right. See you next week.