The Operating System for Self Driving Cars (and Tanks, and Trucks...) With Qasar Younis and Peter Ludwig of Applied Intuition

0:05Casper and Peter, thank you so much for joining me today on New Priors. Thanks for having us. Thanks for having us. I came as casual as I could for the San Francisco. I was worried about you. You're usually buying a job. You're wearing something nice. That's kind of, that's concerned. Is everything okay? Yeah, it is. It is. Two things. One is, you know, I wanted to fit in with the San Francisco vibe. You know, Sunnyvale. I usually dress more like people. I think that's my outfit. And then secondly, you know, I got this Carhartt, you know, thing. And I don't know if you guys know, Carhartt is suddenly cool.

0:37I got the memo from the, you know, Cool Club Newsletter. It's a Detroit brand, if anybody doesn't know. We're representing Detroit and Silicon Valley. Wow, nice. Very nice. Yeah, I just thought, I thought... You're not impressed. It's okay. I'm extremely impressed. I thought it was one of those things where, I think you guys just raised at a$15 billion violation, and so I thought it was more like kind of, you're done. You just checked out now. No, no, no, no. So last night we were having dinner with one of the top three global OEM CTOs, and he says, you know, I can't reveal who it is, only because it's active, active negotiations on a deal.

1:08And he says, well, you know, congratulations on the fundraise. How do you feel? And I said, well, you know, honestly, I feel a little nervous. You know, we have, we have, you know, big goals ahead of us. He said, don't be a coward. Attack. I will send that message to my team. Don't be cowards. Attack. I mean, I guess I'm in general, when I think about you also, I've known you for over a decade. Yeah. I think I've led two of your rounds. And I feel like you're the most successful, most quiet company in AI. You're now at over a thousand people. You're in the hundreds of millions of revenue. You've been profitable the whole time.

1:44So you haven't spent a dime, I think, of any of the money that you've ever raised, which is pretty insane from a - Unbelievable to me as well. Capital efficiency perspective. We're trying to change that quiet part, by the way. Yeah, but you've been super quiet and stealthy. We came up to San Francisco and wore a jean jacket. Yeah, welcome. See, mom? Yeah, exactly. Could you tell people a little bit about more generally what you do? I know you have three lines of business around engineering, tooling, autonomy, and then sort of in-car related product. Could you kind of break down the origins of the company, how you got started, what you focus on, and just kind of give a primer?

2:13Because I think, again, you've accomplished an enormous amount. There's still a lot ahead of you, but my gosh, you've done so much stuff. By the way, this is directly for founders more than anything else. There's a huge value, especially when the company is young, not to be constantly out there. I'm sure there's downsides as well, like people don't know you and it's harder to recruit or whatever. That's never really been a huge issue for us. But the advantages you get is you can operate, you know, the moment you say we do X, there's an expectation you do X, even if X ends up being wrong. And so I think that like, it's like, you know, keep your identity small kind of view.

2:46And so, yeah, the company Applied Intuition is a$15 billion. We just raised$15 billion profitable AI company. And with that, what we really do is we're, we're in, we build vehicle intelligence. So it's a broad category of how do you take this, you know, all the positive things about AI that we're seeing in, you know, in LLMs and in chat and you take them into the real world. So how do you put intelligence in the cars and trucks and tanks and fighter jets? And as roughly as those three business lines. So we originally started with engineering tools in order to build and deploy that type of, you know, intelligence into vehicles and tested and validated.

3:24because unlike your laptop, these are safety critical systems. This was initially stuff that was built, I think, for the self-driving world, right? You were doing simulation environments. Exactly. And then we expanded it to all software in the vehicle. That's broadly what the company does. In terms of what's unique about the company, I think, is we've always thought pretty deeply about building products that are going to be used quickly. If you're in the AI universe, especially in eight, nine years ago, in the autonomy universe, a lot of research happening. And research can be super exciting and actually quite, what's the word?

4:04Like losing huge, like metric tons of money without actually, you know, you can convince yourself you're doing some really, really impressive things. How do you describe the company? Just underlining engineering tools, our vehicle operating system, and then autonomy and applications. And so we started in engineering tools, But you sort of reach a point where in order to make your engineering tools better, you actually need to be developing applications yourselves because that sort of informs you and if we're really getting to next generation technologies. And then it comes to, OK, well, I want to run these applications on vehicles and, well, we need a great operating system.

4:38And we think that we can do something better than anything else in the world. And so that's sort of how we end up with those three business areas. I mean, there is a company that executed the strategies, Microsoft. Yeah. 75 to 82 was doing tools that people don't remember. That was Microsoft's review. Then they went into operating systems and they went into applications like, you know, Office and Windows and stuff like that, or Office and Word and stuff like that. We're doing the same, except the hardware is not PC manufacturers. It's cars and trucks. And I think what's, you know, one of the old Peter Thiel things, like what do you believe to be true that other people don't believe true?

5:08When we're starting the company, if you remember, there are a lot of startups in 2016, 2017 doing self-driving. And our view was there's no path to autonomy. There's no path to like this next generation because without the manufacturers in the loop. Today, we're almost like a Tesla minus the hardware. We do all the stuff that a Tesla has or some other companies, but we put it, we didn't partner with manufacturers to bring that technology to them. Yeah, it's really interesting because if you look at the self-driving wave, to your point, there's like two dozen different companies or three dozen, you know, tons of companies.

5:37And then if you look at the ones that have arguably been most successful in the US, it's two incumbents, right? It's Waymo, which is a subsidiary of Google and then Tesla. And then you guys are sort of providing that same sort of stack more generally for any automotive provider to sort of adopt and use. And I think it's not only the self-driving or the autonomy side that you folks really focus on, but I think the OS is really powerful. You sell, to your point, defense, construction, but a lot of your business is the giant automotive companies around the world. Could you talk a little about what you're providing through that OS and why it's beneficial and what does it actually do?

6:10When we refer to the vehicle operating system, we're talking about the full software stack that runs on these embedded systems that run on these vehicles. So at the lowest level, right, we even do bootloaders because if you want to do very reliable updates to embedded systems, you have to control the bootloader. And then you go above that and we can talk about the actual technical gory details of the operating system itself. So think about like a true operating system. But on top of that, you have to have the middleware, which is responsible for some abstraction, but also some really important safety critical data transport aspects of it.

6:39On top of that, you actually have the applications that are running and also many, many layers to those, of course. But they end up really controlling the vehicle, but then also displaying information. And that information could be displayed to someone who's in the vehicle or it could actually be displayed to someone who's outside of a vehicle. Let's say in the mining example. What I mean, Peter worked on Android at Google. That's where we met. We worked together at Google. What is the big lessons from Android? Especially on hardware diversity, right? That's kind of the I think the big, big innovation of their Android.

7:10Android, it's an incredible story from where it started to where it is today. I think it's true that Android is the number one OS in the world. Like it runs on more devices than anything else by a healthy margin. The big thing that Android figured out was just how to run applications uniformly on a huge variety of hardware. And how to do that in a way that the user experience is actually consistent. And there are a lot of lessons, both at the technical and non-technical level, how to actually enforce that. So there's this thing called the compatibility test suite, which is super important. And it's this enormous set of tests and test infrastructure that allow these hardware makers.

7:50I think it's like Northam. It's like millions I've heard. Yeah, it wasn't even as big when we were working on it back then. And, but what do you get? Like you get this OS that can be used by billions of people on like many thousands of different types of devices. And so certainly in our work, we've taken inspiration from some of those techniques and practices to make sure that our technology is applicable to such a wide variety of vehicle types and chipsets and all of the details there. It seems like one key insight there as well is that if you look at the supply chain for automotive, there's lots of different manufacturers for a lot of different modules.

8:22There's sort of embedded intelligence, really embedded systems on each one of these devices. And it's really hard for traditional car OEM to actually make use of some of the capabilities of these things because they don't really have a good either API or interface to interact with them. I think you all have kind of built out that full layer to hook into all these different Yeah. And I would adjust that the, you know, that's not really embedded intelligence. A lot of the stuff that's the software that's on these. It's embedded nonintelligence. Yeah. A lot of just IO, you know, it's the seat warmer turns on and off and you can actually pull all of that into a central, you know, CPU.

8:58And that gives you a lot of efficiency, not only in just the ability that now all the signals are centrally processed and you can do more interesting things like Tesla does. Yeah. But it's also just cheaper. You're taking all these like redundant systems, which are all kind of, you know, poorly managed and built with different software stacks within each of the subcomponents. And you're removing wiring harnesses. I mean, thousands of dollars of physical hardware can literally be removed to get more functionality. So you're basically streamlining the guts of a car and you're replacing hardware components with software.

9:30Yeah. And then removing a lot of the... And I would say that people who grew up, let's say purely in the Silicon Valley mindset or purely in the mindset of, I can go to the store and buy this computer and I can write software and this computer runs whatever operating system and it generally works. You're so abstracted away from some of the very complicated details of how that hardware works. It's like overly simple. When you actually get into safety critical systems, there's so much complexity in how reliable this hardware needs to be. how long it needs to last when it's actually deployed in the field.

10:05And then just the cost constraints that you have, like fundamentally, cost matters a lot, especially in embedded systems. And you have all these constraints and we still want to do really advanced things. And I think something that we've done really well is figuring out how to do some really advanced things, but actually in a cost effective way. In the kind of, you know, current zeitgeist of Silicon Valley, where you have humanoids emerging, a lot of these questions are not answered on that side. Now, it's better in the sense of a lot of these companies are kind of verticalized. You know, they're doing the hardware and the software and the system is way it's more complex and more simple than a car.

10:38But in trucks, business, car business, tanks, jets, you're talking about hundreds of companies, sometimes thousands of companies working on an individual product. And they all come with very different views. And nobody's really stitching all that together except. Yeah. And we don't, since we're not, uh, we don't have a wiring harness business and we don't have a, you know, we don't make chips. We can, or we're not a cloud provider. We can really come to the manufacturer and say, Hey, you actually need a new way of, uh, you know, operating this vehicle. So, so that's one area that you have. Are you able to announce any customers that are working with you on this?

11:12Yeah. I mean, publicly, we have a bunch of customers publicly are the, the hero customer that we'd come out with was Porsche. So I think everybody knows. and generally considered to be the most competent OEM on the planet in terms of, you look at a Ferrari, a Ferrari will make more dollars per vehicle because it's truly a luxury good. But Porsches are the most profitable cars on the planet. There's 30 to$40 ,000 in profit per vehicle. So they found that sweet spot of high volume and, you know, ability to charge a lot because of the brand. And I think, you know, a company like that is getting pressure from a Tesla that says, you know, people are looking at those, even though they're very different products, people are looking at those.

11:51And so I think we're helping them offer, you know, offer a consumer experience, which is at par, if not better. And I would say it's a pressure from Tesla and also the upstart Chinese companies. There's a lot of interesting stuff happening in China. How do you think about that? So I think one of the big shifts that's happened globally is this rise of Chinese manufacturers like BYD, Xiaomi actually launched a car, I think, within five years, which is pretty amazing. Because I think there were like cell phones and other sorts of hardware, but they never really did anything in automotive. The claim is that these systems are actually pretty good on the self-driving side and in a variety of other ways.

12:26What do you view as the global impact of these Chinese car manufacturers rising up? Lots of nuance here. So number one, they are good. So the car business is extremely international. And what I'm going to say next applies also to truck construction and mining. But in the 80s and 90s, the big boogeyman was Japan. And if you grew up in Michigan and Detroit like us, that's all it was. It was Japan's coming, they're buying Rockefeller Center, and we're going to all be speaking Japanese soon. Obviously, it didn't happen. Then it was the Koreans. So 2010 was Hyundai's coming and all the conglomerates there.

13:03Kia and things like that. Yeah, exactly. Genesis, et cetera. That obviously didn't happen. Right now, the newest version of that is China. There will be another one, but there'll be Vietnam or India or something will come after China. So what the upstart wants to do is they look at the industry, they don't have any legacy platforms and so they can enter the business with a blank slate. And you get a lot of advantage of that. You don't have all of these, you know, you have hundreds of millions of vehicles out that you're servicing and maintaining and brands that already have some legacy to them.

13:31And that's allowed them to, with this EV shift, introduce they being the, you know, the Chinese Communist Party and broadly the Chinese ecosystem to introduce lots and lots of brands. at lots of different price points that all have pretty impressive products. Though it's not. So the autonomy stuff, you know, we go to China regularly and we test drive these vehicles. Super impressive. And better than Tesla, to be like very, very clear. On autonomy or other features? On autonomy and other features. Yeah. All around, all around. Like super impressive. I think if you look back at, you know, Elon, some of his statements about he's seen the same thing over the years.

14:06And then you can just honestly look at the sales of Teslas in China. There's not, it's not that impressive. It's because if you go there and you do the comparison, the local stuff is really good. Now, the stuff that's not talked about often is there is subsidies that are happening. The Chinese consider this to be a national asset. They look at, you know, the car business as a, as we look at defense. Yeah. And they're willing to subsidize it. And because fundamentally the car business in some ways, and any of these, matter of fact, are there like jobs programs. Yeah. So you have hundreds of thousands of, you know, people who work in these industries and then service these industries.

14:39and they create entire economies around cities. We think about like a, you know, one manufacturing plant, let's say it's a billion,$5 billion in investments. The large OEMs have dozens, sometimes hundreds of manufacturing plants. And these are, when you talk about global industry, you don't get any bigger than in the industrials and then automotive. And so China's like, hey, if we're going to be a superpower, we need to have a real industry. I think you fast forward five to 10 years, you're going to see a heavy consolidation. You're seeing the early versions of that we saw, you know, already, which is the, like the Huawei's of the world are starting to become this like new generation supplier.

15:15I mean, if we could be a company, we would be Huawei. Like it's a super impressive company. Not on the, everyone thinks about Huawei on the mobile phone side. We're talking about their automotive business. They provide everything and they provide a platform, a reference vehicle and allows the OEM then to really focus on what they're good at, which is manufacturing, marketing, branding, distribution, and consumer experiences. And so it is a really interesting ecosystem to keep an eye on. It's the most dynamic ecosystem on the planet. How do you think that impacts sort of the economies of some of these countries?

15:46So if I look at the U.S., I think we're very lucky. I have a Tesla. I think it's a fantastic car. And I think it's almost like a local champion in terms of EV and autonomy in the U.S. It's an American car company, by the way. People forget that. People only think the American car companies are in Detroit. Tesla is an American car company. Tesla is an amazing American car company. In Europe, it feels like they're much more threatened by the Chinese OEMs in part because are letting them enter the markets, right? In the U.S., there's heavier tariffs around it or, you know, other means to sort of prevent access in Europe.

16:13It feels like certain markets are pretty wide open and you see BYD and others gaining share really aggressively. Is that a, how do you think about that from a policy perspective in Europe? And is that, you know, not going to really hurt the economies there? I think there's a - A resident European. I mean, there's always a question of trade and trade deficit. And so, I mean, European companies as well as American companies, they benefited a lot from the Chinese market, right? General Motors, Volkswagen, just as an example. So they've, over the years, they've made a lot of profit in China. And so just from, let's say, a furnace perspective, like you can see it just by trade, right?

16:48It makes sense that there's some balance that can be achieved there. I think in the long term though, absolutely these questions always arise. And you hit a point where the volumes become high enough that countries will demand that you manufacture there. And then once you start manufacturing within the country, oftentimes those cost altos actually go away. Like whether, no matter what the brand is, if it's a local brand or an international brand, if it's manufactured in the same place, you usually end up with a product that's going to be of similar cost. Yeah, when you talk about like, if you look at, so if you open your car, you can look at the content of the car in your door frame.

17:18It says, this is, where is it made and how much of it is made? This is not a new thing. In Michigan and Detroit, this is a 50 year old, 70 year old debate. And because there are real implications where if you just buy all the subcomponents from foreign countries and you assemble them in Detroit, that doesn't mean it's made in Detroit. My slightly more caustic view or aggressive view on Europe is Europeans are a little bit of asleep at the wheel in the sense of, I think if I could inject something into the brains of the leadership of whether it's the U commissioners or the industrial families and leads is, it's like what I was told, you got to fight.

18:00Yeah. And there's almost this like, oh, it's going to be, you know, the Chinese are so cheap. The reality is it's not. There's a finite amount of dollars it requires to make something. And when these factories are so automated, that labor arbitrage, which historically was the reason why China was really, you know, cheaper, goes away. So a fully automated factory in Romania versus China, they're not as different as you think. I fall into the category of you, at least for America, being an American citizen, is we can't just be a consuming state. We have to build. Because with that building, you also provide jobs and expertise.

18:37And there are countless case studies of American companies that offshore our manufacturing. You hear the Detroit annoyance here, right? offshore are manufacturing to other countries, including Mexico, then the knowledge of building things is there. And then if you're Chinese, you're Mexican, you're Vietnamese, you're Indian, whatever you are, then you're like, also I just need a little thin layer. And this vacuum company is now, I get all the profits. I don't need the 25 employees sitting in San Diego marketing this thing. Growing up in Michigan, I remember this very because I was entering the workforce at the time in the late 90s.

19:14And the view was at the point was like, oh, this is globalization and it's OK. And it's like we have to have a bit more strategy because the reality is everybody on the planet has some strategy. Yeah. Thailand has some strategy. Brazil has some strategy. The U.S. basically made a conscious choice to allow its industrial base to leave, even though it was phrased in a different lens. But that that was a conscious choice. It's our naive view that the system will just take care of itself. It doesn't because everyone doesn't play by the same rules globally. And I think in industries like us, if you're an AI company in, you know, in San Francisco and you supply, you know, let's say developers that are mostly based, that doesn't matter.

19:53For us, we're a truly global company. So we think about a lot of these things all the time. The advantage that we have, which is extremely significant is we have the best technical talent still. You hear about Deep Seek, you hear about these other things. They're absolutely real. They're not, again, you can't discount it. And by the way, it's not that for America to win, China has to lose. We cannot, the UK won, Germany won, Japan won, and the US still won. We can live in a world where everybody is winning. It doesn't, we don't have to have this conflict, but we do have to agree on the terms of engagement.

20:27And I think like, that's where my view always is. is like, if we're on the same term or playing field, in that context, Silicon Valley has some huge advantages. The best of the world come here. So it's like, just as much as we complain about China, Mexico, Germany, we want to attract that talent and to live here and to build here. And we're still, I think, the best in the world. So if we think ahead and we say, okay, we went through a period where parts of our manufacturing and industrial base were effectively exported to other countries under labor arbitrage, effectively, or cheaper labor. A lot of know-how went out of the country and kind of stayed there.

21:02And in some cases, it almost feels like we've lost some of that know-how over time. Does robotics and autonomy and the automation of factories allow a moment in time where we can bring that back? A factory arbitrarily anywhere is cost competitive based on automation versus labor. Is this a moment in time? And how should people act on that from a policy perspective? Or how should we be thinking about that more broadly from the perspective of starting companies or innovation? We don't know policy. We didn't go to Kennedy School, went to engineering schools. So, but I think broadly speaking, I think it is a huge opportunity.

21:29And you see companies like Rebuild and Andrel are taking advantage of this reality. So I think if I'm a founder, it's an extremely inspiring time because everybody is seeing this opportunity and willing to fund it. You know, these companies like Rebuild and Andrel are funded by classic venture capitalists. They're not funded by some PE shop that's doing a roll up in New York. Yeah, makes sense. And then I guess the other piece of it is you all spend, I mean, you're a very profitable company, which has always been very impressive, given how much you've scaled the team and scaled your efforts. But also you spend a lot on models and on the development of different AI-based tooling.

22:05Could you talk a little bit more about what's for some models you've been training, how you think about the world there, where that's heading? Yes. So we do a lot of work in autonomy, right? So we talk a lot about our work in L4 trucking, and we do some really interesting things there right now, largely in Japan. That itself is a huge part of this. And there's an awful lot of data and model training that goes into that. We also do interesting work in autonomy in aerial and maritime as well. And so fighter jets and drones and boats and all of these things, there's a huge data problem. Data is not nearly as easy to collect in some of those domains as it is, let's say, on the on-road domain.