Why Elon Outcompetes Everyone | Shaun Maguire, Sequoia

41:40And Olaf is an electronics genius. He's an electronics genius. And because of my military experience, I knew how important comms are. I was following the EW side of Ukraine very closely, in part as a SpaceX investor, where Starlink was operational very early into the war and changed the trajectory of the war. and you know starlink is the first like really software defined you know backhaul um in history and and so like being able to take it starlink doing what starlink was doing in very very long ranges and low power to be able to do that in short you know distances with higher power and like huge jamming which makes it obviously a much harder problem um like i just knew how important that would be i don't know if i've ever heard someone ask about basically what elon looks for in capital partners he he really likes you guys he really likes antonio gracios and valor he really likes vy what makes like what specific things does he look for when he's considering having a capital partner I think number one being willing to like do work you know there's the famous stories of Antonio sleeping in the Tesla factories and I mean or what weren't they doing that as well on the roaster ramp yeah I think yeah and I mean it's just like hard to explain how much respect to have for Antonio and like you know you're in your stripes when you're willing to do something like that so being willing to work and number two um like so many people leak things and it's hard to it's it's it's like this may sound so simple but when you're trying to really bend the arc on the future like sometimes you need element of surprise and like people like most investors are leaky and i like this is a very low bar but just not leaking things i think is shut the fuck up when you have information yeah shut the fuck up and um and i think third thing is kind of like being there in all weather like good times and bad and you know someone like antonio i think has done this better than almost any investor in history i think underestimating any of elon's companies is really stupid yes um i think and many people still do it's crazy i know i know he gets a you know trillion dollar pay package you know if if he gets to eight and a half trillion market cap or something and someone still wants to short the stock it's probably not a good idea um i think there's different phases for companies like in year seven or eight of spacex it's kind of almost going bankrupt same with tesla it takes a very long time to bake these technical companies um when you look at something like boring company steve davis why do you think people underestimate boring code right now like what what do they not get i think people are really bad at thinking about non-linear things like most humans just think in terms of linear things and all like a lot of elon's companies are very non-linear um and yes i think people just don't understand at all where the boring company is people think boring machines is easy because they've been around a long time and because you know like you there's a bunch of subway tunnels there's subway tunnels and they're dug by municipalities and all this um i asked steve you know like to stack rank how hard steve was a very early spacex employee and a genius engineer and played a huge role in kind of building some of the early SpaceX rockets and vehicles because he was in charge of Dragon.

45:45I asked him to stack rank Falcon 1, Falcon 9, Falcon 9 reusable Starship, like put in that spectrum of technical difficulty where like kind of the current vision of the boring machine is and and so like what what they're working towards and are close to they call it zero people in tunnel z pit continuous mining so like that's the goal so having a boring machine that can operate with no people in the tunnel continuous mining and he said it's a little harder than falcon 9 easier than falcon 9 reusable um and so just think about that it's like this device is harder engineering than the falcon 9 um and but the people don't understand that because they can't they just look at one boring machine and they compare it to all the others they don't understand the difference people don't understand they're doing like a falcon 1 to falcon 9 or starship um and so anyways like i I think people just really don't understand what's going to happen and how fast it's going to happen once Boring Company hits the milestone of having reliable Z-PIT continuous mining.

47:04And at that point, so right now, it's almost like how SpaceX, until 2009 or so, did the Falcon 1 that was building the original Falcon 9. It's like those eight years or so where there wasn't that much progress. The only problem is you had three failed Falcon 1 flights and two successful ones and maybe some failed Falcon 9 tests. But I think once Falcon 9 started flying missions reliably, then the perception of the company went to one level above, like a big jump, a 10x jump in perception. I think the same thing will happen once boring company hits like Z pit continuous mining and is like actually just operating regularly and has a bunch of these and you can't, you can't go make 100 boring machines before the design is locked.

47:56And so it's like, you can't go make 100 Falcon 9s before the first one works a lot. And so that's kind of once we hit this milestone, then they'll be able to make a lot of them. But people are fools for sleeping on these companies. there's this line from elon that i've heard which is people respond to precedents and superlatives how do you think about that i've never heard that i mean look i think that's a good line i think if i was to map that onto what i'm just saying like i said people aren't very good at non-linear thinking and so the precedent is the is once you've made it you've actually demonstrated that you've made it through this nonlinear regime and you've actually hit the next nonlinear threshold.

48:42So you've jumped to that next plateau. And I think that if I was to map the superlative, it's that, like I said, people don't really know the difference between Falcon 1, Falcon 9, Starship. If you just go ask someone, what's the difference between these rockets? Unless someone cares a little bit about rockets or thinks about engineering, they're not going to know the difference at all but people can kind of intuitively they understand they can see a rocket landing and they can see the difference between oh like i can't tell the difference of the payload mass or the orbit you can get to but if it blows up or it lands if it blows up that's superlative or if like the rocket lands like this is a new paradigm it's super superlative that i can understand and so i don't know that's maybe how i you know doing an optimist demo where you have the robot i was at the tesla event called a year ago whatever uh you know in hollywood at one of those yeah the whole city that they built the whole city that they built and they had a bunch of optimists walk out and talking about that that's the only other person that i know of that's built a city is mr beast yeah for these games but gone one spacex fully built a city in that starship starbase is now officially incorporated as a city um but like that showmanship of, of like actually walking out 20 optimuses or whatever it was like the way, I mean, my mind was pretty blown and I think it's lost on video, but when they came out, cause they were walking from probably like 30, 40 feet away from me down a road.

50:24And I really couldn't tell like are these human actors or are they you know or are they robots and you know i was like look you're initially you look at the face as you would with the human and so then i started like looking down the body and then when you get to the waist it was very narrow you know non-human like and so until i got to the waist it looked like it could still be a human and that I was like, oh man. And I knew that because it's like the Tesla event and I knew it was going to be optimist's, but I wanted to verify it with my brain. And when you see the torso is not human, like it's a very kind of profound, like, oh wow, this is actually a robot.

51:07Hell yeah, we're getting close to the future. We're living in the future a little bit. We're living in the future. So that's that superlative experience that I think has nonlinear benefit in the psychology where people start to understand, okay, this is close. This is real in a way that they can't understand just looking at a chart. And this is something I think part of what Elon is so good at attracting capital is because he's so good at kind of these milestone superlative events and moments that capture the imagination and just like show you what's coming. You said you have to be willing to step into the fire to learn.

51:40What has been a moment where you stepped into the fire to learn something? I mean, many, many, many examples for me. One, I was doing my PhD and I got recruited to work at DARPA, which was not what I was planning on doing. I was planning on finishing my PhD. Honestly, at the time, I thought I'd probably be a professor. and then this totally orthogonal opportunity came up to go work at darpen specifically to deploy to afghanistan and it's like okay i'm in i want to serve my country and like that is maximum going into the fire and that i went into a war zone and like actually saw like you know i some stuff Yeah, I saw stuff.

52:22And it is really hard to explain how quickly you learn when there's that type of feedback and that type of danger. And you just, to give you an example, and this is not of the danger, but there was one event where basically every Friday I would go from one base to another to brief a general. and normally the drive is like crazy traffic in Kabul and first of all, I traveled all over Afghanistan but I would normally be in Kabul for this briefing every Friday and so normally it's like a 45 minute to an hour drive with only a couple miles, it was horrible traffic and one Friday, we got there in 15 minutes or so, like there was no traffic and we were driving from a small base called Green Village to a bigger base called HQ ISAF, the headquarters of the International Coalition.

53:21And so we got there in 15 minutes. And immediately when I got on the base, it's like, something is wrong. It should not, like, whenever... Just vibes are off. Like, vibes are off. Why was there no traffic? I immediately went to, like, the intelligence kind of briefing center and just started asking everyone, like, what's going on? What's in the intel reports?

53:43And it's one of these things. where people could tell the vibes were off, but there wasn't clear intel on what was coming. And then maybe like an hour or two later, maybe even a couple more, three hours later, there was a pretty major coordinated attack. I'm trying to remember the month. This was like March or April 2012. 12 and so if you were to put in like hq i staff coordinated attack like green zone or something you would find the attack so there's something like you know six different bases that were attacked all at the same time around the country and like they at this base they launched a like a rocket into a guard tower and then people so around the base you have like the actual base and And then outside the base, you have like the green zone where you had a lot of like Afghan army and it's you get badged in, but it's not as much security as going in the actual like kind of NATO base equivalent.

54:53And so like fighters went into the they went into the green zone. and it's one of these things where like the human intuition was so clear that something was wrong but our intel didn't like reflect reflect it and so like all of my instincts told me something was wrong and i couldn't find it in the data and so for me this was like very profound realization like like we need to improve the data we like something is wrong when your instincts tell you says something is off and then you don't have the intel to reflect it and three or three hours later you go through an attack um so i i mean that's the literal definition of going into the fire and and just kind of learning how quickly you learn in these situations my brain for probably three weeks was just like obsessing over how could we have known what what was going to happen yeah and there were lots of there were lots of ways to know but i won't say them here yeah i know you so you've talked a lot about like curiosity um and why curiosity is like so important and i i when i look at your past it's almost like obsessive curiosity about a specific subject matter for some certain amount of time and almost in the pursuit of becoming the kind of 2800 chess master like maybe it's csgo at the beginning i've never been 2800 in anything but i've been 2700 in a couple things so 2700 i was definitely 2700 in counter strike yeah really oh yeah i mean i played on like some of the best teams in north america crazy i played in cal invite and went to top tournaments and what what made you like initially get into that because i know soren and olaf were both very obsessed with counterstrike i didn't i actually did not it's amazing um or at least one time the honest answer is one of my best friends was obsessed with it and so he showed me at his house on a friday night his name's brennan thank you brennan like kind of took away three four years of my childhood i'm just kidding they were very good years and i learned a lot um but no like i my friends did it and i think i think a lot of like when parents ask me that like my kid is obsessed with video games.

57:17Like it's so bad. I kind of take the opposite view. Like I think kids being obsessed with almost anything is like, it's better to be obsessed than apathetic. I really learned a lot playing Counter-Strike and a couple of things. One at the time to be good at Counter-Strike, it was an advantage to understand some basic computer networking because to be able to to be able to pick up like an extra 10 milliseconds of you know lower latency mattered like actually mattered second to be able to like lower the jitter of your home network like that mattered a lot and it's like i got into networking would use wire shark to like try to understand when our home network was having issues and uh and try to understand fuck yeah i imagine a little bit of that a lot of that but so like it got me into networking um which was very important for me later in life because the company i co-founded like did a lot of networking um i also like we used insane tactics and teamwork you know it's 5v5 and we would spend so i would play counter-strike for the call to three years that i was doing it so seriously i would play 10 hours a day something like that um like 10 hours a day for three years yeah is this during like high school this is eighth ninth tenth grade okay i i mean i played on some of the best teams in the world at the time and i made some money not too much money but i made you know like a few thousand bucks make 10k a year something like that for two years um so i i mean which at the time like at the time the prize pool for CPL which is the biggest tournament was 50k for the winning teams it's like 10k per person and I never I actually yeah so I never played on the high level at CPL only simply because I was so young like the team of the teams I played on played there but I played a lot of local SoCal lands and I won a bunch of land tournaments and stuff and you'd make$1 ,000 $2 ,000 a time.

59:22And so anyways, I was really obsessed with Counter-Strike, learning an insane amount of teamwork. It was like professional athlete level communications and coordination. When someone would say get killed on your team, the whole team has to move their position to change the angles. People don't understand in Counter-Strike, at the highest level, everyone has basically the same reactions for the most part and the difference maker is your understanding of like the angles of the game for example you know like you want to if there's like a map like you know there was this map de aztec i have all the maps still in my head i like i literally i haven't played counter strike in almost 20 years and i i can still remember like every pixel of these maps i feel you for the the maps i've played vs and so like for d aztec there was this thing where you go through these two doors like if you're you know a terrorist you're on offense you go through these two doors and it's this very wide open area on the other side like like long range i call it a couple hundred meters in the human perception and there's like a big central kind of like dipped courtyard that people can't be in.

1:00:42So no one can be there. Um, people can either be kind of like behind the door. They can be straight down like one direction. They can kind of be behind some boxes or in the other doors, 45 degrees, or they can be in the other directions called like four places where people can be. You want to have like two people on your team have be at 90 degree angles to each other so that if someone, when they come to the door, almost like pixel level accuracy, the second, like their first pixel would come out, if they were to come and their orientation was looking at one of your guys, and if they ended up having faster reaction times and killing your guy, that the other person would have like almost guaranteed ability to kill them because it's 90 degree opposite angle.

1:01:31And so it's like impossible for them to kill that person and scan and kill the other person so it's like the worst case you trade one to one uh and so now it's four v four but you're giving away the position via sound so then that person's going to be at a slight disadvantage like the next time someone comes through the doors but it's still like way better than losing you know like two people um and also everything is like timed when the round starts and which positions you can possibly be in based on the start location 100 but so like the second one person comes through the door first of all you have to have like the angle such that you have pixel level accuracy uh and you have to be in the other team's head to know like you know if it's been 15 seconds and you haven't seen anything then it's more likely that they're going to bomb site b rather than bomb site a and so we should start rotating a little bit proactively and having the synchronization with your team to know like literally how to do these small rotations it's similar to playing soccer or something like that it's just like people adults at least at that time now like myself i have two little kids and so i know what goes into these video games people do not understand like how the level of strategy and the level of teamwork and coordination when these games, it was literally like professional soccer level kind of obsession and teamwork.

1:02:59But it's a young person's game because your reflexes do by the time you're like 22, 23, your reflexes are like nowhere near as good as a 16 year olds um or 15 year olds and so on and on but i like i had very bad grades in high school as a result of all the counter-strike including an f in algebra 2 uh but like a 1.a or 1.8 you know there was a period in time when my gpa was 1.8 it didn't end up there but but there was a period of time where i got an f in algebra 2 I ended up doing like a summer remediation of it. And look, I got a PhD in mathematical physics. Like I'm good at math. The F was, I just didn't want to go.

1:03:38I hated school. I was really, I could not stand my teachers or a lot of my peers. And I just felt like it was a waste of time. I'd rather be like screwing around the computer or playing Counter-Strike or, you know, doing other things. What was your thought process in school? I had a weird situation where I think I was probably in like 10th grade and I talked with one of my teachers. It was actually algebra two where I was like failing that class or something just because I didn't really care. And then my geometry teacher, you know, pulled me aside because I really enjoyed him and his class. So I got 114 % in his class and F's and everything else.

1:04:20But he pulls me aside. He's basically like, you know, you got to get good grades. And I was like, why he's like to get into a good college and I was like why he's like to get a good job and I was like well I don't want a good job and I don't want so that I don't need college and so I don't need these grades so what's the point and then he was like you know Ty I can't argue with that and I just did my own thing after that yeah I mean similar for me one like I was a hacker as a kid and the hacker mentality is that you'll always be able to find like a loophole a back door side door and so I was just willing to bet on myself like I I knew I was going to be fine I I wasn't worried about it.

1:04:56You know, next thing I had a couple, I had some like really adversarial things happen. I'm going to work backwards. Like the most formative thing was in seventh grade. So I'll get there in a second. But in 10th grade, I had, I had an experience with the math teacher. I'm not going to name him. So I don't need to be a jerk. But on our first test, he gave me a zero on the test, even though I got every answer right. and I went up to him and I was like you know like hey you gave me zero even though I got every answer right like what's happening he said I think you cheated and I'm like and he said in a very aggressive way I'm like because you like didn't show your work I didn't show any work and it was for me the problems were so boring that like part of how I'd make him just like five percent more interesting because I'd do it all in my head just to make it like a little bit more interesting and so anyways he gave me his year he said I think you cheated I was like no I didn't cheat like I was like you can ask me anything you want I'm like ask me calculus problems and he was like nope I think you cheated you get a zero I'm like I got every answer right like you have to help me you know like like like prove to you like ask me anything you want right now he's like nope you get a zero he just didn't like you he didn't like me and so I went and candidly I would read books I'd read science fiction books in his class all day.

1:06:17I would just be there reading. I actually counted the books I read that year. I read 67 books in school, only in my classes that year. This is easy stuff. It's like Ender's Game, stuff like this. So I went to the vice principal of the school and told him what happened and that I got every answer right. And he sided with the teacher. And at that point, I was just like, this is such a joke. These people are such jokers. Like later that year, I took the SAT and like I did pretty well. And the school actually reported me to the college board and said that they suspect that I cheated on the SAT. So that's like, that's preemptively, just preemptively.

1:06:57Like that's how adversarial my relationship was with my school. And at that point, I just stopped going to school. I was like, I'm, I'm done with these people. So I ended up mainly going to community college then. And then I, I left high school early. I took my California high school proficiency exam, like CHSP. It's basically GED equivalency and just left and went to community college because I just, at that point, I could not handle it. But if you want, I can tell you the seventh and eighth grade. I would love to hear. Man, so seventh grade story is pretty unbelievable. I've got two. These are good stories.

1:07:29I don't think I've ever told these publicly. Anyone from my school can verify these stories. These are crazy. Okay. So the first one, I went to public school. my school was 7th through 12th grade so it's kind of weird to mix middle school and high school and you know as a 7th grader I was 4 foot 10 you know most kids start puberty sometime around 7th grade and it's like I probably started puberty at the end of 7th grade rather than the beginning and so there was very high variance for kids size like boys size on the first day of 7th grade I was 4 foot 10 I was like 4 or 5 until I think like 9th or 10th grade and I randomly shot up a foot Yeah.

1:08:08Yeah. I mean, that's tough. So my second day of seventh grade, I'm four foot 10 and I'm walking between my first and second period. And there's this kid, Vinny Taramina, who was from a pretty powerful family in the school. His dad had sold a trash company for our earlier conversation to waste management for$500 million. I think it's called like Terramina sortation or something like that but just Terramina waste management so they had sold this company and so that's like that's a lot of money especially in the 90s and I believe they had five kids out of the sixth grades in the school maybe only four but I think it was five and so it's just like you have a lot of power when you have five big Italian kids out of six grades and so they were italian too they were time incredible i know and and they have a lot stranger than fiction stranger than fiction and they had a lot of money and all this and so my second day of seventh grade i'm walking from my first or second period and this kid vinnie teramina is like standing on a planter it basically it's like a 18 inch planter and he's surrounded by his friends and i'm just walking randomly through the crowd and he points at me he's like you you your new name is Joel.

1:09:32And I was like, like what? Like, like me and I'm surrounded by other people. Um, he's like, your new name is Joel. And I'm like, okay. And I just keep walking and I don't remember like exactly which period it happened for, but one of my next periods, I call it two periods later. I show up and it was the second day and I hadn't even been to every class yet with every teacher. And I show up in a class and the teacher calls roll and they don't call my name. And so I say like, hey, like, excuse me, you know, like, I think I'm in the right place. We didn't call my name. Like, what's your name? It's like, my name is Sean McGuire.

1:10:15And the teacher's like, no, I don't see you on the roll. So I go up to the podium where she's standing with like a paper roll card.

1:10:24and she had crossed out Sean McGuire and written in Joel. And I'm like, oh, my name's not Joel. Like, it's Sean. It's Sean McGuire. And some kid yells out, I'll just name him Kyle Tomberlin, yells out, he's a good guy. He's a fireman now. Like, it's hilarious. He yells out, like, my name's not Joel. It's Sean. It's Sean McGuire. And he yells out in, like, a voice like that. and like people laugh and I'm so confused and I'm like no my name's not Joel it's like it's Sean it's Sean McGuire and then like six kids yell out they're like just my name's not Joel it's Sean McGuire and then the whole class is laughing and I'm just like I'm so stunned I'm like what is happening I'm so confused and so I tell the teacher I'm like like that's me and she marks me or whatever.

1:11:17And I go sit down and then this happens in every class I go to, like with every teacher. And whenever I try to correct the teacher and then these kids, they, they, they're smart and they go to the teachers ahead of time. And they're like, this Sean kid is a class clown. Like he, like, like he actually, his name is Joel, but he's going to mess with you. And so then the teachers are confused. And then like the class is laughing and they think I'm a class clown. And it's like, and they literally renamed me to Joel. Like I'm not joking. They literally renamed me to Joel on my second day of seventh grade.

1:11:50And for my whole high school experience, like people called me Joel. And not everyone, but like most of the kids and like the cool kids called me Joel. I still today, like it's programmed in me. If you yell, I shouldn't say this on, you know, online, but fuck it. Like if someone yells Joel, I'll turn around the same way if someone yells like Ty, even from 100 meters away like you'll turn around they say t if someone says t like you'll turn around if someone says joel like i turn around the same way i would for sean who's just hard wired in me and there's people like there's still people from my high school that still call me joel there were even i went to a high school reunion like 10 years ago before i had any online presence or any of these things and some of the kids there only knew me as joel like they didn't know that my name is actually sean like they did not know my name is actually sean and this was one of these things like it was just such a weird way to start seventh grade where you get renamed it's just like man fuck this place um for this fourth i ended up seeing vinny at a party after like his name was vinny yeah vinny taramina so i ended up seeing vinny after after college and vinnie the italian with the dad with the trash collection company trash company they sold for 500 million dollars and so i end up saying to vinnie i'm like dude like what was going through your mind and he's like um he's like you know what man he's like i was really hung over and he's like he looked like a kid i met named joel jacobson and he's like just came to me it's like I'm sorry and high school experience is ruined because the kid was hung over on his second day of 10th grade and just randomly decides to rename me uh and it stuck and and so I was like wow this is you know this is parody um so you're just getting hazed immediately yeah so that was that was one story that just it's like man this place is like fuck this place this the second thing and this is this is like really funny um my school was lord of the flies like it's really hard to explain what this place was like and we had a PE class coach Traeger was the instructor and I think we would meet three times a week and we had to be there it started early we had to be there like 7 30 or something like that and for it's like 90 minute PE class and this guy coach Traeger would always be 15 minutes late we all had to go change in the locker room we all wore a uniform it's just like it's public school it's like very cheap like mesh blue basketball shorts and a gray t-shirt that said sea kings on it which was our mascot and one day this kid was like a very charismatic kid in the grade he decided to rip off his sleeves just to be cool so he shows up to like the beginning of class and coach trigger walks in he's as i said he's always 15 minutes late and he's like la la what happened your sleeves and la's like oh my gosh he's like he's so smooth he's like you know i got a hole in one of the like creates an entire story so you got a hole in one of the sleeves and it didn't look good and like it just kept growing he's like so i had to rip the one sleeve off it's like but then when i had the one sleeve off he's like i felt like i had to rip the other one off because it wasn't symmetrical so i took the other sleeve off and it's like a good story and so coach sugar's like okay and it's public school so you don't get like another shirt um and so the next day probably five or six more kids of la's friends they all come with their sleeves ripped off and coach sugar's like like guys what happened to your sleeves and they're like oh like same thing as la like i got a hole and you know and like and so like i it didn't look good and so i had to rip it off and then when i was one off like it wasn't symmetrical so like there's like six kids so then like the next day it's like 25 kids and so then like the next day the fourth day these kids because this guy was only 15 minutes late these kids and it's like it's so funny to look back on it but they would go and they would go to all the kids and they would rip people's like they would chase kids down and they would rip their sleeves off and it's just a way of like showing dominance over other kids and I didn't want these kids like I didn't care about the sleeves but I didn't want to be dominated by these motherfuckers and so i was i was a really fast runner were you like preparing mentally through those days as you see more and more so i am like i am an extremely fast runner and this is not the best way to justify but like i've won four marathons or something like that and i've done that without training or trying and you know my marathon pr my pace is like five five minutes 37 seven seconds, minute per mile.

1:16:55And that's literally without training. Like that's just, I'm fast. And my, I had a friend, Chris Ringstrom, we were the two fastest kids in the grade. Chris ended up running the hundred at Stanford and Chris and I, we didn't want these kids to rip our sleeves. So for weeks, like for many weeks, every morning, I swear to God, every morning, we'd have 20 plus kids chasing us for like 15 minutes. They would chase us. We had a pretty big campus and there was two big fields and like a lot of other just like cement. And, uh, we would, we would literally get chased by at least 20 kids for about 10 minutes every morning for weeks, just to not let these, they want to show that they're dominant.

1:17:39And we were the last two kids without our sleeves ripped. And so we would just go run like crazy to not get our sleeves ripped is Lord of the flies. Like it's absolutely insane. And they never ripped our sleeves. and uh there's one thing where our school was close to a bay it was in orange county california it's close to the back bay and a lot of seagulls would it was like their hangout spot in the morning almost every day was on our one of our fields and so we would like run into the seagulls and it's hundreds of seagulls would take off when we'd run into them and they would invariably like the seagulls shit when they take off like because it's like they're digesting while they're sitting there and then they poop when they start flying away so hundreds of seagulls would take off and like a small percent five percent would take shits and like almost every morning like one or two kids would get shit on that and it's just it's like it's hard to even explain what this was like and this so this this is my seventh grade experience is it was like getting renamed to joel and running away from wild people that want to tear my sleeves off just to establish dominance and i'll share one more on this like this is a quick one um my school was very good at tennis it was like a it's a big thing in the high school and coroner del mar high school and so we had nine tennis courts on campus um and one of the activities we did in pe for like six weeks was like paddle tennis is these plastic rackets holes in them and uh you'd play 3v3 on the tennis court with a tennis ball in these plastic rackets and it was round robin like if your team won you'd move up and if you lost you'd move down and these uh like there was this one team of three guys and like they were three of the more athletic guys in the grade and they kind of made it they're like another way they would establish dominance is when they would be playing people they would deliberately try to peg them with the ball uh you're just surrounded by assholes i was surrounded by assholes and so there was this like team of three guys one of whom again was this la kid and they were good and they would peg there was this one kid john moftik i shouldn't name him but like he was a i'm sorry for naming you he's a tall very sweet kid like uh very like very awkward kid at the time and they would just peg him relentlessly with the ball but i was my my dad was a very strong tennis player and like i grew up playing very competitive tennis and um and so like i could i was better than these kids and so because they would go try to peg other kids like i would pay you wanted to seek justice i would seek justice on behalf of like this kid John and all the other kind of nerds and I would make it my sport to peg these kids and so they just absolutely hated me and it was like my whole my whole school experience like I had teachers that will give me zeros for like not showing my work on tests and I have kids that are like trying to rip off my sleeves to establish dominance and a kid renamed me it's like I don't even want to be here and then you go home and you play CS for 10 hours yeah so it's like it was it was a kind of an unusual and maybe this is usual i don't know but for me like i just did not want to be in school i think i think everything you know we discovered a lot more context there's more context yeah we got more context it's important to have a chip on your shoulder you got a few chips yeah i've got a few chips getting back to uh elon and having i think elon has got a few very close relationships that he's just had for a very long time gwynne shotwell is one of them uh steve davis i think is going to be another i forgot the guy that is working on neuralink but it's the same thing how how do the people that really succeed where they're working kind of on one of the elon companies with elon how do they work yeah my my personal opinion is that um one like the way elon operates is kind of anyone can raise their hand to do a job um have you actually been in one of these meetings where that happened or like some guy it depends on the context um but if someone like volunteers to do something if they actually deliver on it then great like they move up you know and they'll be taken very seriously and they kind of move up the next level if they volunteer another time and they deliver like they'll move up again on the other extreme if you say you can do something and you fail to do it like you are done or you're stuck there.

1:22:37So number one is just being extremely competent and being willing to bet on your own competence and always delivering and knowing your limit. It's okay to say, I don't think I can do this or I don't know how to do this or I think someone else will be better for this. It's different to volunteer for something versus be assigned something. um you know the next thing is very very quickly learning that you need to go like five levels deep you need to be able to handle like five levels of questions or so in anything and i think the like the next thing is you know a lot of loyalty and i don't mean that like i think a lot of people would take that would misinterpret that and think like oh it's blind loyalty no it's not blind loyalty it's it's a understanding that elon sees things other people don't see i think of elon like alpha go where alpha go would make these moves that like go players couldn't even understand why alpha go is making these moves and then 17 moves later like alpha go would just win and they're like holy crap that was crazy this is kind of like what it's like to work with elon will do these extremely 60 chess moves 60 chess moves that you just like people don't understand in the moment and then you'll understand it a year later or six months later it'll look like prophetic and it will look prophetic and so people that go and don't understand that i like that's challenging and people that say like leak the plan you know or like that's another type of loyalty i don't think this is like it's like trust in the system trust in where you're going like like be like loyal to your teammates um you know be mission oriented like these are if you have all of those things in addition to the like competence and being willing to bet on yourself like you're going to do very well and believe believe it or not i think very few organizations like do those things it sounds very simple but like no one does that yeah it's very it's very interesting because like in that i guess in his organizations you can't actually ask for responsibility and get it the first time in a way that a lot of things it's kind of even on with like interviews and stuff for a very long time i would ask and i like sometimes it worked yeah right and that's a that's a amazing feeling um do you think that he kind of takes a similar approach to investing where you're basically backing someone based on some track record with them saying, I'm going to go change this aspect of the future.

1:25:18And then that's the precedency and so on. So I think he's one of the greatest capital allocators of all time, obviously, across all the different companies, across investing in battery factories, when he did investing in AV, when he did, to the point where it actually works. A lot of people that invest in AV, it never worked. They were either too earlier. The earlier low earth orbit constellation, internet constellations. They were too early. The underlying phased array radio technologies weren't mature enough to where you could actually build a full system that achieved the performance you needed to compete with terrestrial internet.

1:26:00He's this combination of I think such good instincts for where the technology is and where it will be in the near term. um so that's all i think pretty obvious i think the thing that's maybe not obvious is i think he sizes his bets in very smart way so like i don't remember the exact year of when spacex started working on starlink but it was something like 2013 something like that but it wasn't that serious of an effort they were waiting until like falconine became reusable falconine became reusable in 2016 i roughly i think there was two years of like working out the kinks it was around 2018 is when i think elon just fully understood that all the pieces are in place like the underlying phased array radio technology is good enough and like reusability is really working which means that the economics like of launch to get mass to orbit is is gonna is like gonna be really really favorable and the number of missions you'll be able to fly per year is going to increase a lot because it's just way easier rather than needing to make a new to build you know now i think spacex now has done 170 flights in the last 12 months like as of yesterday and you know when we first invested it was like 10 a year something like that six years ago um so 17x in six years that's not bad in terms of number of missions like it's pretty wild and the like by having reusability it was a key point to be able to do a lot of flights per year so you didn't have to make new rockets new boosters etc well you still make the second stage but um anyways like he just has unbelievable intuition and like the starlink bet was a small bet it was going but it was like small to be learning so that you're paying close attention and you even know you need to make a small bet to know what the constraints are so that when the constraints get removed or improved you know and then you can size the small bet to medium bet and then once the medium bet is really working and like the unit economics are good then you can scale it to big bet and I think he's an absolute genius at sizing like yes he's a genius at understanding the having intuition for the technologies and understanding what are the constraints but i think he also is a genius at sizing his bets in a smart way this is somewhere like a poker player needs to size their bets proportional to quality of their cards you know also like the amount of chips they have 100 the chips on the other guys 100 100 and like hedge fund managers a lot of times like if they have some vague new idea but they don't fully understand the business like you'll buy you know you'll put one percent of your fund into buying some new position just to start really learning the company it's hard to learn it from the outside emotional tie to it yeah and get an emotional tie and like start to get to know the management team or whatever and then if your thesis proves correct you'll size that one percent to like five percent or ten percent and i i think that it's he's he's under underappreciated in terms of like how good he is at sizing the bets do you think that that was a learned trait because i i've i've listened to all the books on him yeah i've listened to every interview he's ever done uh at least that are public multiple times probably and i i like to think about the elon that we see today is not the same elon that was building you know zip2 and paypal and x initially um and then also the same person that like initially sells paypal takes all that cash and puts into spacex look i think that's probably true in the sense that I think Elon compounds himself more than like any other learning machine.

1:29:58He's a learning machine. And, and that like, that's exactly where I was going. And part of it is he, once you have so much success, it's just, usually you don't want to embarrass yourself. You don't want to look stupid. You don't want to like make mistakes. Elon is just still so unafraid to get embarrassed and even something as simple as doing starship testing in public um which like you have to bear all these new york times articles you know where they're like they're fucking up failed failed start like starship fails to achieve its goals you know like fails to reach orbit like orbit wasn't even our goal um but like when you're just willing to be in the arena all day every day trying things like learning getting like you're getting embarrassed that's how you really really learn and to do that the scale he does like of course he's not the same person he was 20 years ago he's he's like he's the cutting edge the best investments are contrarian and right yeah what have been the biggest points where you decided to be contrarian and were wrong i mean i was negative on nvidia like three years ago which was obviously incredibly unbelievably this post chat chpd launch post chat chpd launch so i've been a giant i i literally bought nvidia shares in the ipo in 1999 what as a 13 year old um i because i was playing video games like i was yeah you were using the graphics cards yeah so i i would buy like nvidia amd and intel stocks and i would do pairs trading based on you know what generation of graphics cards i thought would be better or what generation of cpus um because at the time like these the gpus run an annual cycle so were the cpus and it's one of these things were like to the to gamers you would buy for your next build like if amd was five percent better than intel like with cpus you would buy the amd cpu um and like the best machine yeah you wanted the best machine the best bang for your buck and people were actually very very in tune with like very the gamers were unbelievably in tune with the product cycle and so i was obsessed with nvidia i literally bought the stock in 1999 um and i i traded it a lot and then i i was holding nvidia until like a 600 billion market cap didn't they go public for like a few hundred million yeah okay so i was holding nvidia to like a 600 billion market cap.

1:32:46And at that point, one thing that's actually really like a crazy lesson, like I underestimated Jensen, to be honest. Um, even though I had been a shareholder of the company, like I didn't, I didn't think Jensen was as good as he is like, like man, like he is, he's, he's really good. And he's really pushed his advantage in an incredible way and he's been so aggressive. And I don't think it was as obvious as people might think now. Like if you go look at his earnings presentations 10 years ago or whatever, and it had been a very sleepy company for a long time. It had primarily been a game, you know, like originally gaming company, gaming customers.

1:33:36And when we go, I don't remember the exact numbers, but like three years ago roughly three years ago the revenue was it is like right when it flipped from being like half half consumer to half data center i don't remember the exact revenue i think you tens of billions i think i think it was like they did a quarter it was like four billion of gaming revenue four billion of consumer sorry of data center revenue and it was like a 600 billion dollar stock and i sold um and at the time it's just like this thing is trading it's such a crazy multiple and it's have benjamin graham in the back of your head saying what are you doing i'm in the back of my head uh and the other thing is like one i i underestimated Jensen to, I think that the market, you know, like I'm going to get crushed for saying this, but I think the market was a little bit irrational at that point.

1:34:48And, but then the Jensen played the irrationality of the market so well that then it became a self-fulfilling prophecy. and i'll explain this a little like at the time so i think so nvidia bought melanox in like 2019 was that like 8 billion i think about 8 billion yeah i think this is probably the best acquisition in history 60 chess moves where it doesn't totally make sense at the time and then one probably the best acquisition history and gave nvidia like a huge interconnect moat which is gigantic like seismic and just exactly right time hardware time scales are long you know like from the time that like from the time the data center boom became obvious like it's like four years before someone like amd or intel will get will catch up on the interconnect side and on the whole system side and the data center and ai thing came so abruptly on the back of chat gpt that they were actually already working on these things it just wasn't nvidia had made it it's like sole focus and had done the melanox acquisition jensen has got a special ability to look like be willing to look wrong for a very long time he has a lot in common with elon and i actually did not understand that at the time um but so yeah he really he has a special gift for that but so anyways I knew what was on the roadmap of AMD and Intel.

1:36:17And I personally feel like if you go back to two and a half years, like if you were to go another 18 months from now, that the technology they were going to put out would be roughly at parity with where NVIDIA would be in four years. Back at that point when NVIDIA was a$600 billion company. But what happened is NVIDIA became so valuable, like and intel and amd became so like cheap they had to cut a lot of their investments and nvidia was able to just like wildly ramp up their own investments and so now i don't think intel and amd will catch up like it's my personal opinion it's not investment advice or anything but like i i think that we live in a different the timeline was altered because of how well nvidia traded and how well Jensen pushed that advantage.

1:37:11And I think this probably was knowable if I would have known just how good Jensen is. But I also felt like the market was underappreciating how good the AMD and Intel projects were in their hoppers. But they've been jeopardized because they got so suppressed by the NVIDIA tsunami. And so this is one where I'm embarrassed because I was like very, I mean, I even had one tweet where I was like, said something like, I think Nvidia is overrated. Like this stuff doesn't make sense. Yeah. This stuff doesn't make sense. Um, so it's like, obviously I was wrong based on the financial performance. And I think I was wrong in terms of how good Jensen is.

1:37:57Uh, and I think I was wrong in terms of understanding like how well they would push the advantage. But I also think the irony is like, I think a lot of so many, like so much of the capital that went into NVIDIA over the last two years is people that have never done anything in hardware companies. They don't know anything about some like networks. Like I bought NVIDIA and the IPO. I've been obsessed with TSMC for 20 years. I've been obsessed with ASML for 20 years. Like, and, and so it's just like kind of one, I've been obsessed with Broadcom since I was a little kid, like literally obsessed. and i think broadcom i mean even even that company hasn't really like fully realized it's it kind of had almost an nvidia tesla-esque moment over the past three four years broadcoms is kind of a misunderstood company in many ways and like this is a crazy i'm gonna embarrass myself like i did not grow up rich at all but when i and my my town where i moved to when i was nine is a very rich town though and like in my high school it's kind of crazy the like one of the daughters of henry samueli was in my class um and you're just surrounded by wealth well i was surrounded by like i think my school like in my school there were kids who's who were like mexican american immigrants whose parents were house cleaners and like i had a friend i had like i had a friend whose parents were journalists of the local paper.

1:39:28And he dated the daughter of a billionaire, like another Silicon billionaire. I'm not going to name them. They're amazing. All of those people are amazing people. My school had like six orders of magnitude of wealth. Literally, it was insane. But so the founder of Broadcom, Henry Samueli, his daughter was in my class, like literally in my class. and I went to like a school dance party at her house and I've been, they were the wealthiest family in the town. So I've been obsessed with Broadcom from a young age because whenever there's like the wealthiest family around, he's like, how do they make so much money?

1:40:04What do they do? And happened to be very lucky that it was from Silicon. So I've literally, I've been obsessed with Broadcom since a young age, obviously like Henry and Henry Nicholas III were both at UCLA. Henry Samuel was a professor at UCLA and Henry Licklister was his grad student and they started Broadcom. And the company's evolved with the products quite a few times over history. But then there was kind of the reverse merger with Avago and, you know, Hawk is an incredible, like he's an incredible capital allocator. And, you know, they bought VMware and rolled up a lot of things. And so Broadcom is this weird company where they have this unbelievably rich history in telecommunications hardware and then in data center hardware.

1:40:48But they also have been this just unbelievable private equity machine and bought VMware. somewhere. But Broadcom today has been an incredible innovator in kind of like next generation data center components. And like, they're the first people to have like a working, what's called co-packaged optics product. And I am personally incredibly bullish on this thing called Silicon Platonics. I mentioned earlier, if I was going to do one of two things to, you know turn 10 billion into bell labs like the two things be starting a chemicals company or or like doing silicon photonics fab and i'm like broadcom is one of the companies that inspires me the most and so i'm i'm weird in that like i've loved this space since i was a little kid and then i watched these people enter the space two years ago like don't know anything i was like man this is you have people that don't know anything like live and breathe it and then they can't tell you anything.

1:41:49They don't know what Mellanox is. And they're like saying this thing is going to $3 trillion. And I'm like, okay, I'm out. And I, I made a little video at Sequoia saying like, why like I, I said, I would, to my credit, I said, I would never short the stock because like, I'm very afraid of the irrationality around it. And I didn't know like the scale of what AI buildouts could be, but I said like, I'm a seller at 600 billion. So anyways, that was very wrong and man I wish I would hold held you know for that other 8x