Uncapped #51 | Joe Lonsdale from 8VC

0:00If you like took like the normal path without AI and like things we were building and knew we needed to build and like assume we need to build, we're like taking the 2030s and 2040s, we're like packing them into the next two or three years because so much is happening right now. Yeah. And that means we're taking the 2050s and 2060s and going to put them into the end of the decade and the start of the next decade. It's just like so much cool stuff.

0:22All right, Joe, I've been really looking forward to doing this with you. You're one of the most interesting people to me and I love a lot of the work that you've done. And so really excited to chat and learn with you. Thanks for having me, Jack. One of the things I want to start with is I kind of put you in this category of people who are both investors and founders, like the real way, you know, like a lot of people say that, but you really have done it. You've like started many companies. You've you've started companies that you then become chairman and some you've worked for a long time on. Obviously, there's Palantir, but there's like there's many others.

0:51Then you also have your own VC firm. I'm just sort of curious, like, what's the mindset that you approach company building, company investing with? Where do you start when you think about doing your work? Well, I think starting a second or a third company is fundamentally sort of an insane act after you've been successful because you already obviously have the money you need. So what are you doing? Because these things are so hard. You almost have to convince yourself every time that it's not going to be as hard as last time, even though you know it is. I mean, I did it once then. I remember it.

1:18I'm like, that's too hard. It's like really, really hard. But you just keep doing it. Well, I did like two where I was CEO, Palantir and Adapar. And then I did a few where I was chairman and like really in the weeds with OpenGov. I was with Zach last night, who was my CEO at OpenGov, who did very, very well. He sold it for$1.8 billion after like 14 years. It was like paddling through the dirt, I was saying. It's like so freaking hard, especially compared to these things today. Like an AI founder who's just like at$100 million in no time. We were next to this kid last night who I'm backing who's like, Joe, I'm not just doubling.

1:48I'm tripling revenue this quarter. because it was just like it was so hard getting these things to work. A hundred million used to be like eight years of hard work where basically everything went right. Yeah, now like one of these kids who worked for me has a billion in revenue and a third year like screw these kids. I love it. I'm investing in them. They're great kids. But it's like they're great. You're adults. You're calm. But no, listen, I think like building is really, really hard. There are just gaps in the world that I see. It's just how my mind works. And there's like this is a gap. And there's like people who are hurting because of this gap.

2:17There's things that are broken because of this gap. and it's so broken and no one else is fixing it. And I have all these really smart friends. Let's go fix it. And so I just can't help that instinct to like just go fix things. We say at APC, like the world is broken. Let's fix it. That's just my energy. So if no one else is going to do it, fine. Let's get people together and do it. But it's like the last option. You'd much rather back a really competent person who they themselves are already all in, you know? Yeah. Do you think not enough investors have this instinct? Like do you think it's right that most people don't do it?

2:44Or do you think there's actually, you know, more investors who can and should, you know, understand this is an interesting setup, just like get some balls moving and then you can attract people to it? Or do you think it's like, right? I think if you haven't yourself gone all in and built a startup and gone through the pain of that over years, then you probably have no idea how to actually build a startup and you just shouldn't be doing it. And I think the first time you do it and probably the second time you should just be 100 % all in and you shouldn't be distracted. So I think I'm like a really bad example for people.

3:11Like you actually shouldn't try to do these things at all. It's funny because even among investors who were former founders or who have done it before, I think many just don't take that as one of the options of actually I could just get this thing started, work with somebody, build around it. It takes a lot of energy. It's like you have to pour like a piece of your soul into something to really make it. Not that I do this right every time. Like I make new mistakes all the time, of course, but like every once in a while. And frankly, like the last several times I've been involved, it's not really mine.

3:39It's really like I'm helping assemble the founding team. I'm helping bring together lots of talent. and how I've been together with a mission, I'm giving them enough upside that it's theirs. And then so that's a little bit different than doing it yourself, obviously. So it's going to be a spectrum, you know? Yeah, totally. I'd be curious to hear a little bit about how you're feeling in this general moment. You know, we were just talking about how hard it used to be to build companies to 100 million of revenue. Now these like AI companies are going nuts. So fast. It's like so fast. You strike me as like, you know, kind of like in the sort of Peter Thiel contrarian-esque mindset of things.

4:09And one of the things that, you know, I wonder is like, is it uncomfortable in any way when the whole world sees something and you're like, we might be in that the quadrant of the two by two that is both like contrarian and right? Like, are you kind of in the mindset of like, AI is actually the thing. Most people have it right. And so I just need to go do it better than everybody else. Or do you sort of take the view of, well, when everybody's here, I should actually be, you know, spending my time here because there's going to be a new wave by 2030. You could still make a bunch of subquadrants, and they could be wrong in some things, and you could be right about some things, but you're all inside the big AI is right thing, right?

4:44It's not like you just have this super simple model. But yes, obviously, this stuff is working in lots of ways in AI. I think people are probably not focused enough on productivity as the kind of grail you should be going after. I think they're not focused enough on the moats created just by the very most talented technologists. So I think going after just the very, very best teams and going after problems that are going to lead to higher productivity. And then there's just all these nuances for how big industries work. And I've been obsessed with a lot of these large industries for a long time.

5:15So I think we have advantages there. But yeah, I mean, listen, it is non-consensus. I'm just like really bullish on this stuff right now. It's just working. What are you going to say? It's all working. Let's go after the very best of it and help it. I can't remember where I heard this, but somebody was saying there is a form of contrarianism even among good ideas, which is that you can like believe harder than everybody else. You believe more. You can understand more the nuances of what's working. So the thing, listen, I've got really lucky the last few years because I get no credit for like Palantir figuring out what it did the last five years.

5:47The only credit I get is that I actually like originally like built the company. I did hire a bunch of those people who are in charge. But like, but it's them now who've done it recently. But like the stuff that we figured out at Palantir and the stuff they figured out at Palantir turned out to be relevant to a ton of other AI companies. So it's kind of the center of the AI world in terms of what's working in many ways was right around Palantir. And so that's just a huge advantage for us. And I think we understand a lot of the nuances. Like how do you apply a workflow ontology to this area? How do you apply the FTE motion to this thing and go deeper on this with a SaaS plus FTE?

6:19It is interesting. The FTE thing is just everywhere now. I mean, it's almost memetic, but it's true. And Palantir figured out the way you do these things in the AI world. And yet you have to use that. When you say Palantir figured out a lot of the modes of how AI is working, what else? Besides that FDM, what about the technology itself? Well, it's like how do you extract the ontology of the workflows? And how do you figure out where to apply LLMs and where not to apply LLMs to? And then what do you have to build for it to work? And there's just a lot of stuff that people have got it right. When you talk about like the productivity stuff being like sort of like underexplored and people don't appreciate how important it is, do you mean like areas of like productivity software?

7:01Are you talking about like making individual like professional workers more productive every day? Is it both? Like what are you thinking about? No, it's definitely both. It's also just like how should this industry work in 2035? Like what does this industry look like today? And what does it look like if it's doing everything that's possible that we know is likely to become possible? It's like unmet. What matters? 2035 seems like – It's so far away now. I can't even think about like May. No, I know. It's like we're pulling, if you like took like the normal path without AI and like things we were building and knew we needed to build and like assume we needed to build, we're like taking the 2030s and 2040s and we're like packing them in to the next two or three years because so much is happening right now.

7:38Yeah. And that means we're taking the 2050s and 2060s and going to put them into the end of the decade and the start of the next decade. It's just like so much cool stuff. My favorite one this week, every week there's something. My favorite one this week is I was with the guy who runs Joby Aviation. I was actually doing an episode with him. And it's just like it turns out there's just going to be all these ways that jets and airplanes are going to be like 10 or 20 times as efficient in the next decade. And like he's launching in the next year, obviously, these current flying cars. But actually, there's like massive things that would take him three months before.

8:07You do it in an afternoon now with his aerodynamicist. It's crazy. Yeah. By the way, it's funny because I feel like before AI took off – or like right at the beginning, like right after ChatGPT, so much of the conversation felt like it was around like you know agi asi and like is this you know is this like sci-fi terminator taking over and then as everything has like become super commercialized and you know these are great businesses and it's proliferating the economy in a weird way feels less sci-fi now and more just like there's just cool things to build there's so much and people underestimate like really smart people like he was saying like his right hand had just like a list of like 50 things he wished he could work on a build and just wasn't the resources wasn't the ability now we're going to get through it all there's just there's so much to build it's working what's interesting is that that mindset though i don't think everybody has it you know and like you can see this actually you know in in high schoolers or something where some percentage of high schoolers i think are like becoming like you know putting on an iron man suit with ai but you can also use ai to just sort of like skate by and so you kind of see these like big skids well it's like it's like soma the sci-fi sci-fi it's a heroine right it's like it's really scary like you can use you can use ai to be your heroine you can use ai to not have to do much at all you can use the i to lose all your agency there's like a very negative version of it and there's like this extremely positive version of it and you know this is a cultural thing we got to figure out how do we get people to be more agentic themselves how do we get people to engage and to choose to get dopamine from iterating and winning and not from sitting there and attaching it to their brains you know it's like a hair like tiktok is evil yeah and i hate that x is having to copy it because the the financial incentive for social media is evil right now yeah no i mean you're saying x copy you know you on x you go into a video you start you scroll you're like it's bad you're on tiktok again i've blocked i've blocked tiktok for years partially because the ccp and stuff but partially because also i don't have the willpower not to freaking scroll these things so i block it i block instagram i can't deal with it yeah and like i'm an investor with elon and x i guess i mean spacex now so maybe it doesn't matter but it's like so i so i have it you know and also i'm addicted to like commenting my stupid views online i'm arguing with paul and g we were today whatever uh he's a good guy but i got angry at him but but like but like but then you go on this thing and it gets addicted to you late at night too it's horrible.

10:10I don't know. I'm going to have to turn it off. It's terrible. Yeah. I feel like tech probably lost a decent amount of trust with the public as a result of social media and people being like, you know, they don't care. Like the tech industry is just like here to like monetize eyeballs and make money off of us. You know what's ironic? It's like, generally market forces are really good in our society. Like they cause us to have to work hard to solve problems. They're going to bring down the cost of so many areas if we can get rid of chronic capitalism in the media itself, like with newspapers and in social media, market forces are terrible.

10:41Yeah. Because it's like because it's because an attention economy, your incentive is to like distract people and just like polarize them. So it's just like that is like the worst area of society for tech. And unfortunately, that's what we're known by. It's really bad. It's also, you know, it's you know, I'm not like some I'm not anti journalist. I'm not, you know, against mainstream media or social media particularly. But, you know, it's like even with journalists who I really like, it's not their fault always, but you know, they might write a great article and then somebody, you know, some editor, the crazy headline on top of it because they got to, they got to grow a business.

11:14It's, it's a very bad incentive and it's actually, it's ripping apart our society right now. And these, these bubbles that it creates in social media, there's probably half your listeners. If they're, if you have a typical listeners who are like, Oh, that Joe Lonsdale guy, he's like, I don't, I don't like him. He has different views than me and he's offense. He offends me. And the other one's like, yeah, you go. And it's like, It's so unhealthy. Well, and the problem is, you know, the middle of the bell curve, who is neutral on Joe Lonsdale, is not going to get shown this because that's not how the algorithm is going to work.

11:39And so I'm going to show everyone who either loves me or hates me. Probably. You know, it's like in general, I think. I'm going over some haters maybe. That's right. Yeah, we'll try. That'll be our goal here. We'll run a survey afterwards. Thank you. I feel like that is probably the problem with social media, though, is it just amplifies extremes. And like a middle of the road, neutral, agreeable take is not incentivized. Yeah, I know. Most people are boring anyway. That's true. No, no, no. Here's the thing. I was on a walk with one of my mentors at the dish just before this. And she comes from the moderate left.

12:08And I don't, obviously. But I actually think like most issues, there's a dialectic where there really is truth on both sides. And what I'm trying to do lately is like actually step back and just like what are the dumb people on each side, but what are the smart people on each side? And I think social media does not do that. Like I wish there was a way for it to do that. So relating this to AI, I feel like the tech industry has some currently missed opportunity to do a better job with our relations to… We need people to love AI more because otherwise we're going to ban it and it's going to hurt us.

12:37And they don't love AI. All society is going to hurt us. I don't think America loves AI right now. Not enough people. Yeah, I think not nearly enough people. They're scared, right? It's understandable. I think they're scared. Why don't they like it? There's a threat for jobs, obviously. And so if you're in an industry where it looks like, you know, you're seeing all these headlines. Do you know anyone personally who's worried about their job being lost? Just to be totally honest. Like, oh, my life's going to be tougher. Because everyone talks about it, but no one knows anyone. Everyone thinks it's not coming for me.

13:01Exactly. I think everybody believes it's going to happen to everybody else. Who are we afraid for? I'm actually really curious. Who's the architect? Because if you walk through it, it's hard to get to the person. You know, what's interesting is we should be, you know, software engineering, let's take as a good example of like, it's probably the best application of AI right now. I just saw a chart that job postings for engineers are going up and are as high as ever right now. There's so much to build right now. And so then you have the question of are we basically just amplifying the value of that function and so there's going to be more demand because it's more valuable?

13:30There will be. Oracle did cut, I think, 30 ,000 or 40 ,000 people because there were things that they had to do with 30 people that have to do with three people now and they just don't have as many of those things to do. So there definitely are already things where you're seeing some cuts for sure. The question is, can those people now in this economy do better? And I think most of them can. But that's been another agentic question we have to ask about. But so then why do you think we're sort of like failing to make AI look like a positive force for the world? Because everyone hates tech from social media.

14:00I think social media has had a terrible impact on our democracy. It's ripped things apart. It's like very distracting for people. It's not good for kids. It's like terrible for young girls especially. I have five daughters and a son and it's like I'm not letting my young girls on social media if just for everything I think it's poison for them And so this is like the last their last consumer experience with us And now that this is like the next social media to them. Of course. They're afraid of it Like I think that's the energy. Yeah, you were mentioning to me before that China likes AI more than America some survey show me it's like 75 or 80 percent positive and we're like 30 percent positive now They may just take better direction from their leaders than we do So that's a cultural question.

14:39But I also think there's more optimistic about how they could build with it and create wealth with it, which people should be here too. I think this is gonna, so the last time we had productivity go up a lot over 30 years, it was like the working class person, the median was like 2.4 times wealthier. There was 1870, 1900. So more than twice as wealthy, real terms for working class. I think it's gonna be more than that the next 30 years. I think it's gonna be like four or five times wealthier the next 30 years if we allow this to work. This is amazing. I think people will start to see, Hopefully, if we don't make it illegal, just what it could do the next five years, I think it's going to be really positive.

15:10It's almost like we need it to proliferate quickly, though. Because to that point, we were just talking about these founders who are having these explosive businesses. You have a lot of people who are resistant to AI. That sounds like the beginning of wealth inequality to me. Well, this is why we have to actually make sure that the applications of AI that help the middle class, that help the working class win faster and make sure they're legal. So right now, for example, like the number one thing I think AI could do for 350 million people in the U.S. is we can make health care like half cost, like really fast.

15:41Like health care should cost half as much and it should be way better. It should be way more convenient. How? Well, there's a bunch of different levels of this, but we need health care services and AI. We need to actually have primary care, work with deterministic AI where you're allowed to start a business that has one doctor and has a bunch of nurses and a bunch of others. And it has input through AI and they optimize it. And they do things through AI that we know are safe. And we prove out, here's 100 different workflows. So Utah just allowed one workflow. They allowed, if you have a chronic disease and you've been prescribed medicine by a doctor, your re-prescription can involve AI.

16:11It doesn't have to involve a doctor. And they're testing it out. So what I'm pushing right now is a healthcare AI sandbox legislation. You know, we have Cistero Institute, which gets things done in like 20 states. So we're trying to get a few states to create an AI sandbox where we can very safely prove out dozens and then hundreds of kind of primary care workflows. and then that would allow huge cuts in costs for these things. And then there's a bunch of other areas of healthcare, of course, he goes after as well. But this is, you generally can have AI practice more safely for a bunch of things where it's actually better.

16:39Yeah. Yeah. I mean, I think there's going to be so many of these. We just have like, there's like a marketing problem right now, it feels like to me. Is that we, well, you guys are the better marketers than me. I need help on that. Well, I don't know either. I mean, you know, like - Let's fight to actually bring down costs for people. That's a good marketing thing. One thing I don't think helps for, you know, and you were close to this, obviously, you know if we can talk about a little bit you know at a high level at least about like the department of war thing that just happened i mean i'm actually interested to hear so you think it doesn't help because i think it doesn't look bad or what no i don't think that i think it's um i think what what it is is um when you have two companies or you know other you know where you see them at odds and you see everybody fighting we're fighting and there's this dynamic of like when you know the pigs roll around in the mud everybody's messy kind of thing and it's just like just a negative energy around like everybody's like telling each other everybody is trying to project that like the other side's terrible you know you know what's funny is that the positive is that it is still being used right now with palantir and anthropic and it's working like really really well this is like the one of the most accurately fought wars with least civilian deaths and the most bad guys falling so fast which is amazing you know so it's like there's all this positive for the u.s if you know what it's like it's like a nasty um it's like a nasty primary election before the general election it is like that you know and it's like hey like there's this sense I have where I'm like, on some level, like, if we all really care about AI getting there, you don't want a really nasty primary before the general.

17:59It doesn't help. It doesn't help. And so I think there's a little bit of that. I'd be curious, like, you know, because you're obviously very close to the Department of War. And so like, you know, with... My friend Emil and then Depsec Feinberg and all these guys in the middle of this. Yeah. And so it's like, you know, with most people in tech, it's like, you know, people, you know, got sort of their tribe to some extent or whatever. And that's fine. We were talking about this ahead of time. That is my tribe, but I was trying to tell you ahead of time that even though I'm on, and I can explain why, I think they're right and Palmer's right.

18:29I actually introduced Dario and Palmer and was trying to get them. I was trying to get them to get on. And it's like how you're saying you appreciate the moderate left and you want to hear the good side of the other side. I think it's really important in this state. If you've heard about the D.O.W. and Anthropic battle and you only think there's stupid people on one of those sides. You have to assume it's smart people who want good outcomes for the world. There's smart people who want good outcomes, who have their good point of view. So my main point of view, supporting the Department of War ultimately, is that you can't have the gray, complicated, nuanced decisions about what's allowed being made by the company or having the company involved in those.

19:04You have to be able to make those nuanced decisions at the Pentagon at the end of the day. And I think that's a fair, totally correct viewpoint. But stepping back, like, listen, originally Anthropic came from like a much more effective altruist. I'd call it very left, very different perspective. And originally they had like, I don't know, like 50 pages of demands for the Pentagon, which were ridiculous. And then to Dario's credit, A, he went and worked with the Pentagon ahead of time, more flexibly. He was trying to help America. He does believe America is better than CCP. B, he got all that 50 pages of nonsense after lots of iteration with his team and lots of work down to just two requests.

19:38And he really has boundaries of why they created Anthropik and what their boundaries should be. And that's in his mind. And he's managing a bunch of co-founders who have different views. you know and they got them all the way there they were working with them they tried really hard but at the end of the day like when they're in the room with the male there's 20 people and and you know the two demands were like no autonomy no surveillance and no surveillance and like and they'll say okay well for autonomy let's say we're going to be using one of palmer's autonomous fighter jets and something we're planning but in the anthropics involved in playing the whole thing is that not allowed or let's say we're using some autonomy in how we respond to an attack and they go, that's the fence.

20:16It's okay. Well, what if we're doing an attack, but then it's part of the attack we're using autonomy to respond to things autonomously. There's all these nuances and Dario's response, oh, just call me. We'll work it out. Just call me. And the secretary's like, well, I can't just call you. I'm in charge, not you. I can't have a CEO making the decision. So, sorry, spec where Dario's coming from, but I think the part of where I had to make the decision I had to make, I'm very sad I got into all the months. I'm very sad about that. no,

20:43there's some way for the industry to just like want to think of it as you know all on a team of you know this is going to be something that's good for the world yeah i think it's good for the world but i think we have to have debates and it's fair to have debates and there's going to be really tough debates about how this is going to be used and you know i think dario is right there are laws congress does need to pass that it has not passed yet because it hasn't even anticipated some of the nuance of like how can you even do surveillance and things with these tools you can never have done before so there so i mean listen there's a lot of good points on both sides here and we're going to have to work together and hopefully our republic can figure out some good rules.

21:14I hope it will. I think it will. On the defense side, obviously you've been involved in a bunch of companies like Palantir, Andrel, Saronic. Yeah, I started Palantir at Saronic and I only invested in Andrel. Only invested. Too bad. And everyone in the early rounds. So those guys are crushing it, man. It's so impressive to see. Three of them used to work with us at Palantir and then Palmer's a good friend. And it's just, yeah, and then Dino at Saronic. He's built more big ships than anyone else now. Fastest built ships since World War II that are big. It's so fun. Yeah, I mean, I wasn't doing venture 10 years ago, obviously, but it seems like there was no interest in this stuff now.

21:47And now outside of AI, it's like the hottest place. It wasn't just that there was no interest. Like when I wrote the check in Neanderthal, I had multiple people tell me they would never work with me again and to not even talk to them about their next round because it's so evil to be working in defense and working on weapons. It was like you had to basically be willing to just go completely against the cultural zeitgeist and be excommunicated, basically. But by the way, sometimes that's the most valuable things to do is when you do stand up to everyone. Well, it is crazy. I mean, Trey wrote something, Trey Stevens wrote something recently that's basically about like, you want to be funding people who are saying the thing that's not popular and not exciting and it's going to be the creation of the next.

22:21I love this. This is one of my favorite things. It's like, what does no one else want to do that is really important to do? Yeah. And by the way, to me, that's like a definition of leadership. It also, like, it both means you're playing in a space that other people aren't playing, but it also reflects a personality type that has like a very... You're willing to just say, you guys are all wrong. Yeah. It's important. Can I give you a crazy one right now that we're doing this working? That's what I want. So China during COVID ended up cutting off a lot of things from us. And they had this whole big strategy of like going after our biotech sector.