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- [00:00]
Joe Lonsdale
I think my take on this is probably not going to be popular with people of either political side. Recessions are actually good to have. Every once in a while, they clean out a lot of nonsense. You know, what happens is there's a lot of resources being used for things that are not productive in the economy. You obviously don't want a deep, deep recession that lasts for a long time. That's terrible. But at the same time, like, in order to have growth be better, it's like. It's like in order to have the tree be healthy, you got to prune the stuff that died on it, Right? And so in a lot of cases, that means cutting back a lot. Cut all the way to the bone, sometimes they call it, and just really focus what you need.
- [00:33]
Cody Sanchez
Hey, it's Cody Sanchez, and this is the Big Deal podcast for those who don't just want to be rich, but free and do what it actually takes to get there. Okay, today we have a guest I've been wanting to have on since episode one. He's a billionaire, but he hasn't built just $1 billion company. He's built like 12. Joe Lonsdale, Co founder of Palantir, huge company. Started an entirely new university at the University of Austin. Created an America First Defense VC8VC that is now, I think, $7 or $8 billion under management. They raise about a billion dollars every year. He's invested in some companies where we've got a little tiny check right alongside him. He also started Addepar, a fintech company worth $2.7 billion that does $2 trillion worth of transactions. I also invested in that bad boy. He started Cicero Institute, a nonprofit founded with the intention of bettering the country. It's incredible what this institute's doing. I was chatting with Joe afterwards. He thinks that his legacy might actually be Cicero, not everything else he's done, which is cool. So obviously, Joe is not afraid to.
- [01:31]
Unknown
Tackle the tough stuff.
- [01:32]
Cody Sanchez
Homelessness, criminal justice reform, American defense, AI, financial freedom for all. He's got opinions, and he's backing them up with action. And I think we can learn a ton from this man who. In a world where nobody is willing to take a stand, in a world where maybe somebody that's 1.1.1% of the country builds $1 billion business, he's built multiple. And he's doing it all on a mission, not just to make more money, although I think he's got plenty of that, but also to change the world around us. And I'm glad there are humans like him that exist in this world. And I think you're going to like this conversation with Joe Lonsdale. Whether you agree with his politics or not is kind of irrelevant when somebody has a bigger bank account than you. I always like to learn something from them, even if I disagree with them. I want to understand how their mind thinks to see if my mind can come up with better ideas in the competition of ideas. And if so, then I bet you can even change the mind of a billion. So today in this episode, we talk about, what does it take to build a billion dollar company? How do you spot top talent and CEOs? How do you get them networked in together? What is wrong with the government today? What about economic policies that sound really great but actually could make us lose all our money and become a bankrupt nation? And what is the fun in being an entrepreneur with lots of zeros behind your name? And how can you affect the world around you? All right, let's get into it.
- [02:52]
Unknown
Let's start with some hard questions. I hear that Palantir's name originates from Lord of the Rings. True or false? And are you a Lord of the Rings, nerd?
- [03:01]
Joe Lonsdale
It's true. I have to give Peter the credit for the name, although I also appreciate it. There's a lot of good symbolism in the name, you know.
- [03:07]
Unknown
Yeah, but explain it, because it's from the seeing stones.
- [03:10]
Cody Sanchez
I happen to be a Lord of the Rings, nerd, so I'm on your level here.
- [03:14]
Joe Lonsdale
So in the story, like 2,000 years ago, there's all these bad guys coming into the land. And the elves helped craft these, like, really powerful magical objects to give to the humans to help stop the bad guys, help secure the land. They can, like, look through them and communicate and coordinate. And it's successful. It stops the invasion. It keeps the land peaceful, it gets rid of the evil orcs. And then the problem is, of course, is 2,000 years later, a bad guy captures this and then he's using it for evil purposes. And so when we were starting the company, we were realizing it's actually really dangerous to create anything really powerful in the world. And there's all these new possibilities of powerful ways you can help the government see the terrorists, find the bad guys, figure out how to stop what's going on. Which, obviously, after 9 11, this seemed really important. It was scary. There was all these bad guys in the world that wanted to attack us. We wanted to help stop them. We did. But the whole point is you have to build in all these civil liberties frameworks. You have to watch it Carefully, because when you create power, it can be captured and used for evil.
- [04:08]
Unknown
It's interesting because if you were to explain Palantir, one of your companies, I think sometimes it could be confusing for the every person. What exactly is it?
- [04:15]
Cody Sanchez
It's data, it's AI.
- [04:17]
Unknown
It's all of these words that maybe seem like a bad guy could use it.
- [04:21]
Joe Lonsdale
Oh, yeah. I mean, I think like, maybe like a decade after we started the company, there was a James Bond movie where the bad guy was basically building Palantir. It's very easy. It's very easy to turn to the evil thing. But, you know, Palantir worked because we worked really closely with a lot of the special forces communities and the teams and people like that who are competent. And we helped go to Iraq, we helped reduce the number of IED deaths and really kind of, you know, fix things, make things work. And the government was spending billions and billions of dollars and they'd gotten way behind Silicon Valley. So we thought, what can we do to put something together to help them and help stop the bad guys?
- [04:55]
Unknown
And you obviously have a very storied history and now have. How many companies do you think you've actually started?
- [05:01]
Joe Lonsdale
Well, we build a lot of companies, so definitely at least a couple dozen. But so far there's only about eight or nine that are pretty big.
- [05:08]
Unknown
Yeah. And by pretty big, you mean billion dollar companies. Yes.
- [05:13]
Joe Lonsdale
You guys like to be like a billion.
- [05:14]
Unknown
Yeah, exactly. There's just going to be a really clickbaity title.
- [05:17]
Joe Lonsdale
Put like dolls signs and flash the bee. That's kind of my style.
- [05:21]
Unknown
Let me help you with branding. Now, what I think is interesting, though is I've heard you speak at little small events here and on a bunch of interviews. And despite you building, you know, palantir, let's call it 67 billion. In what market cap and, you know, 8 VC. 7. 8. $10 billion in assets under management, something like that. Addepar, which we are a tiny little investor in from the beginning, too.
- [05:47]
Joe Lonsdale
Add a par is the biggest number because there's $7 trillion in the platform. Yeah.
- [05:51]
Unknown
Under management on that one.
- [05:53]
Joe Lonsdale
Yeah.
- [05:53]
Unknown
Put you on a mountain of money. So despite all these things, I've also heard you speak about sort of with this, like, sense of longing about original building and how, like, there's something really powerful about a small group of people building together and how that's sort of the foundation of America. Do you think that is still accessible for young people today? Could they build their version of Palantir today?
- [06:16]
Joe Lonsdale
Yeah, I mean, that's the whole point of America is that we build things from scratch. And when something's broken, when something's not working, you know, you build a new. And frankly, America needs a lot of new institutions right now. The only way to start an institution is to start from something really small and get going and. But, you know, I would say, though, building is not always about building the big things. I think the most important thing about America is just building anything at all. Building a small business, building a way to help your community. Most of what works in America is there's like hundreds of thousands or millions of people each building something small. And altogether that's still the majority of our economy. It's the majority of what's really positive. So I don't think it has to be big to be important, but the idea to go out there to be entrepreneurial and to try to create something that's a really key part of our country.
- [06:56]
Unknown
And you're still building. I mean, you could have stopped after the 47th company or whatever, but you kept going. And you obviously find, like, some pretty wild joy in this. You're also not sitting in maybe what's considered a center of power. You're in Texas.
- [07:10]
Cody Sanchez
Right.
- [07:10]
Unknown
You could be in dc. You could be maybe in New York or la, if you wanted to control attention or money or, you know, maybe the government in some way, shape or form. Why do you keep building?
- [07:22]
Joe Lonsdale
Well, I mean, it's, it's. The most important thing in our country is the builders. Right. That's like everything else is basically just living off of the fact that there are a lot of people who are helping build and work and create things. And it's, it's, it's fun too. And there's, you know, when we build things, you know, I mentioned we call it venture capital is the investment part. The entrepreneurship is the building part. And in either of those areas, there's really two things that matter a lot. One is what's newly possible. Now, that's a really fun question. Like, what's a new thing you could do thanks to new technology, thanks to the way industries work? And then the other thing is just how do you get the best talent? And just like you would to like, you know, win a sports championship or have the best football team, like, who do you get on the team and help you win? And those are. These are fun problems to work on.
- [07:59]
Unknown
Yeah. You've now invested in what I would assume would be hundreds of CEOs. How do you find topics? Talent? Can you tell almost immediately if somebody's or not.
- [08:08]
Joe Lonsdale
You know, Alex Karp, who is my co founder of Palantir, he is this great philosopher and has all these theories of the mind and he'll meet someone in two minutes and he'll know all sorts of things about them. I don't have that magical power, unfortunately, but maybe a tiny bit of the fairy dust rubbed off on me or something. Yeah. But it's not really, that's not really what I know how to do. We do know how to work with our networks. We know who's already the best in certain areas. We know how to find people who've done amazing things, you know, in the thousands of companies in our network and then try to convince them to build things with us. We do have a great talent network.
- [08:38]
Unknown
So what do you think is your unfair advantage or superpower?
- [08:43]
Joe Lonsdale
You know, it's a, it's a combination of, first of all, optimism and seeing how things can work. So I think most people who I'd consider smart people, you know, that I met at university or science and engineering, I think their first question is usually, is usually why it won't work. And so I think. So I think being optimistic is really important. Being good at strategy where you kind of like really study, understand things and you know, having, having strong opinions, you know, looking at things and saying, okay, this is why this is broken. And I, you know, and I think this is why it's broken. I think you're all wrong and I'm going to show you why it's broken. But then you have to take that strong opinion. You have to talk to a lot of people and you have to iterate. So having a strong opinion, but having it loosely held enough that you can kind of make it more accurate and make it better when you continue to work, that's also I think a pretty hard thing to do. But it's a learnable skill.
- [09:33]
Unknown
So what is the way that you do that in a company? You've been with some big personalities, obviously. Peter Thiel, Alex Elon, and I imagine you guys all disagree intensely at varying points. Do you have a framework for how to do that in a way that doesn't just end up in emotional distress and entrenched sides?
- [09:52]
Joe Lonsdale
Yeah, you definitely have to have debates. You definitely have to talk to a lot of people with whom you disagree. You have to bring in others and learn about things. You know, a lot of people just generally don't have strong opinions. And so when you do have a strong opinion and you see other people who do, that's actually in some ways that can cause you to fight, but in other ways it cause you to respect the person. Okay, so now let's get to the bottom of this. What do we have to prove to see who's right? And then you go and you prove it, you know.
- [10:17]
Unknown
Interesting. And so if that was to happen between us, and I was to say, well, I really strongly believe this, your natural inclination is, I'm going to push to find the truth. And it really doesn't cause you much distress to have that conflict, whereas a.
- [10:27]
Cody Sanchez
Lot of people do.
- [10:27]
Joe Lonsdale
Or we can make a bet about it, too.
- [10:29]
Cody Sanchez
It's really fun.
- [10:30]
Joe Lonsdale
A few of those going with friends right now, really.
- [10:33]
Unknown
What's the best story about a bet that you've made like that?
- [10:37]
Joe Lonsdale
I mean, right now, obviously, just last night, my friend and I are going back and forth on who's the most dangerous for the country, which presidential candidate. Of course. Right. And I. And the bet we have is that if. Whether or not. Whether or not. If Kamala wins and she wins the Senate with a decide, does she have new Supreme Court justices or not?
- [10:55]
Unknown
Oh, interesting. So then you can quantify, because it would be hard to determine who's more dangerous because we'll only have one that wins.
- [11:01]
Joe Lonsdale
Yeah. So whoever she. So if she wins, if she. If she doesn't add any new justices in the four years, assuming she also won the Senate. Yeah. Then he'll win.
- [11:09]
Unknown
So how much money does he win?
- [11:11]
Joe Lonsdale
Well, it's a lot of money. Very passionate about this right now.
- [11:16]
Unknown
I like that. And so you have a lot of friends, as I've seen, on both sides of the aisle, both Democrats and Republicans, 100%.
- [11:23]
Joe Lonsdale
And this is really important. I think it's crazy that our country has gotten to the point where people like, I don't want my kids to marry people who are. Think differently, and I want them in my life. And it's like, that's so unhealthy. And I mean, listen, if someone's like an extreme socialist and they're trying to lead a socialist Marxist revolution, I'm probably not going to get along with them very well. But we live in a pluralist society, and it's really important to work with people who have different views. I bet the majority of the scientists I work with are probably some form of on the left. That's. That's the kind of the culture at the universities. Doesn't mean I want to work with the best scientists in the world. Doesn't. And, you know, most of the time, doesn't mean they don't want to work with me as well. We still can get great things done, and you can save lives and, you know, you can create new medicines you couldn't create otherwise. They need my network and financing and understanding of how to build things, and I need. I need their breakthroughs. So, I mean, yeah, you got to work together.
- [12:09]
Unknown
Yeah. Well, we were even talking about this beforehand. That even on. Let's call it the Right. If that's where you sit, there's division inside of that.
- [12:17]
Joe Lonsdale
And so being there's a huge civil war here in Texas as well, on the right, it's a big deal right now.
- [12:22]
Unknown
And what do you mean by that?
- [12:24]
Joe Lonsdale
Well, I mean, there's a lot of people. I mean, the Paxton issue is one issue. It's a huge one in Texas. And some people see it through the lens of Donald Trump's being wrongly persecuted, so he is, too, and we shouldn't fight anyone on our own side. And other people say, well, if you broke the law, I did all these things, and then we need to, like, make. Make no room for breaking the law. I need to be honorable. And it's just. It's, you know, these things. People. People start going back and forth and fighting over things. They disagree on facts, they disagree on intentions, they disagree on principles. And there's a lot of people who are very angry at each other. And, you know, it's complicated for me to be stuck because I'm like, yeah, I really want to get all these things done that are positive. Let's not fight. But at the same time, so I don't want to fight, and I agree with the really strong policies, but then I also agree the principles are really important. And so. So it is really complicated how you handle these things.
- [13:09]
Unknown
Yeah.
- [13:09]
Cody Sanchez
You know, speaking of which, you had.
- [13:13]
Unknown
Some really interesting tweets on, you know, kind of civil war in a different way. But I liked this one in particular, which was the truth is that anyone who fights for something real will inevitably be seen as controversial. And, you know, here you're kind of. You're talking about meritocracy, equal justice, capitalism, things that perhaps weren't so controversial before, but are now. I told you beforehand that we had one of the vendors from our podcast actually have pushback against different people coming on the podcast because they thought, you know, I don't agree with this idea. So because of that, I shall not work on it. And instead of having thoughtful disagreement, I'm just going to say, no, I'm out.
- [13:51]
Joe Lonsdale
I think a lot of young kids are taught that these days that you're supposed to cancel people. You're not supposed to platform them. You're not supposed to let them chat, which is. It's really sad. I think obviously we should be debating these issues, not just telling people that they should disappear and go away, you know?
- [14:03]
Unknown
Yeah. And so do you ever get scared by putting out really controversial opinions? Does that scare you anymore?
- [14:09]
Joe Lonsdale
I think scared is the wrong word. I do think there's certain things that are just not worth sometimes debating for, like how controversial they are versus the positive impact you can have. I mean, there's. There's hundreds of possible things we could talk and debate about. And, you know, if I'm going to go somewhere, like, maybe it's not worth, like, debating about January 6th and what happened or what didn't happen for a particular crowd, because then you're not going to get anything else done because they're just not going to listen to you, because I hate you, based in your view. And so there are some things that are so polarizing that when you're trying to get things done in the world, you say, like, yeah, I do think this, but I'm not going to say it. But then there's other things that you say, you know what? This is so important that even if people aren't willing to work with me, I feel like this is so important for our country. There's my job to put this out. And a lot of people who are successful, they're really. They're really cowardly about what they're willing to put out because it's just. It just helps them to keep being more successful by not being polarizing at all. And therefore, their whole life, they're just so careful. And it's a little bit sad because if you're a billionaire in our country, if you just put out, like, standard kind of moderate left Democratic stuff that goes along with that party, then you're like, you're totally fine and everyone's going to like you and everyone's going to not attack you. And I have a lot of friends who in person are like, joe, I totally agree with you. This is crazy. Like, I can't believe they're doing this. This is so wrong. But of course, I can't say that in public, would mess up all my fundraising with all these pension funds that are run by Democrats or something like that, you know? So it's, it is a little bit sad, the kind of cowardice we see. You think you can make more money. You'd be like, elon, and just say what you think and yeah, that's not how 98% of these guys work.
- [15:43]
Unknown
Interesting. What do you say back to them when they say that to you?
- [15:46]
Joe Lonsdale
You know, I say back to them. I realize that sometimes it helps you get things done to virtue signal and to go along and then I have stress in your life. But this is a really important thing for our country. So let's consider allying on this and pushing this forward. You don't have to like make lots of noise about everything else, but at least take a stand and be bold and save your civilization. Because if no great people have no people with resources stand up for our civilization, we're going to lose it.
- [16:10]
Unknown
Yeah, I think that's really important. It's interesting too, because I found, you know, even like I was getting ready this morning and I got my hair makeup done, as you can tell from all the face paint I have on. And I was talking to the two young women who are doing it, and I was just asking them out of curiosity, how's your business doing? And they both said, well, business has slowed down a lot. And I said, yeah, how much? And they're like 30, 40%. We ascertained that number after we talked through it a few times. And I said, is that normal for this time of year also? No. And so I said, well, what do you think is happening? And so we started to kind of talk about the economy in not so many words and explain that maybe we are coming into a recessionary period. And even small things where they were talking about, you know, there's a certain type of hair that has to be done consistently and one that's low maintenance and thus like 3x less expensive. And what was interesting is I was talking to them, I was like, well, do you want, you know. So when you're thinking about this from a political standpoint, does this change your mind on things? And they were saying, well, in one instance, our two biggest costs are overhead. So lease their lease for their little unit, Right. And then also their inventory. And they're like, our prices have gone up massively on inventory. And so I said, well, that's interesting. Why do you think that might be? And so we were like kind of talking about this a little bit, and I was curious your take a little bit because one of them said, well, it would be nice if they capped prices, you know, if we could have some price caps on things. At which point I had your visceral reaction and I had to really think through how would I explain what that meant? What is your take and how do you Explain to people who might not understand what an esoteric word actually means for their life and their livelihood.
- [17:51]
Joe Lonsdale
It's really interesting because when you get these kind of policies on the left that ignore how markets work, what I've learned is that there's people in the middle like that who are good people and they didn't study economics and they don't realize they don't work. And we'll talk about why. But then there's also people on the far left who are extreme. And the reason they're doing this is not because they think it's going to work. They're smart enough to know it doesn't work. Yeah, but this gives them power. And so we should talk about that too, right? So there's really two things going on here. It's really important. Most of these dumb policies that are our job, when you look into them, it's not because the people are all that dumb, it's actually gives them power. So, so first of all, why does this not make sense? You know, we've tried this all over the world a lot the last hundred years. You know, this is a classic thing of communists and socialists is let's just make certain goods really cheap. When you make certain goods really cheap, you get scarcity. Because if you can't make a profit making the good, you stop making the good. And so, so that the price in the market doesn't reflect, it doesn't reflect like someone like price gouging, right? There's like if someone, if the price is really high, there's a giant market, like there's tons of businesses, someone else could start a competitor and they could do a lower price and that lower price would win. And as long as you have markets, as long as you have free people, you're almost always going to have people bringing the price down to what's a reasonable level. Like a lot of, you know, the supermarket price gouging is the one that's been in the press a lot and a lot of people said, well, the supermarkets are making so much money they're making like 1.5% margins. And yes, at scale, 1.5% margins is a giant number for Walmart, but it's 1.5% right at the end of the day. So I mean, you can't lower prices much more and they to be profitable. And if you do start setting them, you're going to make them go bankrupt or you're going to make them not provide certain things. And then by the way, prices are going to go even up a Lot more. And so basically, I don't know if we have time to go over what prices mean. If there's signals of how, there's signals to the market of how the work it takes to get everything else. It's like this complicated thing that exists that lets us deliver goods. It doesn't rip people off. So anyway, so there's all these economics. We can read more, you can talk to other people, see it online. But then what's really happening here? Well, if you look at the price gouging law that Kamala Harris and Senator Warren and all these people on the very extreme left we're putting forward, it's actually something that applies to about 23,000 big companies. And it would give them a lot of arbitrary power to harass these companies and tell them to do things. And guess what? If think of these, we're talking about these cowardly wealthy people. Think of the cowardly wealthy person, one of those 20,000 companies who doesn't want to be harassed, who wants to be able to keep doing their business. What do you think they're going to do? You know, they're going to be friends with them, they're going to give donations to them, they're going to go to D.C. and hang out with them. Are they ever going to speak out against them? Of course not, because they speak out against them. Then they'd have a price gouging investigation. I was talking to a friend here who's building this like big, I won't say what it is, but some, some big popular thing for a lot of people here in Austin. And he had the inspectors come and there is like something they found after looking at everything, they say it's okay, just donate $100,000 to each of these three groups. And there are three, like very progressive left Democrat groups. And then we won't like, we won't like make you like do the millions of dollars in fees and fix it and everything. And this is how it works when you have kind of a more socialist state is you put lots and lots and lots of rules in and then, and then you basically selectively enforce them and kind of get, use that to get power to your side. And so this is, this is where, this is where the legislation is really coming from. It's not ever going to fix prices. And everyone's smart who studied this understands that, but it would give them an amazing amount of power. And she wants that power to use in our society, which is scary to me.
- [21:18]
Unknown
Fascinating. It reminds me of when I was working in China for A bit. And they talked about how in China they don't have rule of law, they have rule by law. And so they can have all of these rules that allow people to say, well, if you do this, we can actually use the law as a stick as opposed to protection 100%.
- [21:36]
Joe Lonsdale
And this is where the regulatory state is terrifying because once you have, as we do, millions of rules, if someone wants to come after you and fine you for something, they will. If they want to go to attack Elon to punish him for speaking up, they will. And they do. And they do this to a lot of our friends. And this is why you need, like, government that's checked. Like, the government should be afraid of us, not us of them. They should be afraid of their bothering people for wrong reasons. People can get together and fire them. That's how elections are supposed to work. Not some unaccountable mass of people that just harassed you. So things have really gotten out of control in this country and we really need to take back. Power for the people is I think, what a lot of people are realizing.
- [22:10]
Unknown
Yeah, I think. Well, I certainly agree with you on that. You know, speaking of maybe government ineptitude, but also applied to businesses. You had another tweet that I liked that said, you know, we can't hire the right people, we can't fire almost anyone. Our bureaucracies have been getting steadily dumber, more bloated, more broken for decades, and it's breaking the country. And you were talking a little bit about, you know, this, the decline of merit based hiring and the focus on accountability and what it should be. Can you talk about this some more? Do you think that DEI actually helps organizations in society?
- [22:43]
Joe Lonsdale
Yeah, this is a really important one. It sounds abstract to a lot of people. A lot of people have their everyday concerns and they're like, why do you care about this like merit based hiring thing? That sounds great, but I want to put food on the table and I want to get to work and I want to be afford healthcare for my kids. So, like, what the heck is this thing? And it's really interesting because in our society today, the government is huge. It spends a ton of money, right? It spends trillions and trillions of dollars and it's in charge of like, putting in more charging stations, putting in more roads and putting in more buses, putting in like, everything, right? And you keep seeing recently, it keeps spending tens of billions of dollars of stuff that just, it's all wasted or it's all, you know, given to their friends, of course, but it's all, it's all, it's all. It's like, like you know, seven charging stations after spending $10 billion or think it did like a handful of buses for billions of dollars on something that people don't talk about that for light, right?
- [23:32]
Unknown
Light Speedway in California.
- [23:34]
Joe Lonsdale
Oh yeah, exactly. We have this supposed to train in California that's just like given $20 billion to a bunch of basically sketchy lawyers and supposed like minority owned businesses that are run by their friends that aren't actually doing anything. They built almost nothing. Right. For insane amounts of money. It's, it's embarrassing for our country and our country's becoming a place where we can't build big things. So what's, what's going on? Well, you know, our government didn't always used to be run by stupid people. This is a big deal. It's like, you know, there was, there was this. It's fascinating. The Civil War. This is mid 19th century. The civil War. Abraham Lincoln. Back, back on my wall, hurry. A bunch of things signed by Abraham Lincoln is one of, along with George Washington and others. Like I love the early American founders and presidents and you know, he made the government a lot bigger. Don't necessarily agree with all of that, but they did, they agreed 1883. Afterwards they said, you know what, we're making like tens of thousands of hires in our government, but we're just hiring all of our friends. Because of course if you win, you want to hire your friends, reward them for helping you. And it started to be a little bit of a mess. They said this is not good. So they passed an act in 1883 called the Pendleton Act. The Pendleton act put in merit based tests. So in order to run things in government, in order to be in charge of huge budgets, you had to be pretty smart and be understand the area you had to pass the test. We had those tests for about 100 years. But what happened and by the way, during those hundred years we went to the moon, we fought World War I and 2, had all sorts of really hard, complicated, amazing things that the government was involved in. And what happened is in the 1970s we started to have these very progressive left movement in all of our courts. And they said wait a second, these tests, are these the right things? And they look. And they said, well our research does show that doing well in tests makes you good at running the government. But our research also shows that minorities get much lower scores on these tests. So these tests must be racist. And so they decided that we're not going to have any tests anymore in our country. So this was, this was a, basically a form of DEI. It's like proto DEI in the late 70s and it was under Jimmy Carter's administration and then eventually the courts pushed it and finalized in the early 80s. So for 45 years we haven't had merit based tests in government. At the same time Jimmy Carter said we're also not going to be able to fire people. And it really wasn't even him was there was a Democrat Congress. But anyway, they said basically if you want to fire someone, here's all these new procedures. And so they made it almost impossible to fire people who are doing a bad job in government. So you, so you have, you can't test them anymore, make sure they're smart, you can't fire the bad ones. What do you think happens? And so all of a sudden we're spending trillions of dollars by these groups that are, they're not nearly as competent.
- [25:57]
Unknown
That's fascinating. I didn't know that. So you could basically point in a lot of ways, obviously we can't totally tell causation but to the increase in maybe even amount of government employees. Because now, you know, you see right now there's some pretty decent job numbers before the most recent one, government employees.
- [26:14]
Joe Lonsdale
It's so embarrassing. Like, oh, we have amazing job numbers. You just, you just took a bunch more, you know, spending more and more money on, on frankly fake jobs. And I, I feel badly saying that because there are some people who are work for the government who are great and there's some people who are trying really hard. But if you just arbitrarily hire more and more and more and more people, it's like that part of the country is not what's actually creating wealth and funding things. Like it's all has to be funded by the other part where we're actually building things in the real economy.
- [26:37]
Unknown
Yeah, well, you talk a lot in your businesses and in the government about incentives. And I think one of the most difficult parts about the government is the incentives are perverse. Whereas you know, if you don't spend the entirety of your budget, well, you.
- [26:48]
Cody Sanchez
Get it taken away.
- [26:49]
Unknown
And so there's actually no focus on profit. There's only focus on continual expense and having continual employee employees.
- [26:56]
Joe Lonsdale
It's even worse than that too because your reputation is like how many people who work for you. So they're all trying to justify like in my companies, like if it's run well, you're trying to justify how to do something with, with less expense and fewer Resources because there's an incentive for that in the government. You're trying to justify hiring more people.
- [27:12]
Cody Sanchez
So I talk a lot about business buying and I get a lot of questions about it. One of the most common ones is where do you find a business to buy? My answer is sad because the worst deals are oversaturated marketplace sites, but the best deals are off market or curated deals. Either way, finding a business to buy usually kind of sucks. I think it should suck less actually. So that's why we invested millions in this company. It's called Bizcout, a business buying marketplace full of the best deals for both on and off market businesses. It's brand new, it's built different and we've got verified buyers. So what does that mean? That means the best sellers that are actually interested in listing will get responses. We've got scout sites, AKA at a glance. What's the quick analysis of this deal? We've got off market data so you can get all the info you need to do direct outreach efficiently. We've got embedded lending so you can get your own financing for the business right where you buy it. Bizcout is brand new, so go check it out because we're going to be adding so many features over the coming years and I hope that in the future with you guys and your feedback, we change the face of main street buying and selling and turn a few thousand more people into owners while we do it. Because you're a big deal listener, you actually get some goodies. So go to the link in the show notes if you want to see Bizcout and if you want to think about buying or selling a small business.
- [28:31]
Unknown
So let's talk a little bit about the economy and some changes. So it feels like it's starting to slow down. There's lots of people talking in the ether about founder mode versus manager mode, about wartime CEO versus peacetime CEO. A lot of this generation has never seen a true recession. They saw maybe a V shaped downturn during 2020 with COVID but immediate government spending to fix it. And so they really, they've never lived or worked in a in a down period. So as somebody who heads multiple companies, what are you telling your companies right now and how do you think differently in this market versus the last 13 years?
- [29:09]
Joe Lonsdale
Yeah, I think my take on this is probably not going to be popular with people of either political side. Recessions are actually good to have every once in a while they clean out a lot of nonsense. You know what happens is there's there's a lot of resources being used for things that are not productive in the economy. And you need a sensor mechanism. You need certain things to go bankrupt. You need to, you know, you obviously don't want a deep, deep recession that lasts for a long time. That's terrible. But at the same time, like in order to have growth be better, it's like, it's like in order to have the tree be healthy, you got to prune the stuff that died on it. Right. And so if you, if you never prune, then it then doesn't do as well. So there's something like that here. So, so I'm not like scared of a recession. It's not a horrible thing. I think our policymakers are too negative about them. I think it's normal to have cycles where you have recessions. The goal is for them to be short and then to have high growth afterwards. And you know. Yeah, exactly. We need to be wartime CEOs. You need to take over and cut things that are necessary. You need to focus on making sure your default alive, which means you have enough cash coming in to pay for things. And so in a lot of cases that means cutting back a lot and really focusing on, you know, we call it like, you know, cut all the way to the bone sometimes they call it. And it's just really focus what you need.
- [30:15]
Unknown
Yeah, yeah. I was reading some interesting data about, you know, recessions and expansions and if you can be one of the companies that survives a few of those, you know, you are 3x more profitable and maybe in some cases have somewhere around 9x more revenue. And so I think there's a really good argument for if you can make it through this. If you can just survive during a downturn. Your ability to thrive on the upturn mathematically looks to be a lot more aggressive.
- [30:41]
Joe Lonsdale
The way our society does better is it has higher growth overall. If you want higher growth overall, you want more of the resources going into the really, really well run companies and not into the ones that are sloppy. And so a recession kind of cuts the sloppy stuff, which is rough because that's rough. But, but, but it's, it's actually necessary for a free market economy to work well.
- [30:59]
Unknown
Yeah. Now with your, with your companies, do you go and talk to them about how to run differently in this environment? Like are you going and talking to all the APC companies? Do you talk to your, your, you know, capital allocators about how they should invest in companies differently? Does the thesis change depending on the economy?
- [31:20]
Joe Lonsdale
Yeah, it's Been really hard to know when the recession is going to hit because you keep getting these waves of government stimulus, sending out money and, and it's kind of. So it's like. Yeah, so we've been, we've been worried for a couple of years that at some point, as a reaction to all this, like, overstimulus, kind of like being on some kind of drug high, like you have to have a crash. And so, so we've been basically trying to make sure companies take advantage of the money around, raise a lot of money on good terms, have a lot of Runway that they can kind of get through it. A lot of our more established companies, things I built like, like Addepar, for example, which is the wealth management technology company, trying to make sure it gets default cashflow positive. And so even though we're being very aggressive and building a lot of things there, we're also also watching it carefully that it, that it doesn't need to raise money just because what can happen if there's a recession? If things go bad? There might be a couple years where it's tougher to raise money on good terms. You don't want to be forced to try to do that.
- [32:09]
Unknown
Yeah, you also, I think, have some interesting takes about existential threats that your companies have faced before. And so was there a time where you were like, oh my God, we're not going to make it, we're running out of cash, everybody's going to hate me, I'm a terrible founder, and what do I do next? And if so, what happened?
- [32:31]
Joe Lonsdale
Oh, all sorts of times like that. I mean, early on at Palantir, like a few of the key people were just about to quit in year three because it was taken so long to, to get the government to take us seriously enough and to use it. And we really, you know, it was interesting. I found it happens a lot when you're on the verge of success, that people are exhausted and they're about to give up and you just need to like, get them to like, double down for another year and then you can make it. But that's, that's, that's a common theme with a lot of companies I've seen, where it's like, you gotta push so hard, you get exhausted and you got to convince people to have a second wind and you got to find a way, whatever inspires them. I think in that case we try to bring in people like from MI6, which is, you know, the intelligence agency. Yeah, yeah. This guy, Sir Mark, is my friend from. There was number two there for decades and you know, named M, which is kind of cool. And he's so, so you're, you bring in people and you expose them to their problems and you, and you inspire them with what they're working, what they're working on matters and show how it's close and it's tough because you do. I mean startups are a lot of times like building a bridge to somewhere you're not exactly sure where it's going to. And that's, that's a very scary thing. You have to be, you have to be a little bit overconfident sometimes to do these things. And so no, no, I think OpenGov is another one. So we sold OpenGov this year for $1.8 billion. And there were multiple times when we thought OpenGov was failing early on. Zach's an amazing CEO who, he helped me start it, but then he came in as full time CEO a few years in and we just learned a lot. We built a tool to help governments and help cities and state agencies compare to others and see how they're doing. And it turned out that when the budget turned down, that wasn't a tool they absolutely needed. So it was actually kind of useful at first. But then they saw them stop paying us. We're like, oh, this sucks. We learned that we actually have to build tools that run their everyday processes. And so we had to kind of rejigger and like do things that they already had budget for. And then, you know, at one point our engineering team just wasn't strong enough. And I'd been busy, I was a chairman, but I hadn't noticed. And we'd like been missing milestones and like crap. So to bring in a call in favors, like bring in all these people and like, you know John Chambers, who built Cisco, which is a very large company, his former cto, CPO Ponkage came in and we just like helped us and helped us hire people and my CTO boss car so we'd have all these people we just had to bring in and like fix it and you know, we could have just given up a couple times. It was like, we're basically out of money. The revenue wasn't going up, didn't look like it was working, realized the team had been demoralized and the best people had left. What's happening is Facebook and Google were stealing them for like twice the salary. Because this is based in California, in Silicon Valley and you're paying people like 250, 300k for good engineers and it got to a point where the top tech companies were paying like 6, 7, 800k and they're stealing people away. And even if they were sort of loyal, it's like she's like, Joe, what am I going to tell my wife? Or you know, what am I going to tell my spouse? In their case, it's like, yeah, I agree, you kind of got to go for the higher paying job. We're not growing, so yeah, we thought we were gone, but Zach really doubled down, really brought in some great people and we're able to actually make it grow and be successful. But these things are hard.
- [35:25]
Unknown
Yeah, definitely. And I do think the other part too that you mentioned about in our companies, what I try to push upon them a lot is look how often these big huge companies like Facebook and Google lay off massive amounts of their staff. I mean, we see it nonstop.
- [35:41]
Joe Lonsdale
We need to trim back sometimes.
- [35:42]
Unknown
Yeah. And I think one of the nice parts, but you would know this better than I, our companies, I just sort of have a visceral reaction to hypergrowth, inflated salaries to grow. And then you cut 20 to 30% of the workforce because you didn't forward plan that well. And I've never built a billion dollar company, so I really have no idea. But one of our, I think our differentiators is like, yeah, we're going to grow a little bit slower than other people perhaps, but you're going to probably make less money, but you're going have less volatility. How have you thought about layoffs in your companies and growth and how do you think about that type of.
- [36:18]
Joe Lonsdale
I usually tell people you're going to have a little bit less salary, but the upside is going to be worth so much when you get there that overall you're going to make a lot more money. I think, I don't think it's ever a good pitch that someone's going to make less money over long term. I think you want people to be part of something that they're going to do really well and if they can. So for me anyway, that's the pitch I usually have. Palantir had very low salaries. You know, actually when I was working with Peter Thiel, must have been 21 or so. We conducted a study, had me look into of CEO salaries. And so it turned out there were three different cohorts at the time, salaries were lower. This was turning 42 this week. So this is 21 years ago. But it was like there was one band was like 75k and under, there was like 75k to 120 and there was 120 and above. And the CEOs for startups that were 75k and under, like just massively outperformed the ones that were 120k and above. And it was kind of mixed for the middle salaries, but it was like, but the low salary CEO is just massively outperformed. And there was something about like, like just, it was very clear they were there to like to have, get upside and not to, not to get paid. Especially. Especially it got even worse when you got even the higher salary, like 200, 300k salary CEO for startups, which is like massive underperformance versus low salary ones. So that's interesting.
- [37:27]
Unknown
Do you think that still holds?
- [37:29]
Joe Lonsdale
I think the bands would be different today because I think you can't even live on that much money in these expensive areas very well, which may be obnoxious to say for people listening in other areas, but these are really expensive areas to live. So you probably need to raise the bands. But yeah, I think it's, it's definitely still a really important indicator. It's not, it's not like the main thing for how we invest, obviously, but it's definitely one of like the 10 things you want to check when you're investing in a company early stage is if they're there to pay themselves a huge amount. That's a huge red flag.
- [37:54]
Unknown
Yeah, that's a good point. Yeah. And I guess the best CEOs we've ever invested in, they wanted the upside. They were like, no, if you have two options and one of those options is much more if we win, I want that.
- [38:05]
Joe Lonsdale
So what I did at Palantir is we actually ended up putting this in all of our offers is we'd give them three offers of different salary and different equity. And then we'd show them. And we have a little caveat down below is kind of fun. We show them like if the company has certain outcomes, like what might the equity be worth? So this is really fun. Imagine you're one of Palantir. You'd say like, well, you can make 60k or 80k or 100k for this position as an engineer, but then like, and then you get obviously a lot more equity investing over the next five years for the 60K. And you know, if the company's worth a billion dollars, your shares could be worth, you know, 10 million. And if the company's worth $5 billion, your shares could be worth 50 million. And they say, Joe, you shouldn't put $5 billion that's totally unrealistic.
- [38:46]
Cody Sanchez
Jokes on them.
- [38:47]
Joe Lonsdale
Isn't that funny? So many people gave me a shit for making the table with 5 million. Is the high as the high outcome. Fascinating because it seems like a lot of money back then.
- [38:55]
Unknown
Yeah, it's still a lot of money. But I think that you're. That's really interesting too because theoretically, if you were this greedy billionaire capitalist, you'd say, I'll pay you 200k, no problem, no equity. But like investing is one of the very few areas in the world where you know, as opposed to charity, like you could invest in somebody and that person could become richer than you based on the capital you invested in them.
- [39:17]
Joe Lonsdale
Oh, totally. I have people I've backed who started giant companies who are worth a lot more than me. But frankly, if you're greedier, you want everyone around you to have upside because then they're working harder and it's. And also it's just long term greedy. It's long term greedy. And you couldn't, you couldn't. I mean, if you want to sleep at night, like you need to make this theirs too.
- [39:34]
Unknown
Yeah.
- [39:34]
Joe Lonsdale
Especially by the way, if you're doing more than one thing, which is usually a bad idea to do more than one thing. But because I'm in a position where I'm helping start these things and get them going and helping kind of coach them, I want them to feel like their company, not my company. I may become up with the idea, but you want the person, the people involved to feel like it's now they're ready and they've iterated and they've taken it and it's theirs. And you know, it's one of the reasons why I don't always talk about a lot of the other companies I helped start is I think it'd be demotivating sometimes for some of the CEOs, I think I'd rather they were in the media more because that's because it's theirs and they own it and it really is more theirs now, you know, So I think that's a better way to do it.
- [40:09]
Unknown
I like that. How about, how often do you think for a fast growing company you have to completely redo your executive staff? Like how many people came with you all the way from the beginning from Palantir?
- [40:22]
Joe Lonsdale
Palantir was unique because we did have five or six extraordinary individuals who have grown over 21 years. Yeah. And it wouldn't be, I wouldn't say came with me because I'm definitely, I'm an advisor, but I'm off the. I'm off the train, so. But it's, you know, Alex Karp did call me on Friday when they got into the s and P500 earlier.
- [40:39]
Cody Sanchez
Oh, I saw that.
- [40:40]
Unknown
Congratulations. That just happened.
- [40:41]
Joe Lonsdale
It's a big milestone. It's a big milestone. And so I'm still very close to him. And Steph Stefan, who is my college roommate, is a co founder and people like Sean Sankar and Aki actually been there the whole time, as have some others. So Palantir is unique in that they have, I think we had just such a strong team that they were able to scale the vast majority of the time. You are very often upgrading and redoing a lot of the positions and even Palantir has had to upgrade things and change things. It's not just upgrading people, it's changing your structure. I think this is very important, if we're talking about startup world now, is that if you're building something at scaling the right way, you're going to report to each other and set goals and kind of have a, have a heartbeat of like, what everyone's doing and how you're coordinating is going to be totally different with 20 or 30 people than it is with 50 or 60 people than it is with 150 people. And so a really great startup will leader will kind of reevaluate these things really every like six months even. And sometimes it'll be a whole year, year and a half, but sometimes you'll have multiple structural changes even in six months, because you have to. If you're growing so fast and it feels very much like you're doing something wrong, it feels like, oh, everything's broken. This coordination doesn't make any sense. I'm a horrible leader. This is a mess, but let's just try to redo it this way instead. And almost like it's supposed to feel that way if you're growing. Well, it's not. There's no like, clean, perfect way for these things to work.
- [41:56]
Unknown
Thanks. This is a therapy session for me mostly.
- [41:58]
Cody Sanchez
Forget about the podcast. I feel good about life now. This is sort of random, but we.
- [42:04]
Unknown
Were talking before about some people that we, we both know and have met here. And I was telling how I had some funny interactions with them.
- [42:10]
Cody Sanchez
And I've noticed, maybe in Austin in.
- [42:12]
Unknown
Particular, but it's gotta be even more.
- [42:13]
Cody Sanchez
In San Francisco that a lot of.
- [42:15]
Unknown
People who are wildly successful are neurodivergent to some degree on the spectrum.
- [42:22]
Joe Lonsdale
Nice way of putting it.
- [42:23]
Unknown
Asperger's. As fuck like, whatever you want to say.
- [42:25]
Cody Sanchez
Like, have you noticed that at all?
- [42:27]
Joe Lonsdale
Weird. But I think I'm less weird than a lot of my friends.
- [42:29]
Unknown
Yeah, you're. You actually are highly sociable, which I don't think is always the case.
- [42:32]
Joe Lonsdale
I'm, like, right on the fuzzy line where I can kind of pretend to be sort of normal for the sake of your cameras.
- [42:36]
Unknown
That's the goal. How long does this last?
- [42:39]
Joe Lonsdale
You know, let's. You got to go hide a little bit. No, it's. It's. Yeah. I think in general, people who are entrepreneurs, people who are different, sometimes that's because they don't fit in to the other boxes. Right. And sometimes that's in a positive way, sometimes that's in a negative way. You get people who couldn't fit in to get a real job, try to be an entrepreneur, actually. Just dysfunctional. That's bad, too. And so. But, yeah, no, I mean, people. People who are different can sometimes do things that other people can't. And so you definitely get a lot of them in the Valley.
- [43:09]
Unknown
Yeah. And do you think that, like, throughout your life, you have to have outgrown a ton of people? Like, has there been many points in your life where you've had to leave others behind because of your level of success or they didn't understand you, they didn't agree with who you'd become?
- [43:23]
Joe Lonsdale
I don't really. Well, I don't think I left. I lost friends from who I'd become or anything like that. I, you know, I. If anything, I've probably been, like, too loyal. Sometimes it's really hard for me to fire CEO who I've, like, built something with and sat together with. And I usually want to, like, get to the point where they're also convinced that it's. It's like, the right move for the company. And. And so it is. It is a really. It is a really tough thing. But you. Yeah, you definitely have things where things don't work out and things have changed in your life. It is a little bit annoying to me. Like, because of my level of success, I'll have, like, these acquaintances I never would have heard from before, like, reaching out for things, like, constantly. Right. And so. And it's like, it wasn't even that social in high school. We had our, like, own small group of, like, I guess, somewhat nerdy friends, and I had other people around. But now all of a sudden, like, everyone, like, remembers you, and it's like, it's like. So if anything about it, leaving people behind is the people I left behind are no longer wanting to be left behind is kind of how this stuff works, which is whatever, it's fine. And it's like this is just a normal way of thinking. So it is very fun to be in a position where you can help a lot of people and you can do things. You know you can. You know you can, you can. There's a rare disease somebody, somebody's kid has and there's ways to like do research on it you couldn't otherwise have done before. There's all sorts of cool things you could do being in my position, which is positive. But no, I wouldn't say I'd like lost too many friendships thanks to these things. I do think I'm so busy that sometimes I don't always have time for as many as many of the old friendships. But you know, some of them, the ones who are really close, those are precious because you can really trust people you've known for 20 years. Especially when you're in a position like mine. It's just really nice to be able to have old friends you can trust, you know?
- [44:58]
Unknown
Yeah. And that don't really want anything from you.
- [45:00]
Joe Lonsdale
I mean, everyone wants things from each other. But it's like I trust them, you know?
- [45:03]
Unknown
Yeah.
- [45:03]
Joe Lonsdale
I think I like, I try and convince them to come on like trips and stuff with me. And so maybe I want them to come on the trip more than they want to come. Who knows?
- [45:09]
Unknown
Oh yeah, that's true. You're always like hela, skiing somewhere, breaking stuff.
- [45:13]
Joe Lonsdale
I did have ACL surgery. The trick with hella skiing, it's not that dangerous if you don't put the skis on too tight.
- [45:18]
Cody Sanchez
I don't.
- [45:19]
Joe Lonsdale
It's still.
- [45:19]
Cody Sanchez
I don't know, I feel like a lot of your logic seems reasonable.
- [45:22]
Unknown
That one I don't know about.
- [45:24]
Joe Lonsdale
Well, also don't fall, Cliff.
- [45:25]
Unknown
Those two things minor really.
- [45:28]
Cody Sanchez
We've just got two months before my first ever book is out in the world. If you want to preorder it for yourself or anyone you love, you can do that. The link in the show notes, if you're thinking about buying businesses, if you want to scale small businesses, if you want to own Main street, it's called Main Street Millionaire. It's for you guys. You know, these days, lots of people.
- [45:48]
Unknown
Have a lot of negative things to say about billionaires. Billionaires shouldn't exist. Billionaires are bad. Billionaires take from society.
- [45:54]
Joe Lonsdale
Are they really negative? Is this a jealousy thing or what is it?
- [45:58]
Unknown
I think, I mean, I can never ascertain Somebody's emotions as to why they do something. But you can just look at what they say on Twitter.
- [46:06]
Cody Sanchez
Let's say if they're not a bot.
- [46:08]
Unknown
And I guess my thought here would be one. Does that ever annoy you? And what's your comment back? Like how do you explain to people that it's good for society that we allow uncapped upside side for all very.
- [46:19]
Joe Lonsdale
Self serving arguments we have to make? Let me tell you why I should.
- [46:23]
Cody Sanchez
Be allowed, why I should be a billionaire.
- [46:26]
Unknown
Oh gosh, you give away a lot of it to be fair, of course.
- [46:29]
Joe Lonsdale
Like we're starting universities where have teams in 20 states trying to fix laws that in ways that are nonpartisan, that just make things efficient and functional. Listen, I, you know, I think it's a really question, interesting question for a free society. Like do you want all of the money to be run by committees? So right now, first of all, our society, there are trillions and trillions of dollars, right? Like over the next 10 years our government's going to spend like probably about 65 to 70 trillion plus minus 10% trillion, right? This is so much money. If you took away all the money for the billionaires all combined, I think it's what like 4 or 5 trillion. So this is a very small amount of money like relative to like what our institutions are managing right now. And you see our institutions and you see them when they try to build these things, they, they, they light money on fire, right? You, you literally have I think 300 billion a year are going to NGOs which is the non government organizations. These are mostly nonprofits that are like trying to like do things with progressives, right. And trying to create more activists and like I think mostly amassed. They're not accountable. You have, you have all sorts of committees that run trillions of dollars in pension funds that run trillions of dollars for government to give out to things. And the amount of return you get from the relatively small amount of money controlled by the billionaires versus the amount of money controlled by our big institutions, to me it's just obviously much higher. Like if anything I would love for Elon and Mark Zuckerberg and Bill Gates. And by the way, I do not have the same politics as some of those guys I just mentioned. Especially not Bill Gates sucks in the middle right now we're trying to pull him over but like kind of seems.
- [47:58]
Unknown
Like he might be open.
- [47:58]
Joe Lonsdale
He's becoming a little bit based, right? This is good. But Bill Gates for example is like totally different politics than me. I would Love for him to spend more money through the Gates foundation rather than how we're spending it right now, because it's just so much more competent. Even where I disagree with him, it tends to be more competent. So I guess the thing and then the other thing is I do believe in the moral principles of freedom and autonomy and being able to create things. I'm not out there, like, stealing stuff. I'm literally just like, building new companies that didn't exist before, taking my small piece of them, investing that in other companies, taking my piece, investing in other ones. So I think, and by the way, every time I do it, I pay pretty high taxes already. So I think it's interesting, like, overall, our society would probably work better with more people with wealth and more people investing. And that is by way why America is so awesome. America has hundreds of thousands of multimillionaires who are investing in things in their communities, who are building things. And it's that money that tends to actually, you know, when you own something, when something is your something's yours, when something is tied to your family, that just gives you the incentive to make it functional. So I think that that's what free society is. It's a bunch of people who own things, who care about them, who want to make the functional for themselves. Whenever you drive in a city, or if you drive in a city and you see a building that's like, dilapidated and broke down and ugly and abandoned, there's a really good chance the government's involved. Really? Because when the government owns something, it's nobody. So they don't have to make sure it's used, they don't have to make sure it's nice. They don't have to make sure it's worth it. So when you look at Soviet Union in the old days in East Germany versus the fries part in West Germany, the part the government owns is ugly and it's broken and the plumbing doesn't work in these places and things have been stripped and no one ever replaced it, and it's falling apart and. And it's sad. And what that is is that when no one owns stuff, it just breaks. And so the fact that we already have the vast majority of our resources run by government right now, I think that's the problem. Right? And the problem is not this other part, which is smaller, which is that which we create and which we build things with. So I think it's a very unfortunate kind of left populist thing to try to focus you on the billionaires over here. When there's actually this much bigger, obviously broken part of our society that's really scary. It should be scary to all of us.
- [50:17]
Unknown
Of course. I mean, tragedy of the commons. I've seen it again and again in Latin America. I used to run a business in Argentina, and I remember a young woman, you know, Christina Fernandez, came up and wanted to be president of that country. And came with beautiful commentary and very flowery words. And I think that the path to hell is often paved with good intentions. And they ran us out of the country and nationalized all businesses and those businesses that used to be producing for highly resourced country that has all in a highly educated country too, by the way.
- [50:49]
Joe Lonsdale
And last year, that's the amazing part. It's so rich, so educated, but with the wrong ideas. It became very poor.
- [50:54]
Unknown
Destroyed it. Destroyed it.
- [50:57]
Joe Lonsdale
It's really sad. Well, I'm a huge fan of Javier Millie, who's in charge there right now. Yeah, I know. Elon and I both, both look to him as something we'd love to do more of here in the US as well. A Fuera.
- [51:06]
Unknown
Yeah, agree. I really liked that video where he was just throwing away all of the government agencies.
- [51:11]
Joe Lonsdale
All these departments are just. A lot of them are fake. And they're just doing things to spread their control, not to actually help people. I mean, it's really sad, but, you know, if we can go back to the billionaire one more time, because I know this and then I always thought that turned to be silly. But, you know, I think there's about. In America, depending who you ask, there's tens of thousands of people worth more than a hundred million dollars. And Kamala Harris is targeting them right now is the classic populist policy. She wants to do something called an unrealized gains tax. And I could forgive people for thinking this might be a good idea, because if you're just like trying to pay for your healthcare and you have a job and you want to be able to afford things, and you see people making all this money and you hear some people aren't paying enough taxes. It's like, let's find another way to tax them and make them pay their fair share. So I think that first cut is like, oh, this is interesting. It sounds like a good idea. Now let's actually look into this. Unrealized taxes. What does that mean? And so a lot of people who have a lot of money, you have a couple options. One option is you just like go to the beach all the time and you relax and you party and you and you and you don't build things because you don't really need to anymore. The other option is that a lot of people who have that kind of money in our country is because they've actually been really good at investing and building. I'm sure someone got lucky, but a lot of them done it a lot of times. I've gotten lucky dozens and dozens of times. So maybe it's all luck. But at some point there's probably some skill from these people, probably some knowledge of how industries work from these people. And so it's actually probably good to encourage them to build. Let's say, let's say you take one of these people and I'm going to go build something I want to bring back, you know, So I built a multibillion dollar company with my friends that brings back advanced biomanufacturing to the US So this is helping do like gene therapies and cell therapies and curing all sorts of diseases. It's a really, it's that we actually, you know, mangoes mpic as well actually, which is interesting, but there's all sorts of things and we're doing it onshore because we don't trust China, we don't trust other countries to give what we need it and also creates jobs in America. It's a great thing, right? We want to bring more of these things back. So if you want to start a company like that, what do we do? We literally went, we raised $750 million for half the company. We bought some old plants that weren't really being used their capacity and we hired a few thousand people and we equipped them and we went off and then we raised more money at a billion, at $5 billion valuation. And so imagine starting a company like this and you're starting to produce and you're raising our billion to 5 billion dollar valuation. So now on paper, let's just say my senior co founder, who's a famous guy, Bob Nelson, he's a billionaire in the biotech space, suddenly his share of that company, let's say you go 20%, suddenly his share is worth a billion dollars. Now the company's just hiring people, just getting going. No one's going to buy his share for a billion dollars, his share, but suddenly, because he's already worth all this money. Otherwise she wants him to have to pay $250 million to the government. So instead of being able to take all this money and scale up our manufacturing, scale up our business, do everything, she wants him to have to sell out basically, you know, Sell to God knows who because it's, you know, and then have to pay tons and tons of money. And does that, does that make sense? And on top of that, let's say I'm doing this. Let's say I'm doing another advanced manufacturing thing for defense. I want America to be able to defend itself. I am doing that. By the way, as you know, we're building a bunch of stuff for that. And let's say I have a friend who ran the, ran the fleet previously and just one of the smartest people there. And we want to give him, he's now retired. We want to give him like a few percent, you know, from this company. And he's, he's been a good investor. There's a few, a few people like that have been a good investors. Other things, they've just crossed a hundred million dollar threshold. And I say, listen, I want to give you 5% of this new company. It's, you know, you're going to help out a lot. It's at a $500 million valuation, it's going to be $25 million. And he, and he and his wife look at this and say, oh, wait a second. Now that Kamala Harris has passed this rule, if we're going to take a $25 million upside in this illiquid, you know, hopefully help make it much bigger over the next decade, suddenly we'd have to pay $6.25 million a quarter of that. So suddenly, if we were going to do this, we couldn't all of a sudden buy this house we were going to buy with our kid. And so, no, of course not. We don't want this illiquid, risky thing that we're going to have to pay all this money on. And so suddenly he's not willing to help that he's not willing to bring the jobs back here. So what you see in a lot of words, what I'm saying is there's like systems that work certain ways, and if you put bad incentives into the system, so if you try to make people pay money they don't have, if they were to build, that actually gives, get less building. And so, so, so yes, you need to tax people for money they have, but to tax people with this unrealized tax thing. And by the way, like everyone in the valley, Democrats, Republicans alike, who understand how things work, they know it's a terrible idea. This is one of those ones that I wonder if she kind of knows it's a terrible idea too. It just sounds good to people. It's just by the way, it would expropriate so many of us. So it's like a communist thing, basically. Basically, it's easy.
- [55:47]
Unknown
Very well. And the other part I think that people don't realize is that everything's a slippery slope with the government. So, sure, you start with the 100 millionaires, but then you trickle its way down. And that's how all taxes has happened in this country. So if you think that you should be taxed when you go in and give your friend a hundred bucks because he's starting a startup and you want to invest some tiny part in his startup, but you are okay with not getting any cash back and having to pay 20 bucks for the eventual potential that you could make money, but probably higher likelihood that you'll lose it, then.
- [56:17]
Joe Lonsdale
You should vote for this policy 100%. You can invest in a startup early on. Your friend goes and raises a big round of much higher valuation. He says, the company's doing great. We just raise a bunch. Your shares on paper are worth this. And you're like, oh man, I owe all these taxes. It's crazy.
- [56:30]
Cody Sanchez
It's crazy.
- [56:31]
Joe Lonsdale
You should pay every. I mean, no country in the world does this. You should pay taxes on money when you have access to it, not when it's on paper. It's just one of these obvious things. And I think she knows it. I think this is like a. She's just so far left that she's. She's just kind of going along with this kind of fake energy from people, frankly, who, you know, I've talked to a few people. They don't understand this stuff at all. Of course they don't. So. So it's just. She's just taking advantage of that.
- [56:53]
Cody Sanchez
Yeah.
- [56:53]
Unknown
We actually went around Samuel and I to the University of Texas campus and we asked a bunch of people if a bunch of students at the business school if they should be taxed on unrealized capital gains. And it was fascinating to see their responses because most of them said yes first. And then I said, can you explain to me what unrealized capital gains are? And they couldn't across the board. And then I explained it and I said, now what do you think? And they're like, oh, yeah, that seems dumb. And so, you know, that's why probably it's important that you build it A Built a university, which is like the next thing I wanted to hit on. You basically saw the university system and were like, not only do I not want to fund any of the existing schools that are already out there. But I want to have the extreme excruciating pain of trying to create a new university and get accreditation, which you guys just got, right?
- [57:41]
Joe Lonsdale
We just that we have the first class.
- [57:43]
Unknown
You have your first class the way.
- [57:44]
Joe Lonsdale
We have permission to be a university. It took thousands of pages of regulation. The only, the official rule is that you can't actually be fully finished with your first accreditation until you've graduated your first class.
- [57:54]
Unknown
That makes a lot of sense.
- [57:55]
Joe Lonsdale
Yeah, exactly. They basically, and it's very funny because all the trolls online are like haha, the undercredited university. I mean the rule is that you can't be fully accredited until you graduate your first class. So. And this is, it's basically a cartel system. They don't want new competition. But you know, my co founders and I are very stubborn. So we're going to build a great university despite all the dumb rules trying to stop us. And it's going great. We've had thousands of professors apply. Amazing, amazing professors. We have, you know, from top schools and other places who felt persecuted in many cases by the extremes. These people aren't on the right, by the way. This is, this is a diversity of perspectives. But it's, but it's competent people who, you know, it's really liberal versus illiberal. Liberal in a traditional sense means, means open to pursuing truth and free speech and not shutting people down. Whereas illiberal means they want to censor you, they want to shut you down if you have the wrong views. And a lot of universities, they're very illiberal these days and that's unacceptable. We need to train our best and brightest young people to actually pursue truth, to actually speak out to not just virtue Signal.
- [58:52]
Unknown
Yeah, it's brilliant. I mean we're pretty big on online education, but more tactically in the trades and for small business.
- [58:58]
Joe Lonsdale
That's amazing.
- [58:59]
Unknown
But I do think that so much of the underpinning of society is, you know, history, philosophy, how the founding fathers have.
- [59:05]
Joe Lonsdale
You need some class of our leaders in society that study these foundational principles for how our country is supposed to work and you fight for them. And if we don't train anyone those anymore, we're going to be in trouble. Because that's how civilizations prosper is they have to understand their founding, they have to understand like why they work. They have to understand what their core is. And if you lose your core, then you lose a lot.
- [59:25]
Unknown
Yeah, well, it seems there's this like trend from the great CEOs and leaders of our time sort of they start out as either engineers or executors or doers and then they end up naval ravicant like philosophers and psychologists.
- [59:38]
Joe Lonsdale
Philosophy is the highest art in some ways. Right. And you understand people to understand institution institutions. How do you have massive impact on the world if you don't deeply understand people institutions? This is Alex Karp was, you know, the star student for one of the greatest living philosophers alive in Hopper Moss in Germany. My co founder of Palantir, Elon Musk, Peter Thiel. Charles Koch is, you know, calls himself the chief philosophy officer. He's a great philosopher. I've interviewed him before and obsessed with how he helps every one of his employees self actualize. Like he's obviously demonized by some people, but he's, he's extraordinary in terms of, in terms of applying philosophy. I'd say he's the greatest living applied philosopher business. He's 89 now. But yeah, these guys who had success at all these really high levels, the vast majority of them spend time trying to understand philosophy.
- [60:22]
Unknown
What books have impacted your thinking from a philosophical perspective more than any others?
- [60:30]
Joe Lonsdale
You know, it's, there's, there's no, there's no one in particular. David Hume was always a really important influence on me. A lot of the ideas of how he understood how the mind works and how reason worked really shaped a lot of how we designed Palantir and some of our technology early on. I think, I think a lot of the floss, I think a lot of the philosophy of falsifiability is really important. There's, you know, Kant is really confusing. I don't suggest people try to read it without someone to help. But one of the ideas Kant had that I always really loved is that in order to understand something, your brain has to have a model of it. So you actually have to try to build a model of how something might work. Like you're trying to play a game or whatever, like build a model and then, and then once you have a model, you can iterate on that model. So a lot of times in business when I'm trying to look at something, I just don't know how it works. I'll like force myself to try, even just guess how it might work with some kind of model. And then we say oh here's why it's wrong. But then you kind of, you're iterating and you get to the right model. So just fascinating to try and understand from some of these philosophers, like how you in mind actually approaches things. Then try to apply that.
- [61:29]
Unknown
Interesting. So in business, might a model often be? Is this their business model? Is this their organizational chart? Is this, like, what are the applied business aspects to a philosophical model?
- [61:41]
Joe Lonsdale
Well, you could, you could say, like, how does this part of logistics work? What is the incentive of everyone involved? And, like, who's paying who? Like, why is this, you know, I'll give you another one. For healthcare, one of the things a lot of people don't understand is like, how do people make money as a payer, as an insurance company and healthcare? And it turns out that we've capped the margins for healthcare. Sounds good. You don't want the insurance companies making too much money. But because we've capped the margins and because they make 20%, their incentive is now to make healthcare as expensive as possible. Because the more expensive it is, the bigger that 20% is. And you can kind of go around each of the players in the ecosystem and see what their incentives are. And you say, wait a second, everyone wants this thing to be way, way, way more expensive. Like, we've totally screwed up how we regulate this space and how we put it together. There's just, there's things like that that you kind of can map out and understand.
- [62:29]
Unknown
Interesting. So are you like queen's gamut? You're just like watching checkerboards in the air, chess boards in the air as you're visualizing models. Are you a visual?
- [62:37]
Joe Lonsdale
I was the California State chess, you know, for K to 6.
- [62:39]
Unknown
So that is you.
- [62:40]
Joe Lonsdale
Well, I. But I don't, I don't, I don't know. I don't know if that's how the brain works, but I do like strategy games.
- [62:46]
Cody Sanchez
You're listening to this podcast, so correct me if I'm wrong, but I'm going to take a guess that you either own a business, want to own a business, or are generally interested in making money. If that's true, I wanted to share this thing with you. I don't know why I've never talked about it before, but of all small business transactions, somewhere around 60 to 80% use some amount of seller financing to buy a business. Meanwhile, most people don't even know what seller financing is, let alone how to use it. So what is it? Seller finance is when the seller of the business becomes your bank to buy the business, so you get to pay them back for the new business that you own. Over time, using profits from the business, this makes it possible to pay as little as $0 down or a much smaller percent than with a traditional bank. It's one of the most powerful levers in business buying yet there's next to no info about it out there. So I went ahead and put everything you need to know about seller financing in one package. If you want to check it out, go to the link in the show notes.
- [63:39]
Unknown
What about when it comes to. So you have some philosophers that you've turned to. If you were a young man today, you know, and you probably have thought about this because you created a university, but if you were a young man.
- [63:49]
Cody Sanchez
Today, where would you say you should.
- [63:52]
Unknown
Read these things, you should follow these people, you should think through these in order to create some sort of foundation on which to build a principled, successful life?
- [64:01]
Joe Lonsdale
Well, I would. I mean, there's been a great conversation and debate for the last thousand years in the west. And I think that if you want to understand what's going on, you need to understand, understand that. I would, I would look, I would look to what the University of Austin is teaching in their courses. Right? I would look to, I mean, if you want to say, like you, what are the great business leaders reading? I think, I think Charles Koch would say, like Karl Popper and falsifiability and Paul and all sorts of those things. And, you know, I think in general, just like, look to the people you admire in business. A lot of them write a lot these days, A lot of them talk about a lot of these books.
- [64:33]
Unknown
You have a newsletter and a podcast.
- [64:35]
Joe Lonsdale
I do, I do. I do put things out myself as well. You know, I, I'm, I'm actually thinking of doing something on a little bit more about the kind of the fundamental values of, of liberty and the frameworks behind our civilization and why it works the way it does. I think a lot of people working in AI right now don't understand, like, the frameworks of liberty and why our civilization works the way it does. And it's very scary because they have, they have these very authoritarian biases if they're not careful. And so I think, I think giving a counterpoint to that's going to be important. We probably should put out more. They should be reading, so I'll be doing more of that.
- [65:05]
Unknown
Amazing. Actually, on AI, you've said this is going to be one of the best things ever for humanity. It can make things really inexpensive for poor people and for everyone else. But we've also heard people like Elon Musk say, your buddy, that it could be really bad for society too. What do you think as a broad generalistic stroke about AI today?
- [65:25]
Joe Lonsdale
So about nine years ago in California, I used to live in California, here in Texas, which we love. But I had a dinner with, it was actually Elon Musk and Mark Zuckerberg and about five other friends about AI. And this is like well before OpenAI and all of us assumed that AI was going to have a very, very big impact over the next 15 years, but it was just really unclear what the timelines were. And it was funny because even in that dinner, Mark Zuckerberg was definitely on the optimistic side. Elon was definitely on the pessimistic side of how it could destroy the world. And listen, Elon's obviously not only helped start OpenAI and X, he's also applied it at Tesla, applied other places. He's using it to do great things. So it's not like he has a simple minded approach where he's all negative on this, but he is obviously very, very worried about the long term, long term things that could happen with AI. I'm not saying obviously he's naive or wrong, but it's just so extraordinary over the next 10 or 20 years what AI can be harness to build and to accomplish and to create for our civilization. It's like this amazing, very positive tool that I guess I'm more focused on the positives and I tend to think that as we build it out and as it gets stronger, we can use it to figure out how to stop the negatives. There definitely is some chance many, many years from today that there's something that's gone exponential in intelligence. I don't think the universe usually works like that though. I don't think things just usually go exponential intelligence. I think, I think they get better at certain things over time that we use them for, to make everyone wealthier, to basically produce things much, much cheaper. And you know, in most cases I don't think it's going to be like Dune where we have to have like a jihad against the intelligent machines. Right. We'll see. Great movie.
- [67:05]
Unknown
Don't want to live in it though. Yeah, probably not. Yeah, I mean it was interesting. I was with my, the lady who cleans my house the other day, who's amazing and she is a first gen immigrant and she was talking about how her daughter is teaching her how to use ChatGPT, you know, and some of the others and how she's applying it to her business and she used it to create a little LLC so that she could hire a few other people to do it.
- [67:27]
Joe Lonsdale
I love it.
- [67:28]
Unknown
And you know, you could see sort of the immediate effects of she's 40.
- [67:31]
Joe Lonsdale
It'S so fast, you could do it right away. You could talk to it. I mean, smart enough to work. Exactly. For people who are, who are older and who are not tech savvy.
- [67:37]
Unknown
Exactly.
- [67:38]
Joe Lonsdale
It's making, and it's making the tech stuff more productive. Speaking of make everything more productive, we're doing it for healthcare billing. Healthcare billing wastes hundreds of billions of dollars for our country right now it's just this thing in the middle and we're making healthcare billing about four times more productive. So. And there's going to be all these areas you just like cut tons of unnecessary expenses out of.
- [67:55]
Unknown
Yeah. So I imagine that. I mean, if you look at the uptake rates of AI just for the everyday American, it's lower than I anticipated. Like for instance, my parents have never touched it. Right. So if you were young today, would you be telling people you should be experimenting with AI above everything else? You should be learning philosophy. What would be your core tenets for the youth?
- [68:16]
Joe Lonsdale
I mean, you got to do things you're passionate about. First of all, we can't. We. Our minds, our minds don't really work that well. No, you're not using your full mind unless you have emotional feelings about something, unless you're like really interested in it. Like this is one of the things where they scan like the best chess players in the world and they're playing, they're playing games. They have all sorts of emotions about all these different positions and it's like, is basically a way for them to like harness even more of their mind. Like when you're passionate about something, you're actually better at it. So. So for young people, find what you're passionate about. Of course learn about AI of course explore it. It's fun with little kids too. You can like make pictures. I have my daughters and I will tell the computer different things. We'll make different dragons and princess caves or whatever, you know, and you tell stories. We'll like write a story.
- [68:53]
Unknown
Four and six and young, right?
- [68:55]
Joe Lonsdale
Four, six, seven. Yeah. But a four year old can like amazing four year old could describe something she wants to see and can. We'd have a story, she could describe some silly thing and we could weave it into the story and you'd even have a naked story with you back and forth and you could tell it. You know, you have my daughters be characters in a story that we're working on and iterate on it and stuff. It's fun, I love it.
- [69:13]
Unknown
Samuel, you going to do that next? All right. Samuel's a new father, so he's probably.
- [69:17]
Joe Lonsdale
Got to wait till they're at least three for this to make sense.
- [69:19]
Unknown
She can't feed herself yet and talk or communicate, but yeah, okay.
- [69:24]
Cody Sanchez
Kind of where I want to close out a couple.
- [69:26]
Unknown
Couple. A couple of things. One is, I think people have beat up this idea quite a bit. But first principles thinking, you know, obviously categorized were created by Peter Thiel. But then you talk about a lot to this day, this idea of getting back to base level. How do you explain that at a very simplistic level?
- [69:42]
Joe Lonsdale
First principles thinking, yeah, And Bridgewater, by the way, was all about this as well, which is a very interesting hedge fund, right? It's the biggest hedge fund in the world. But it's really important you use. You've seen this in lots of. Of areas where you go back and you say, what are our fundamental assumptions? What are we doing here? Like, like, why. Like, what is our firm the best at? Why is there an opportunity here? What are. What are we going to like, what's our core capabilities? Right? These are really philosophical questions as well as how do you break down the frameworks for who you are and then say, okay, given these. Our core capabilities, what are the juxtaposed areas? What are the areas next to it that we can go into that are similar? And you'd see it's just. It's a really good exercise to keep coming back to because it reminds you. It reminds you of things. This is why building a deck is really good for an entrepreneur, even if a small business is. You want to put together, here's 10 pages on who I am, what I'm doing, what the goals are, why it's going to be successful. And I think a lot of entrepreneurs say, oh, I'm just so smart and fast, and why would I do this stupid thing that's for stupid people. It's not for me, and it's actually, it's for everyone because everyone needs to get back to. To the core of like. Exactly. Like what and why and who and how. And sometimes those principles, you'll notice, have actually changed in a way you have. Maybe you intuitively realize one of them has changed, but you don't really find it until you go back and actually write it down. So it's just such a helpful thing. You know, as a founder, I really admire the founders, not just of companies, but, you know, the founders of America as well. And the founders of America were really clear about their principles, and we're very, very lucky about that. There's all sorts of debates, there's all sorts of writings from that time, I grew up reading something called the London Magazine, which is the Founders of America and the people, you know, writing things in parliament and everything would write it and argue back and forth, even as you have all these primary sources of what was going on. And it was the light, the enlightenment kind of just happened over the last hundred years. And it was really a time where people were really focused on principles and society and what's correct. And so it was a great intellectual breeding ground for founding something like America. But I find founders in general who are the best are similar to the American founders, like, really debate these things and really come back to them and that and that. And it kind of refreshes and renews what you're doing.
- [71:44]
Unknown
Yeah. It also seems like you have to repeat yourself very, very often as a founder.
- [71:48]
Joe Lonsdale
And so you do, because you need to make sure people understand the vision of what's going on. I remember early on at Palantir, we'd walk around and talk to a bunch of the engineers helping me recruit and like, and like, what's the mission to you, in your words? Why are you excited about it, in your words, when you're talking to your smartest friends and we're going to go over to Stanford or MIT or wherever else we're going to go and recruit, like, they tell me, as if I'm one of them, let's talk about. Let's practice and let you know it's helpful. You got to do that.
- [72:14]
Unknown
And isn't that how you guys originally were able to recruit a bunch of engineers from top schools who maybe didn't want to work in defense or maybe didn't want to work with this upstart?
- [72:23]
Joe Lonsdale
Well, so I think the reason we were able to recruit a lot of the best people is we started with a bunch of the best people. So it's very chicken and egg. I, you know, from the chess world, from the math world, from Stanford, computer science, from my friends who, you know, were at Caltech and mit. We had a really strong group to start. And once you have a really strong group, people are like, oh, yeah, my smartest friend from Caltech went here, I should go check it out. And then you have to convince them of the mission when they come and convince them that they're going to be solving these really interesting hard problems.
- [72:48]
Unknown
Interesting. All right, I want to close out with a few fun ones.
- [72:53]
Cody Sanchez
Spending money.
- [72:55]
Unknown
What are some of the silly ways that you. He's like, look at my wall of.
- [72:59]
Cody Sanchez
Lincoln paraphernalia over here to the left.
- [73:02]
Joe Lonsdale
My Wife designed this, but she's not a spendthrift. But she did a great job, I think.
- [73:06]
Unknown
Yeah, she did.
- [73:07]
Joe Lonsdale
Yeah.
- [73:07]
Unknown
I would be shocked if you did this.
- [73:09]
Cody Sanchez
That would be a fun little aside for you.
- [73:11]
Unknown
But I think a lot of times, you know, I don't really like to glorify money for the sake of materialism ever. But I do think when you're young there's something fun about hey, I can take my work, I can turn it into this thing, I could buy something in the world. Is there something ridiculous that you spent money on early on?
- [73:26]
Joe Lonsdale
I think the things that are most ridiculous I spend a lot of money on but that are also really cool is, is like getting laws passed in the states to help people and it's really fun. So like, I know it's not material but like, I mean this. When I was 16, I bought a BMW, if that's what you're going for. Right. When I first made money, you know.
- [73:44]
Unknown
I was going to go for which size plane, but fine, we'll go with the BMW.
- [73:47]
Joe Lonsdale
So it's really cool. So for example, you talked about your passion about vocational stuff. I am too. I think it's really important for a lot of people. The problem is a lot of our vocational schools suck. What do you do if a state based vocational school sucks? What if it's being run by people who are incompetent and say there's 20 of these schools in a state like, like what do you do? And so the thing you do actually we figured this out, we spent a lot of time on it is you say, okay, the state is funding all these, starting next year we're going to fund these things in proportion to the average salary of their students coming out.
- [74:13]
Unknown
Brilliant.
- [74:14]
Joe Lonsdale
And so suddenly they can't game that they actually. So the schools freak out. They're like, what skills do we got to teach our students? What businesses we got to partner with to get their salaries up? Because you can imagine most board level conversations, they're probably talking about woke, they're probably talking about some nonsense award they're trying to get. They're probably talking about how to raise the salaries of some people there. Who knows? They're talking about these goddamn boards, right? But if all of a sudden it's like, okay, no, you are being funded based on your student success. Yeah, you know we've doubled the salaries of some students coming out of these places over a period of six or seven years. So imagine like spending, it's like, cost me like a few hundred thousand dollars of like Lobbyists and lawyers and my team traveling and all this stuff. There's. And we write op EDS for the. For the legislators and get to know the governors. So to pass one of these laws, it just, like, fixes this and, like, helps tens of thousands of students. Cost us a few hundred thousand dollars, which is. That's, like, so much cooler than a nice car I could buy. You know, I don't know. Cars are cool, but, like, it's actually cooler to do something where, you know, you've helped tens of thousands of people. And imagine you get to do that, like, dozens of times. To me, that's pretty cool.
- [75:13]
Unknown
And you get to build the world that you think should exist, which I think is one of the benefits of money.
- [75:17]
Joe Lonsdale
And you get to make it functional. Yeah, you get to make it functional. You get to make it. If we don't fix these people's lives, they're probably going to vote for Kamala Harris's nonsense stuff. If you fix these lives and they're happy and they don't want to tear things down, they want to actually be part of a functional society that then all of a sudden, they're not going to vote for the communism. They're not going to vote for ending America. They're going to vote for more of America because they're doing well. So the more we can fix things, the more we keep all. Everyone functional. Yeah.
- [75:43]
Unknown
And I do think, like, when my team asked me this, they got mad because I didn't have a fun answer on one of the podcasts, and my answer was, I like to hire people when I have more cash.
- [75:53]
Joe Lonsdale
There's, like, 20 people who work here, so.
- [75:54]
Cody Sanchez
Yeah, you literally, literally have a small army here.
- [75:58]
Joe Lonsdale
They help you get things done. Fine. Though. The other really fun thing that I bought recently, it's my favorite thing I bought this year by far, is Starling for my plane. Oh, that is obnoxious.
- [76:06]
Unknown
Not at all.
- [76:07]
Joe Lonsdale
Because, you know, basically, when you're taking off and landing, it's still perfect. And, like, I have zoom calls that work perfectly well. It's like, it's great.
- [76:14]
Unknown
Do you just call Elon if it's ever wrong? Anything ever goes sideways?
- [76:17]
Joe Lonsdale
Usually it'd be like, his number two because it'd be really mean to bother him. But, yes, tempting. Okay.
- [76:22]
Unknown
I want to end with something a little goofy, maybe, but there's so much going on in the world today that feels like a battle of good versus evil to me.
- [76:32]
Joe Lonsdale
Yeah.
- [76:32]
Unknown
And I know you're very principled, and I don't really know how to phrase this question, but do you think that we are. Is there sort of a spiritual warfare going on? Is there a battle for good and evil going on? What do you see? Because you're embedded in governments across the world, you see true evil in war zones with Palantir, and you've been on the, you know, front lines here in Austin helping homeless crises all the way to helping us win wars in the Middle east and China.
- [77:03]
Joe Lonsdale
I think most people in our society, first of all, are not evil who disagree with me. I think this is very important. So we definitely have ardent disagreement between good, well meaning people. And I would start with that. However, I think there is definitely some evil in the world. I think, I think the Islamists, this is not people who are Muslim, but Islamists, the people who are the extreme are, are terrifying and evil. And there are so many people full of hate, full of destruction, full of. Full of murder and horrible things. And so you get that in the world. I think one of the evils that I see all around me is the nihilism of the successful class. Successful people who, who are just out for themselves and their families and are too afraid to speak for. What they know is right is that there's a. Our civilization really only works if the people who are the leaders, the people who are successful, the people who, who are in charge of things, if they're willing to fight for what they know is true and what they know is right. And there's something really poisonous. It's kind of like a black pill, people call it, where they say, you know what? Things are so broken. Anyway, I'm just gonna get mine. I'm just gonna ignore this. I don't want the trouble. I'm just gonna just keep making more money or keep doing these other things, but I'm gonna have nothing to do with these battles. And they know these battles actually impact millions of people's lives. They know they're gonna really, really matter for our world. And they know what the right answers are and they're afraid to engage them. And that drives me crazy.
- [78:25]
Unknown
Yeah, it's beautiful. I agree. I think there's so many people listening to this who are entrepreneurs, who are building something, but say, I don't care about politics. Politics. I don't care about what's happening in the world around me.
- [78:35]
Joe Lonsdale
Politics cares about you. And. Exactly. You know, I think there's. I think there's hundreds of millions of lives on the line. I think there's all these things in our civilization right now where we have this really cool Research going forward that's going to save lives, right? There's all these things that are so functional that I'm just like, when I see I have a relative with a certain disease, it's scary. And I say, you know what? As long as our civilization is functional over the next 20 years, there's no. We're going to cure this because I know the technology is there. I understand. As long as we have the money to invest, as long as we can get people to work on these things. But if our civilization is dysfunctional, if we let people break it, if we let people do what they're doing right now with terrible ideas, whether it's price fixing or unrealized taxes or packing the court and God knows, you know what else with, you know, with our country.
- [79:21]
Unknown
Or gays for Gaza, that one really gets me.
- [79:23]
Joe Lonsdale
I mean, that's just like these people are very deeply confused. But if. But if you break. If you break things, right? If you have, like. Yeah, whether it's the. Whereas the commies and the Islamists or something else, and you break things and we don't keep kind of going upwards with positive feedback effects, we're not going to solve those things. We're not going to cure that disease from that person. We're not going to have people living positive lives. And frankly, we're going to have people having less children as well. It's a huge problem right now. I think if you make things more functional, like, we can very easily bring down housing costs, get rid of traffic. If our government was at all confident we literally could get rid of traffic for very cheap compared to all this other money we're spending. We have tunnels everywhere, no traffic. But it's like. And there's things like this that would let people have more kids. It would let people live, you know, whatever other happier lives they want to live. And I think it really matters. Like, these fights really matter. And I'm very frustrated to see so many people on the sidelines.
- [80:10]
Unknown
Yeah, it's beautiful. American optimist. I so appreciate you being on the pod today, Joe. Thank you.
- [80:15]
Joe Lonsdale
Thank you.
- [80:16]
Cody Sanchez
Now you guys get to say you were inside of a billionaire's house with me. Isn't that fun? If you liked this episode, please subscribe and share. Tag me on Instagram, where I reshare everybody who watches the podcast. That is the only way we get the word out. In a world in which mainstream media does not want you to get this word out, they'd prefer to feed you a bunch of proverbial lies as opposed to tell you some uncomfortable truths. I'm not that into that here. But the thing that's interesting about today, I was actually not going to say this publicly and I was debating it with the team and then I thought, fuck it, my show, right? And here's what happened. So Joe Lonsdale was going to come on the show and we had a vendor that was working on our podcast. They do some what's called pre production stuff, like come up with thumbnails or their interesting tidbits on the Internet. And this young gentleman reached out like two days before the podcast and basically said, hey, due to my moral beliefs, I do not agree with this guest that you're going to have on your podcast. And so I'm not going to work on this podcast, but feel free to send me other podcasts to work on. And I thought about that for a minute and I thought, man, that is everything that's wrong with our society today. That instead of when you disagree with someone, you try to dig in deeper to understand their perspective and define mutual truth. You instead want to silence them and you want to be no part of the conversation. So needless to say, we're not continuing with that individual. I believe hugely in the right of free speech and never in shutting down other people's words, especially when I disagree with them, because that is when you are actually supposed to protect free speech. There are trolls of mine all over the Internet that say ridiculous things and I've never once reported that they should be kicked off platform or that they should not be paid attention to, except if it was something that was violence. I think you have the right to say it. And so I thought I'd bring this up not to shame this guy, although I disagree with his decision. I respect anybody's beliefs to have whatever beliefs you want. I just think it is the core of what is rotten in our society today that someone who doesn't even know this individual is going to read a few things that they have written online, probably a few tweets, maybe a few one off YouTube videos other people did and say that this man who has done more for the city of Austin that I live in and across the country doesn't have a right to speak. I think today increasingly we've got to figure out how to have conversations with our neighbors and realize we have more in common than not and stop vilifying them. And I think Joe Lonsdale said it perfectly on this podcast, which you guys probably heard. He said, I'm friends with people on all sides and I Don't think most people are evil. He actually said the opposite of that. He's like, I think that I don't agree with all of their ideas, but I still talk to them. And in fact, we have to do that. That's part of being in a republic. And so in this episode today afterwards, Joe and I got some breakfast at his house and we talked with his head of his podcast. And I'm reminded again about why I like talking with guys like him. Because unlike some billionaires who. I mean, God, the Khosla guy, Vinod, or whatever his name is. I mean, this guy, for instance, he is going out there saying that we should have an open border when he has a private mansion on a beach, trying to block public access to the beach for normal people, is in a lawsuit for like five or seven years while trying to say that we should have open borders. That guy's out of touch as a billionaire. But when you go to a guy like Joe Lonsdale, he's still fighting the good fight. Every day. He's getting kicked in the gut just like the rest of us trying to build a business. He's losing tons of money. He's having wins, he's having losses. It's probably more insulated once you start being able to have your own plane. But I think when you're in the game of business, you get killed all the time, no matter how successful you are. When you're in the game of politics, even more so. And so maybe this episode is a little reminder that we shouldn't villainize each other and that actually the real villain are not the builders beside us, but the burn it downers or the grabbers that are located in government. Those are the people that we should be fighting back against. All right, if you guys agree with me, follow along on the Big Deal podcast and I'll see you next time. Also, if you like this podcast, leave a review. I'm trying to get to a thousand reviews. We're right around464, not that anybody's counting at all, on the Internet. And I read every single one of them. It means the world to me. If you wouldn't mind leaving a review. You, if you like what you listen to.