← Conversations with Coleman
Conversations with Coleman
Underdog Innovation w/Joe Lonsdale
00:51:39
Joe Lonsdale is an American entrepreneur and venture capitalist. He has co-founded companies including Palantir Technologies, Addepar, and OpenGov, and co-founded and serves as the managing partner at the technology investment firm 8VC. He founded the Cicero Institute think tank, and co-founded the University of Austin, where I just finished teaching a course.
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- [00:00]
Coleman Hughes
Sa. All right, Joe Lonsdale, thanks so much for doing this.
- [00:32]
Joe Lonsdale
Thanks for having me. I'm excited to be here at our university.
- [00:35]
Coleman Hughes
Okay, so we were actually. We were just chatting about chess before we started, and you share something in common with one of my favorite people and one of my mentors, Tyler Cowen, which is that you were extremely good at chess as a child and obsessed with it. And as an adult, you've gone on to do other things. You know, Cowan, he. I think he was state chess championship of my home state, New Jersey, at 15. And then one day he just realized, actually, I don't want to do this for a living.
- [01:07]
Joe Lonsdale
My chess master, as I was a kid, used to tell me that most great men were chess players, but few chess players are ever great men. So I don't want to do it your whole life, but I think it's really good for your mind.
- [01:19]
Coleman Hughes
Why?
- [01:20]
Joe Lonsdale
There's a lot of things. It's like this intellectual discipline. It's. It's like trading your brain to, like, to think ahead and stop every time you do something and then think about all the next steps and how they might interact. And then there's probably, like, trades. You'd have a stronger memory, because to really do it right, you have to memorize a lot of old games. And then there's also just, like. Just like, as a kid, you have to really spend, like, 20, 30 hours a week at least to be really good at it. So to work that hard on something, like, one of my lessons in general is you can't really be great by being a dilettante. If you want to be great, you have to, like, really focus on something for a long period of time. That's what entrepreneurship is. That's what great scholarship is. I'm not, unfortunately, a great writer. I haven't read any great books, but it seems like that would be the necessary thing there, too. So that lesson of the focus, no matter how smart you are, I could play the smartest person in the world. I'd still crush them if they hadn't put in those hundreds of hours of work. So it is something that just teaches you how to work hard and trains your brain.
- [02:11]
Coleman Hughes
Yeah, I agree with that. I think I learned that being obsessed with playing trombone as a kid. As silly as it sounds, it almost doesn't matter what the skill is. But learning what it takes to get great at something by example, I think is important because it just tells you how much work you actually have to do in order to reach the top five or one percentile at a skill, which is really what you need to do in order to be great.
- [02:37]
Joe Lonsdale
It's really annoying. It'd be great if you could just do it right away. Yeah.
- [02:40]
Coleman Hughes
One thing that strikes me about chess is that especially classical games, long games, it rewards intense analysis. Before you make a decision, you need to calculate, make sure that the move you're about to play is extremely solid before you act. And it strikes me that might not actually be the best strategy, say as a business person where time is incredibly precious and valuable and you might have to make decisions quickly as an entrepreneur based on limited information. Whether that's choosing what, choosing whether to invest in an early, early stage company or choosing a kind of business strategy or investment as in one of your own companies.
- [03:29]
Joe Lonsdale
Well, you know, and, and so just stick with the chess analogy for a second. You have tactics and you have strategy. And so when you're playing chess there's like, what is precisely going to happen that you can calculate in the next kind of like five or six moves and those are tactics. And then strategy is what's your general sense of the principles of the position and the frameworks and the high level things you're going for. And I think that's definitely the case in business as well. There's like, the tactics are like the things you can measure and you can just get right and you can make sure you've like checked all the boxes and like looking at things, understanding what is the market size, how good is this product versus the other thing, like, like what can we know about the talent here? But then the strategy is this kind of larger thing like where's the world going the next five years and where do I want to be positioning myself? Like we wrote this AI services thesis and that's a strategy document in the sense that it kind of frames things in a way that we can now think about that strategy writ large while also still getting the tactics right. And so I would say that is very important to think ahead in business. Maybe you don't have weeks, but you definitely can, you know, go home or take a weekend and really think about things and do it right. Like I, I wouldn't just react instinctively to any major decisions.
- [04:38]
Coleman Hughes
So you worked with Peter Thiel early in your career. What did you learn from him?
- [04:44]
Joe Lonsdale
So I wrote this piece, which I'm not going to read the whole piece to you right now, but it's a pretty prominent single page, basically has nine main lessons to try to summarize some of them. A lot of them are things around like the how important, like very top talent is a lot of it's around. Don't try to make lots of excuses for what you're doing. You should find the one biggest reason to do things because usually the one reason is bigger than all the other reasons. If you tell me three reasons why you're doing something, it means you probably have no reason yet. You should figure out what the one is and just lots of other great things like that. But if I step back and say what did I really learn most from Peter? Is that it's possible. I guess I'd say what I learned most from Peter is the intellectual leverage of just an approach to the world that's contrarian in first principles, thinking and just thinking about the world differently and then applying it. And it's possible with a great mind to just completely achieve things that are just like 1000x by looking at things differently and then using that. So the applicability of extreme intelligence and extreme intellectual leverage of having that and of going at things from your own way, that probably is one of the biggest lessons I learned from Peter Thiel.
- [05:53]
Coleman Hughes
So as a venture capitalist, when you're deciding whether or not to invest in an early stage company, what do you look at? Are you more focused on the founder? And if so, what qualities do you look for in a founder?
- [06:07]
Joe Lonsdale
You know, I'm originally, I'm an entrepreneur and you have to be careful as an entrepreneur, as a venture capitalist, because whenever you look at something, you can't just think of yourself as running it. Right. So it's just very tempting. You actually have to be looking at the team and all the rest of these things as well. But you know what, what I would say about venture capital, it's not like there's like lots of little close decisions. There's. There's just some things that are clearly like way better than everything else. And so what I'm really looking for, and this is a little bit obnoxious maybe, but what I'm, I'll give a couple examples. Like what I'm looking for is just like, is like people who are the best in the world at something that's possible now that wasn't possible before, that that creates value. So it's really the two questions who's the best in the world? And different types of things in engineering and what are the things that create value economically that you couldn't have done three or four years ago. So when I explain this to people, it's like if you wanted to invest in Uber or Lyft, you Couldn't do it before the smartphone existed. Doesn't make any sense. Right? You can't do it in 2005. You can't do it now either, because it's already been around forever. It doesn't make any sense. And then the question is, who are the teams? Who is the people like Travis and Emil who are so intense they're going to be able to go around the world like crazy and do it? And these things are very. These things are very like, if someone coming over today, who I'm really bullish on that. He was one of the key people who was bought. His company was bought by Google and helped create Waymo. And he has a bunch of Waymo engineers working with him now who are some of the best in the world. You guys have all seen Waymo, and they're doing construction in the real world with AI. And it's like. It's not like I'm the genius to know this is a great thing to invest in. If anything, I think I was able to lead the Series A because of the ways I could be helpful to him and because of my reputation and because of my team's reputation and because of their hard work. So it's almost. Almost like. It's almost like it's not even the decision. This is obviously the best in the world of this thing. They're doing something as possible now. And then it's almost more about, like, what gets me the credibility to access that deal as well, you know?
- [08:00]
Coleman Hughes
Yeah. So you're talking about kind of sectors that are the most ripe for innovation and sectors that are kind of in some way the easiest to innovate in. But I think one thing that separates you from other venture capitalists is you seem eager to innovate also in the sectors that are the hardest to innovate in, like, literally the most, almost look impossible to innovate. What am I talking about? Prisons, hospitals and higher education. These are. You've never even heard of a new college, and here we are in a new college. So why is it that you're also. Are you just like a masochist? Is it that.
- [08:41]
Joe Lonsdale
Sometimes it seems like that. No, it's. No, everything's great here. No, it's funny. The way I look at that is. So there's these underlying things that happen in the world that make new things possible, and then they usually go to certain places first, and then they go to other places later. And so they almost always go to healthcare and government and institutional places like universities last, because these are harder, but because These are harder. The way you think about it, it's like there's an island in the middle of the ocean that has a bunch of animals that just only evolved to live on that island. And all of a sudden there's like a raft from the mainland and something that evolved to be competitive in a much larger, more ferocious environment lands there. And then it just beats the crap out of these weird animals because they've been protected from the ocean for a thousand years. And so what it is is that you get things in government and healthcare and universities get particularly broken because it's so hard. So if you are able to get in, you're just so much better. Right? So, so this, I think this is counterintuitively, this stuff where it looks harder to innovate. If you're stubborn enough and persistent enough to break in, it's actually in some ways easier because you're just going to be so much better than what's already there because it's hard.
- [09:56]
Coleman Hughes
There's a ton of low hanging fruit in terms of actually how you could innovate. It's just that you can't get past those.
- [10:02]
Joe Lonsdale
If you could just like climb that fence and get in there, there's going to be all these delicious animals to eat because they didn't evolve to run away from you. But you have to like get in there past that barrier first. Y.
- [10:11]
Coleman Hughes
We're not talking about the students. It's an analogy, folks.
- [10:16]
Joe Lonsdale
Well, you're talking about the competition.
- [10:18]
Coleman Hughes
Yes, it's an analogy. Okay, so let's talk a little bit more about higher education. What specifically has gone wrong in American higher education and in what ways do you see University of Austin? What problems is University of Austin solving and how did those problems arise?
- [10:37]
Joe Lonsdale
Gosh, where to start? There's a lot of different areas. I think one of the fundamental problems is that our culture at large is actually being negatively impacted by our higher education. You have about 100, maybe a couple hundred top universities, and what happened is the size of their administration has basically tripled over the last 25 years. There's more administrators and students at Yale and almost as many at Harvard, I believe. And these administrators are almost universally ideologues. And they've kind of shifted the culture of these places in a very dangerous direction where they basically teach everyone, don't speak up, be guilty about having opinions that are not mainstream, be careful what you say. Not offending people is more important than kind of arguing and finding the truth and drilling down for what's the right answer. And this has spread to our culture at large. It's gone from the universities, it's gone to the tech companies who are censoring things based on this, and it's gone to lots of other parts of our country, gone to our government and other institutions. And this is really dangerous for our free society. I think in order to have a healthy, free republic with citizens who vote, they need to be willing to place kind of truth over not offending, and they need to be willing to be courageous and fight for what they believe and speak out for what they believe, even if they get attacked, even if they get demeaned, rather than being taught as we are right now, teaching all of our top people to, like, just kind of shut up and go along. So for me, that's really, really important. Like, how do you inculcate intellectual courage? But that goes along with other things as well, because in an environment where you don't have intellectual courage, you end up not exploring all the ideas. You even need to understand history. You need to understand economics, you need to understand any of the soft sciences. They've pretty much been conquered by ideologues of those places. Like, if you want to get hired for sociology or history at a top university most of the time these days, you need to hate America, you need to hate markets, you need to have a certain set of prescribed views, which it's probably fine if you have a few people like that there, but it shouldn't be the whole thing. So you have a very broken environment, and it's hurting the young people going through it, and it's hurting our culture. And it means universities are not fulfilling their mission to discover new knowledge and to kind of make our society strong. Instead, they're doing something very different.
- [12:48]
Coleman Hughes
Yeah, I definitely experienced that when I was at Columbia. I graduated 2020, and I used to joke with some of my friends there that you would have to have this moment where you basically came out of the closet to someone as not woke. And truthfully, most of the students weren't woke. But it was just, you had to have that moment where you kind of revealed yourself and said, actually, I don't know about that article in the campus newspaper that said there's white supremacy everywhere. And then you would hope beyond hope that they wouldn't cancel you. And more than likely they would say, you know, I kind of agree with you. And then you've realized you've, you've, you know, you can talk with this person. Right? And that would happen thousands of times in little interactions all over campus.
- [13:29]
Joe Lonsdale
Was. It was that was that hard for you at first because it's kind of scary, or how did it. Because you seem more comfortable now pursuing your truth. Like, like, what was it like then?
- [13:36]
Coleman Hughes
Well, yeah, I think it's always harder when you're younger because belonging and being cool and being liked is the most important when you're around that age. And, and so I think there's a lot of social fear. But, you know, for me, it definitely got easier as I went along, and then it got harder because I became a public person. And then it got easier again because the first time you get, I, I. You've sort of experienced this lately, but the first time you get dogpiled on Twitter, it feels, you know, traumatic. Might be a slight overstatement, but only slightly. And then the fifth time it happens, it's like you don't even care.
- [14:18]
Joe Lonsdale
For me, it was like, it made me want to fight. I was really angry. All these people are attacking you. Like, where are they? And I wouldn't respond too much. I'm angrily like, no, you're wrong. But it's like, I can imagine, depending on your personality, it might make someone kind of go hide or something, too. Right, Right.
- [14:31]
Coleman Hughes
The New York Times had a really good piece about what happened with the DEI program at University of Michigan recently. And. Or was it Michigan State?
- [14:44]
Joe Lonsdale
Yeah. You missed out a very large DEI program.
- [14:46]
Coleman Hughes
Yeah. So when you talk about bureaucratic bloat, which is really what you're talking about on campuses, DEI has been one big part of that, where, you know, at Michigan, you had something like a 10xing of the number of DEI bureaucrats, which, ostensibly, these people are being brought in to solve a racism problem, a sexism problem, an inclusion problem. Right. And yet after they're hired, all of those problems seem to get worse on campus. And I thought of this analogy to when the British ruled India. You've probably heard this. They had a problem with this particular kind of snake, and so they offered a cash reward to anyone who brought in this pest.
- [15:28]
Joe Lonsdale
Cobras.
- [15:29]
Coleman Hughes
Cobras, yeah. And so people started breeding the snakes.
- [15:32]
Joe Lonsdale
They started breeding cobras.
- [15:33]
Coleman Hughes
Yeah. So actually, what happens is if you, if you 10x the number of bureaucrats meant to, who now have to potentially justify their jobs in a, in a society that has largely, largely tamped down on the actual racism problem, well, in some way, they're going to breed snakes.
- [15:53]
Joe Lonsdale
It's really fascinating. I totally agree. And it's, you know, it's, it's like a combination of things. First of all, first of all, it's like, no one can criticize this or else they're racist. And so it's just like. And you find this, by the way, in lots of forms of grift, where the grift tends to exist in the things where if you attack it, you're a monster. Like, are you going to attack saving lives in Africa for cheap? Like, you're a monster if you're doing that. Therefore, it's able to build up, like, massive grift. Are you going to attack homelessness? Are you going to attack people helping homelessness? They must be good people. And therefore you get, you know, hundreds of millions of dollars of grift hidden and tied along to all the homeless NGOs. And you see this in every part of our society. Whenever you can't attack something, whenever it takes on, like, almost like a religious aspect or, like, and you're just a bad person if you're against it. That's where, like, you get tons and tons of waste, tons of nonsense. The thing that really gets me is, is like, originally universities were scientific places, in part, right? Originally, they're supposed to have things that were, like, not religious and scientific. If you go back, that was like, the whole thing is people at universities would, like, argue with Christians a lot of times, not that you shouldn't have Christian universities, but they say, oh, I'm scientific, you're not religious. And that was like a conflict in our society. And instead, it's like universities have become now a new form of religious places. And instead of having a scientific method saying, how is this DEI hire helping? Is it good or not? Can we objectively evaluate it? Can we say if it makes sense and what the returns are? There's nothing like that at all. It's purely just a religious thing. And in my mind is kind of where our society has gone, which is very unhealthy.
- [17:18]
Coleman Hughes
Yeah. So given that Trump yesterday announced that he is taking the first step towards eliminating the Department of Education, obviously he can't do that by himself, but he can scale back the spending a lot and get rid of some of its functions. What is your view on the Department of Education? Is that a wise move to get rid of it?
- [17:41]
Joe Lonsdale
Yeah, well, Jimmy Carter created this thing, and the results have consistently gone down in education in our country in every way since he created it. A lot of stuff seems to exist as a special interest, not for actually achieving the goals it's supposed to, but for supporting the people and the kind of grift that exists around it. So you see this with teachers unions in K12. They're not fighting for what's good for outcomes, they're fighting for what's good for the government workers and for the teacher. You know, for the, not even teachers, but the administrative workers, which is massively overpaid. And it's similar with the product of education. This, this stuff exists to pay itself and to pay its friends lots of money. And it's lots of money, right? This, this, this is what's where we're paying, we're paying for all these administrators, requiring these administrators to do crazy things. We're trying to put all sorts of WOKE rules on these schools and then force them to hire more WOKE people in order to do the woke rules. So it's become this self licking ice cream cone of nonsense. And yes, 100%, most of it should be cut. It probably shouldn't exist in the first place. If you're going to give out money, I'd rather give it out. Unless states each decide. The whole idea of America is we're going to have a federalist system where states compete. So why not let states compete now? Maybe there's certain things we could do nationally, maybe we decide to give out. Maybe you decide to give out some loans or in some accountable way, although I'd rather states do it. Maybe you decide to give out some Pell grants to make sure everyone who's poor gets a certain amount of money. I don't really mind that, but having a giant bureaucracy around it. And by the way, I have a personally very negative experience with these people. Under Obama, they changed all of the rules so that universities, they're required to have people basically treated as guilty until proven innocent if any student made any accusation. And I was attacked by that. And it was so egregious that one of the members of the board, I won't mention her name, a very prominent lady, she was close to Obama. And when the Obama administration ended and the lady in Department of Education came to work with her, she made that lady apologize to me for what I went through, for having just changed the standards to be completely ridiculous. These are two Democrats. But apologizing, this is ridiculous. And then Betsy DeVos changed it back and created due process back. And then Biden came in and they put it back. They just got rid of due process again. So I mean these people are actually insane. So yes, I think you should probably fire all of them.
- [19:48]
Coleman Hughes
Yeah. Okay, so let's talk about Doge, which has been in the news a lot and getting a lot of bad press in left leaning outlets. And maybe you can defend Doge. But let me just lay out some of the criticisms that have been circulating. So one is that the people working for Doge are a bunch of young tech bros who don't know anything about government, have never worked in government, and therefore aren't going to know sort of what to keep and what to cut, aren't going to know actually how the system works as a model. So aren't going to be able to figure out how to improve it. There's been accusations in the New York Times that Doge has been exaggerating the degree to which it's actually cutting, exaggerating or lying, whether intentionally or not, and that there's been privacy concerns. And this general critique that Elon Musk is becoming the prime minister of the country and he's, despite being unelected, wielding too much power and using it to enrich himself and his interests. So take all of that as one big critique of Doge and defend it if you're so inclined.
- [21:03]
Joe Lonsdale
I think he's lost a lot of money from having done this so far. So it's like he's not doing a very good job if that's his. I happen to know him personally. He's doing this because he believes it's what's right for the country. I mean, there's lots of ways to take this, but I think stepping back, what is the framework through which we should see these things? And I think there are some roles government plays that the majority of people want it to play and they should do well. But most of these government departments, think of the worst run company you've ever known. They would have gone bankrupt 30 years ago and instead you keep giving it lots of free money. It's just a total disaster. I think last Friday we canceled President Trump, I'm going to say we the world we here. But President Trump canceled, I think four different independent agencies. And one of them, just to give you an example, was the Federal Mediation and Conciliation Service. And this was like a nine story, beautiful building in the middle of the nice part of K Street where the lobbyists are only about 60 people full time in the building. And it was just like a, it's just like a series of comedic things that they found. It was like they're using a budget to buy champagne and fine art. Some of the fine art was being bought from the boss's wife who was making it. They were flying people around the world on first class tickets and junkets where they would do like one zoom call on the trip and Call it a business trip. They were paying hundreds of thousands of dollars of services that were like their friend service, but there's no record of what the service delivered. There's whistleblowers. And the bosses would make the whistleblowers go back and change what they said and then give them something really big. I mean, the whole thing is just like this giant fraudulent agency. Everyone agrees they're not really working there. It's a total mess. It's tied to former union leaders somehow. And this is not just one example. There's stuff like this all over the government. So it's grift and then it's activism. You're finding activism all over the government. And so I actually wrote a piece on USAID a few months ago with my friend Ben Black, who looks like he's been nominated to run dfc, which is investing as opposed to just giving out money. And we went after USAID and the stuff we found was just horrifying. I mean, it was like several hundred million dollars to these groups that were going around encouraging censorship and encouraging ideological bias in news. It was clearly just like a left wing NGO that Soros and others had started that then the USAID gave tons of money to. They're funding protests all over the world against the right wing. The list goes on and on and on. There's just so much grift, so much waste, so much nonsense. And what I would say at usaid, I had some friends who were in the Bush administration who successfully saved a bunch of lives in Africa by creating new clinics there to treat aids. I think that was a good thing. We saved millions of lives. That's positive. A lot of that money, for example, goes to South Africa today. We. What does South Africa do otherwise right now with its money? You know, it funds the political party with Julius Malema, who sings songs about how everyone should kill the white man. Like literally, they're sending him money and we're sending money to the AIDS clinic they're sending money to singing songs about killing white men. They're spending money suing Israel, the icc. Like they're spending money doing lots of nonsense. I'm sorry, but we've already shown how these AIDS clinics work. They can spend their money on their own people now. We don't need to be doing that anymore. Given like they're doing all these other nonsense. Like, why is that our job? So yeah, I think it was good to have done it, but now that we've done it, they could do it. So. So for, for me, like there's just so much stuff that very clearly should be turned off. And by the way, you needed the engineers to get to the root access of what's going on. So I was with a bunch of senators for the State of the Union recently. Right. Whether it was. It's not called State of the Union, but he spoke to both George Hess and Congress. And when you're, when you're talking in private, even a lot of the moderate Democrats were like, yeah, this is actually crazy what they're finding. Like, we are. It was never reported to us any of these things. And a lot of it's very clearly hidden in a way that would have been hidden forever if you didn't get engineers to go right to the root access and see what was going on. So, because it's so egregious, because there's tens of billions of payments that are being flying out from treasury, you know, unmeasured. Because there's magic money computers, they're finding they just, like, create money from scratch, coordinated with nothing, in multiple departments, totally illegally, and DoD and HHS as well as Treasury. I mean, it's just like, so much stuff like, thank goodness someone's finding it. So I'm feeling very good overall.
- [24:55]
Coleman Hughes
Can you explain the magic money computer?
- [24:57]
Joe Lonsdale
So the idea is, is that when you send someone money, it should come from somewhere. You should, like, withdraw from one account. And if you want to create money officially, you should be tracked. Okay, the U.S. federal Reserve has the ability to create this. And we're creating it, and we're tracking it, and we're going to report on it, and we're sending it here. This computer is not going to issue this check. Instead of that, you had a computer all by itself, not talking to anything, just, like, issuing checks. And they found so far, at least 14 of these. This is actually insane. I mean, I would love one of these. It'd be very useful, you know, but. And it's. And it's like. It's kind of like, imagine having this and then turning it off. I mean, it's kind of like taking like the genie in Aladdin, you know, the movie where instead of using your third wish for, like, something for yourself, you've set them free. And this is what these guys are doing. They're finding these things and they're setting the genie free. They're turning them off. And it's very clearly not what happened in the last administration when the last administration found these. They used the genie to give Stacey Abrams billions of dollars for her, you know, nonprofit that was super Sketchy. So it's like, you know, and by the way, DOGE is not perfect, but like, thank goodness there's people in there whose bias. And we're $2 trillion in deficit. This is a disaster. Like, thank goodness people who actually want to turn these things off. There's so much wrong in government that I'm willing to abide by a few small mistakes we can fix while confronting all of this insane broken stuff in order to move the country forward.
- [26:11]
Coleman Hughes
Yeah, at a high level. This is how I view it. I think either America can keep increasing the deficit indefinitely and never face consequences, never face a debt crisis like Greece or Argentina or Puerto Rico, because America's magic and we have the reserve currency and the rules don't apply to us, or that's not true. And eventually we will face a nasty debt crisis that will affect all of us in a very nasty way. These things are very hard to climb out of. So if there's even a 10% chance that the latter is true, then we need something like Doge. And so I assume they're going to be process files and things that. Things that I don't like. But I don't actually see any of the critics of DOGE taking that problem seriously, A or B, proposing an alternative to doge. Where they lay out here is the way to cut the budget by 30%. And with no process files, no one.
- [27:10]
Joe Lonsdale
No one has said that 100%. And for me, it's two issues. One is using the money towards activism that's making our civilization worse. I don't like that either. But to 100%, we started to have a lot of inflation in the last few years. And I think some of that was tied to just lots of money printing massive deficit. If you accelerate that further, the inflation is going to go up. That's what happens like when every time you print money, all the rest of the money is worth less. And, you know, so, you know, just stepping back, it's really interesting. If you talk to people in Congress and this is a problem with both sides right now in Congress, on average, it's really hard to actually say, here's how I would balance the budget. Like, the one person who's done it in, like, living memory was my friend Paul Ryan when he was speaker of the House, he actually put out a balanced budget and everyone attacked him because guess what? To do a balanced budget, you got to cut some things you don't want to cut. It's really hard. So right now there's literally no one willing to do it. So everyone will say yes, if we were in charge, we like, in theory, cutting waste, but then they never do because they're going to get yelled at. And then it just keeps getting worse and worse, and eventually you run into a wall and someone in five or ten years left holding the bag. Thank goodness for our civilization. We're now rerouting things in the right direction. Elon saw this very clearly. This has been my view as well. I was some of the first money supporting what he was doing. I helped him raise a bunch of money for the election and whatnot. Thank goodness we have a great man like that willing to take on this personal risk. I mean, he is getting attacked like crazy. Tons of death threats, tons of attempts on his life, just all sorts of things smearing him. It takes a really great man to do what he's doing. He's the richest person in the world. He did not need to have this stress in his life, but he sincerely believed this was worth doing. And to me, that's just like, I honor him the way you'd honor a great warrior sacrificing himself for your civilization. It's just really amazing to me.
- [28:50]
Coleman Hughes
So it seems to me the Trump administration has two impulses, one of which I really like and one of which I really hate. The impulse I like is the Doge instinct, the instinct to cut through red tape, to cut waste, to make the government efficient. All of this stuff that administrations never do but are really ultimately existential for the country. But then there's this other instinct that is vengeful, and this is mostly coming from Trump. I think Trump's personality, specifically, he likes to get revenge on people who he feels have done him wrong in the past, whether that's like, a law firm that represented Hillary Clinton, and now he's retaliating against with an executive order or a pollster who puts out a poll that he didn't like the day before election, and now he's filing a lawsuit and so forth. So I'm curious, like, where. Where, if at all, do you feel the Trump administration oversteps? And where do you feel you support them?
- [29:53]
Joe Lonsdale
Let's talk about the vengeful things. I think it's a really interesting point to me. There's a dialectic here between something that's, like, very reasonable, maybe something to be more careful about. You have to imagine it from his point of view and his wife's point of view and his son's point of view, living their lives where people went after him, tried to frame him. He was getting his point of view, try to put him in. Try to put you in jail. Clearly illegally filtered money to people who were attacking you. Like, just did all sorts of things that. That were unfair and changed the nature of the playbook and used lawfare and attacked you. So of course you're going to be, like, angry and pissed off. And then on top of that, you know, a lot of this stuff we're finding that people did in Doge in other areas. I, you know, talked to my daughters about it and like, here's this thing we found and we're stopping it. And she says, oh, Daddy, they did that. They're going to jail, right? I'm like, well, I'm not. She's like, but, Daddy, that's really bad what you just told me. You know, there's, you know, stealing the money and using it for their friends and using it for things that are illegal and inappropriate. And of course they should go to jail. And it's my daughter's right. That's a child's instinct that you have to have some consequences. And so, like, A, he's really angry about things, and B, there was a lot of grift and fraud. So you probably do need to kind of go back against these people. At the same time, you're right. I think there's just like, a lot of anger. And you have to make sure you're applying the anger in healthy ways that are principled as opposed to just, like, being really angry. Going after things now with things like the pollster. I don't know the exact details. I think there's an assumption that there was, like, illegal stuff behind the scenes where Democrats were potentially. Or activists were potentially paying people off or whatever. And I think the idea is by doing a lawsuit, you could see what illegal things were going on around it. So some of that. That sounds crazy. Might actually be part of the principled side, but you're right. There's probably also some stuff where they're just really angry. Like someone's rifling through your wife's underwear drawer and attempt to frame you and put you in jail. Like, that would piss me off. I might get really angry. And I agree. As a leader, you try to, like, harness that in principled ways and not in unprincipled ways. And one hopes these things get pushed in the principled direction.
- [31:52]
Coleman Hughes
Okay, so let's talk a little bit about the Democratic Party. It seems to me that the Democratic Party right now is in a crisis. A few days ago, CNN reported that their favorability rating is 29%, 29%, which is brutal. And at the same time, every crisis is an opportunity. Was it Rahm Emanuel who said, never let a good crisis go to waste?
- [32:21]
Joe Lonsdale
Rahm's a bright guy. I think he's gotta be trying to run for president if he can.
- [32:24]
Coleman Hughes
Yeah, he'd be an interesting candidate, but. So if there were a time when, when someone was really going to try to just dig the Democratic Party up by its roots and completely reinvent it, now would be the time. After such a massive failure and failing to beat Trump in lying about Biden and, And. And their own favorability rating, I think.
- [32:47]
Joe Lonsdale
I think both parties, and we're talking about Democrats right now, but both parties are beholden to certain special interests that make it really hard to. To do certain things properly. Right. And so, like Rob Emanuel, even in Chicago, was basically at war with these crazy teachers unions, but then ultimately didn't end up going all the way there because they're too big of a donor and too big of a power block on the Democratic side. And I have friends who spoke in person and private at the White House with Barack Obama after he won, who 100% agreed these unions were corrupt, were hurting, our kids were way too powerful, and he's not going to touch them because they're just such an important part of the Democratic Party. And today it's even more complicated. It's not just the usual special interest that maybe both sides have. Some of you have this, like, really interesting ideology in our society that was really affirmed very strongly during the woke kind of, you know, movement over the last decade where, where you have the trans movement, you have the, you know, the people born male and women's sports, etc. So Seth Moulton's a great example of a reasonable, moderate Democrat. He and I disagree on a lot. He's a representative from Massachusetts, and he tried to speak up and say, you know what? I actually agree with 75% of Americans or 70% of Americans. My daughters probably shouldn't have to compete with people born male. I think that's a reasonable position. And he just got reamed by the party. He was disinvited from Yale by some of the professors there. He was. People quit as a spokespeople. People told him they couldn't be friends with him anymore, and it was really nasty. And so I think there's an interesting barrier here they have to overcome where there's some of these issues that are 80, 20 issues that their base is on the wrong side of. And how do you unwind that and how do you get back to a point where you're not constantly at war with your base? And by the way, the Republicans have some things that are frustrating there too, but I don't think it's quite as bad as Democrats have to deal with, with that insanity. And I don't know how they get past that, but they need someone. And Gavin, I think, has been trying with some of his signaling. I think he's been a terrible leader in California, but he's been trying to show that he's reasonable on some of these things. Can someone signal and get past that and still win on the left? Maybe. We'll see.
- [34:44]
Coleman Hughes
Yeah. I see Gavin Newsom trying to innovate by talking to people like Charlie Kirk and Steve Bannon. I also see now Ezra Klein trying to innovate as a Democrat thought leader.
- [34:54]
Joe Lonsdale
I love his abundance agenda. I think it's like I love it if both the left and the right both have an abundance, you know, pro innovation agenda. That'd be great. Again, I don't agree with Ezra on a lot of policy, but at least that's a healthy direction to take the Democratic Party. I think for all of us, we should hope that that's where it goes as opposed to something darker.
- [35:09]
Coleman Hughes
You know, if you woke up tomorrow in a fantasy world where you were governor of Texas, what would be at the top of your agenda?
- [35:18]
Joe Lonsdale
Gosh, well, I have a lot of respect for our lieutenant Governor and Governor. There's a lot of good things they're doing. I would be a lot more bold against some of the nonsense in terms of where we're still wasting billions of dollars here. And this is not necessarily the governor's fault or lieutenant governor's fault. But I would try to rally people together using my leadership to, for example, turn off the minority based contracting. I think it's racist. I think it wastes billions of dollars. I think it's just inappropriate. It was still like 30% of our money we spend is based on. It's not even like it's giving it to minorities. It's usually giving it. There's like someone manning a phone somewhere who's an Indian woman or something, and then she's passing it to a white contractor, but she gets to keep 30%. There's all sorts of nonsense like this. So I mean, I think doge is key. There's all sorts of NGOs that are working in Texas right now today that are sponsored. They were sponsored before by the federal government or by others who are governments who are trying to interfere in our business. I would make those fully transparent and look at them. But you know, in general, Texas is a pretty well run state. One other thing, one other area I'll give you. The two strongest special interests in Texas that are somewhat corrupt are the education administrators. We have like 1200 school districts, each with their own administrator. And so tons and tons of money go towards these kind of activists. And there's so much to fix there. I'd make school choice 10x what we're going to be doing to compete with that. And then two, the healthcare interests are very powerful in Texas. And Texas, by the way, should be proud of its health systems. We have MD Anderson, we have all sorts of other great places that are curing new diseases, that are doing great research. And the problem is, we talked about this earlier in the conversation. When something's really great, you can hide a lot of grift and nonsense in it. And that's what's happened is these guys have become very powerful lobbyists and they've blocked competition in health care and they make it really, really hard using their cartel power to start up things. And so you get it to be way more expensive. And Texas health care costs have grown like 7, 8%, compounding for decades now. And it's getting really expensive and no one can afford health care anymore. And so changing a lot to allow innovation, to allow competition into these types of areas. Those would be my top preferences.
- [37:12]
Coleman Hughes
Okay, so let me ask you a question about leading an institution and you lead several o' Sullivan's Law, this idea that if an institution is not explicitly conservative, it will over time drift towards the left. A. To what extent do you think that is true and how do you think about leading an institution like University of Austin in that framework?
- [37:39]
Joe Lonsdale
It's a really great question that we've debated and talked about with a lot of my friends who are quite cynical because of this. My view is it doesn't have to be that it's explicitly conservative, but it does have to have some explicit values. If you just say you're only for free speech and that's all it is, then I think those Sullivan's Law will apply and eventually it will get conquered. It will get conquered over time. The way I see it, at least at a board level for University of Austin is we are. And again, again, this is a nuance, but it's really tough. This is a problem for the west, by the way as well. Right. It's a problem for our civilization as well. I would say in our board level, we are Explicitly for a liberal society. We are explicitly against illiberalism. And the three most common and most virulent forms of illiberalism around today are probably socialism, communism. It's probably like all the stuff around identity politics and wokeness, and it's probably all the stuff around Islamism. I think those are the three most dangerous worldwide kind of forms of illiberal ideologies that are very dangerous. And so it doesn't mean you can't debate the nuances around these or that we couldn't have a student who's a socialist. But I think the organization itself has to say, okay, we're not those three things and we're not going to let those three things conquer our board or conquer our departments and start excluding people because those are illiberal ideologies that if any of them get in charge, if they get in charge of the DEI thing at University of Michigan, if they get in charge of the sociology department with the communists at Harvard or whatever it is, they don't let anyone else in. So to me, it's not that you're explicitly conservative, but you do have to be explicitly opposed to liberal ideologies. And this is a very sensitive conversation. But I feel strongly that's the right way to run things at that level while still allowing free speech internally.
- [39:19]
Coleman Hughes
So the problem is the paradox of intolerance, right? Like if you allow an intolerant idea at the leadership, it will crowd out what you want to be, which is a tolerant institution.
- [39:32]
Joe Lonsdale
You can't allow the illiberals to conquer. You've seen this in so many different countries and so many different things over time. It's very, very dangerous. Still, they'll get in using your freedom, using your liberalism, using, using the rules of your society. And then they will take over. And then, and then, and then there's no turning it back without, without violence, which is what happened in lots of different places of the world.
- [39:52]
Coleman Hughes
Okay, a few more questions. I've seen a troubling trend of anti Semitism on the far right in, you know, on really in the media. I'm talking about certain guests that Tucker Carlson has had on people getting a platform on Joe Rogan show and so forth. And just also just scrolling through my Twitter feed, I regularly see just straight up anti Semitic posts getting anywhere between 30 and 80,000 likes. I mean, just the other day someone started a YouTube page where they're just. It's like a Jew tracker, essentially. It's like.
- [40:34]
Joe Lonsdale
I think, I think I might be on this one.
- [40:36]
Coleman Hughes
Yeah, you're definitely on it. I actually know for a fact that you're on it because I saw the video. So he's just like looking at all the people who are Jewish who are in prominent positions.
- [40:46]
Joe Lonsdale
I mean, we are kind of awesome. I can see why they're jealous. It's. Listen. Yeah, this is.
- [40:52]
Coleman Hughes
So what is going on here?
- [40:53]
Joe Lonsdale
You know, this is. This is. I did a post about this on my ex and got millions of views a couple of weeks ago. And Elon said how great Jews are underneath it, which is nice of him. You know, this has been an issue for. For a couple thousand years, right? So, I mean, you know, in 1066, William the Conqueror, you know, had fully solidified his position and invited over Jews to come in 1067, the next year, and be merchants in his empire. And they became extremely successful and actually were critical to like, making a lot of things very prosperous for a long time. And people got extremely jealous of this powerful minority. Killed tens of thousands of them in New York in 1189, 1190. And then over time, they become blamed for multiple other things with plagues and other stuff, and eventually just expelled them all in 1290 when. During a very bad economy. And this happens again and again and again. When you have a group that's very good at staying separate as part of its identity, but is also a very successful minority, you're separate and you're successful. That's an obvious thing to attack. And it's happened again and again in the West. And you could say maybe there's something particularly annoying about you that you're not aware of. But, I mean, I'm probably not the same. I mean, I'm half Irish Catholic, I'm half Jewish. It's probably not that. It's like Jews are exactly the same people for a thousand years. Obviously they're just a group of people, but it's a group of people that happens to be more intellectual and have more priorities there and was forced to work more intellectual areas. So you probably have them be a successful minority for a very long time. And that's. It's kind of a measure of a society. How do you treat different people who are successful minorities in your society? And when things are healthy and positive, they do well. When things are turning negative and polarized, for some reason, they do worse. And the Joe Rogan thing, I think he likes conspiracy theories in general. I think he's going to bring on whatever the conspiracy theories are that are popular. And I'm not necessarily forgiving him for not knowing any better. But that's just who he is. He's like a force of nature who brings on these crazy conspiracy guys. And of course some of them are going to be anti Semitic. And if he's not aware that they're repeating a blood libel people have used to attack us for 1,000 years, he's not thinking that way. He's going to make that mistake. The Candace Owens and the Tucker thing seems a little darker. It seems like they probably do have some deep seated issues there that are a little scary to me especially. Candace Owens is kind of, she has millions of viewers, but she's kind of seen as very clearly anti Semitic and crazy. The Tucker one's scarier because he's more tied in with the right. And I think that is very problematic. And, you know, it does seem like there's probably a psyop going on where he's probably funded by some Arab countries. There's probably. Some of these bots are probably funded by people who, who do want to divide, like Jews and Christians in the US and you know, I think part of why America is so great is that there is a really strong natural alliance between Jewish and Christian values. It's really powerful. And if you look at, if you look at the highest form to me, of some of the Christian values in Christianity, when you look at the example of Jesus Christ himself, like following Rene Girard's analysis, like, you know, rather than like saying scapegoating is good, right? Because basically every ancient myth there's like scapegoating where that. And people kill the monster. And that's. And then that's, that's like, that's what happens again and again and again. And in this case, he puts himself as a scapegoat. And in the Christian example, which kind of builds on the Jewish examples, he actually himself becomes God, becomes a scapegoat. And he's basically saying like, you should overcome this cycle of violence in your society because you're making God, my God, myself, the scapegoat. And that's like, that's a really deep wisdom that really should say not to do these things. And I think Christianity and Judaism, like, they came from the same root. They are natural allies. And I think the wisdom of Christianity is saying, stop doing this. But it is really sad. People are trying to divide us very strongly right now.
- [44:29]
Coleman Hughes
Yeah. Thomas Sowell has a great essay called Are Jews Generic? It's a little bit of a weird title, but what he's getting at is he looks at societies all over the world, West Africa, East Africa, Southeast Asia. He finds that often there have been cases where you have super successful minorities. Whether that's like, it was like the Indians in East Africa, the Chinese minority in Southeast Asia, and places like Malaysia. And when you have a small minority that's disproportionately successful without political power, they're often the subject of actually just deadly riots.
- [45:05]
Joe Lonsdale
They become scapegoated, basically.
- [45:06]
Coleman Hughes
They become scapegoated. They get expelled. Quite often that happened in Uganda or Kenya. And usually the economy suffers when you expel them because they were actually playing an important role in the economy, which is why they were successful. They weren't stealing the money. They were.
- [45:20]
Joe Lonsdale
Oh, yeah. When the Jews were kicked out of England, it was not good for their economy.
- [45:23]
Coleman Hughes
Yeah. So this is a pattern that happens over and over again. It seems to me anti Semitism is sort of like systemic racism, but for white people, which is. What do I mean by that? I mean, a lot of black Americans have looked at the numbers around black wealth and black income and black representation at the top level and have said, okay, why are we underrepresented? It must be that white people are basically conspiring against us in this way.
- [45:52]
Joe Lonsdale
Right? Yeah.
- [45:53]
Coleman Hughes
And that's what the theory of systemic racism is in a, in a nutshell. And anti Semitism is kind of similar in that you can say, okay, well, why aren't, why isn't the white working class doing well? Well, it must be the Jews, because they are, on average, more we. So it's actually the same illogical.
- [46:11]
Joe Lonsdale
It's a really good point. Like the last 10 years, when the Wilkinson thing got stronger and stronger, I think all of our schools around the country started teaching it implicitly that there's an oppressor class and an oppressed class and that they use that. Obviously, you said that's how I think it's actually very dangerous, like you said, because if that is used to explain why black people aren't doing as well, it therefore also implies that Jews must be oppressors and must and must be bad. So I think it's a very, very dangerous framework for this. I mean, maybe that's tied to why more of this is going on as well. That's a good point.
- [46:37]
Coleman Hughes
Yeah. Okay, so I want to talk about. The coalition on the right right now is partly libertarians. Like, I would call Elon basically a libertarian. I don't know if he. He calls himself that, but Silicon Valley libertarian. Right. Thinking of people like, like, like yourself in a way, like David Sachs, Elon, and so forth. And the nationalist MAGA conservative right. It seems to me the only things holding, the only thing holding this coalition together is Donald Trump himself and a few shared policy interests like getting out of forever wars and hating the left and loving America. Basically that's what they have in common. Outside of that, they've got a ton of differences. So how do you think that that coalition is going to hold together or break apart?
- [47:37]
Joe Lonsdale
You know, I think J.D. vance represents the coalition really well. I think he has things on both sides for where he came from. He definitely came from a neighborhood that is, you know, he's very poverty and has a lot of the what it's kind of more traditional MAGA side and he's done very well within the tech world and navigating that world, understanding it and you know, I mean, I think all of us are learning a little bit from others. And just because you're the coalition with someone doesn't mean they're correct about everything. But there are needs in our country that are really important. So for example, I'm very much in favor of merit and of excellence and I think a lot of the mayor coalition generally is that way too. I think a lot of them see they've been discriminated against, especially as white men is their view in a lot of these areas. So I think the merit excellence thing does hold us together. I also see the Trumpian point which is very popular, that some of our policy was probably worse for some of the rust fault areas and some of these other areas, some of the types of outsourcing and some of the types of immigration could be adjusted to still have merit and excellence win without necessarily breaking these constituents. We probably do have too many people abusing H1BS to bring over huge numbers of not very well paid Indians to replace people in certain areas. That actually is the case and maybe that is slightly better overall for our, for our economy. But maybe it's not what you owe to the people living here in America. Maybe you should have some merit based rule where a compromise could be. We can only bring people in if they have a certainly high enough salary not to be stealing away those sorts of jobs. I think it's very reasonable in some cases. Similarly, similarly, a lot of this left ideological stuff probably does attack these people even a lot more than we realize and we need to fight it for that reason and stuff too. So there's a lot of, there's a lot of ways in which I think people are getting together and I think JD Vance is kind of right now the natural heir to Trump and he definitely, hopefully brings those sides together in a healthy way to keep going like this competence coalition, which is how I see it.
- [49:34]
Coleman Hughes
All right, so final question. If you were a University of Austin student right now, how would you be spending your time? What would you be paying attention to? Like what sectors of the economy would you be eager to get in on the ground floor on? Obviously you'd be doing all your schoolwork very diligently, but how would you be spending your time if you were like a 19 year old UATX student?
- [49:59]
Joe Lonsdale
I'd definitely be excited to be in your course. Coleman, it's really cool you're here this quarter. I mean, I think the chance to have the intellectual foundations, by the way, is really amazing. And I wish I'd done a little bit more of that. I kind of did it on my own time. But this is a great place to do that and hang out with people and I think that's important. The other side of what I'd be doing is I'd be learning as much as I can about AI and I'd find at least one or two sectors that I was interested in and trying to understand everything about how AI was going to improve or change those or make those look very different in the next five or 10 years. And I'd be using the fact that I'm at a university like this to get access to people who could teach me and to, you know, one of the best things, if you want to be an entrepreneur, you need to have hypotheses. So I'd be trying to like learn enough to form my own hypotheses. And I guess I was probably a pretty. Not that I'm not obnoxious now, but I was probably a very obnoxious, you know, 20 year old because I have all these strong opinions and you go talk to people. But that's actually really good for an entrepreneur. Even if your opinions are wrong, as long as you're listening and learning, you can make them better. So I think, I think a lot of young people are afraid to have opinions. I think the better thing is to learn what you can have an opinion and then go try to talk to people about that. And being here is a huge advantage because we have all these innovators around this, we have all these cool people tied to this that if you do have opinions, they're going to be able to expose you to the right people to iterate and learn on those opinions. And then the person who has the opinions and is exploring and is keeping getting feedback, they're going to be like, miles ahead of a person who's just going to come out not having had those opinions. So I think to be an entrepreneur, study the new boundaries of what's possible, talk to people, have opinions, iterate, and hopefully meet other smart people here who want to build with you.
- [51:26]
Coleman Hughes
All right, Joe Lonsdale, thanks so much for your time.
- [51:28]
Joe Lonsdale
Thanks, Coleman.