Auren Hoffman (00:01.49)
Hello fellow data nerds. My guest today is Joe Lonsdale. Joe is the co-founder of a number of amazing companies, including Palantir, Addepar, OpenGov, and he's a co-founder of the University of Austin. He's also the founder managing partner of the venture firm 8VC, and he's invested in some incredible companies, including Oculus, Anduril, Wish, Flexport, and many, many others. Joe, welcome to World of DaaS.

Joe Lonsdale (00:28.737)
Thanks, Auren, great to be on.

Auren Hoffman (00:30.506)
Now you're an outspoken optimist in a way, you even have a podcast called American Optimists. It seems that most smart people I meet are pessimists, but most founders are both smart and optimistic. Would you agree with that?

Joe Lonsdale (00:46.861)
I think that's right. I think it's easier if you're really smart to be pessimistic. There's so many ways for things to go wrong and it's so frustrating how broken so many things are. So I think it's very easy by default to fall into pessimism. I think it takes actually an act of faith and an act of hope to be optimistic. But frankly, I think if you're really smart, you can figure out how and why things can work as well.

Auren Hoffman (01:11.569)
Is optimism like a skill? Like can we teach it or is it ingrained or?

Joe Lonsdale (01:15.793)
I think it's a skill. I think, listen, I think there's definitely people who are by default more optimistic. There's definitely people who are by default more pessimistic. We always react to our older siblings and our parents. And I think some people, if their older brother was too optimistic, they become more cynical. It's just like this natural give and take and that's what it is. But no, you could definitely work on yourself to be more optimistic, to find ways to believe and have hope, to find ways to figure out how to help the future. It's an important skill set to build.

Auren Hoffman (01:43.394)
Do you think like as a society, we become more pessimistic over time?

Joe Lonsdale (01:50.305)
I don't know if that's true. There's been a lot of times in the past where people were really, really nervous. I think there's like all sorts of these waves where people assume that the whole world was screwed where all the stories about how we've already patented everything worth patenting with a patent office 130 years ago and all the things about people. The end of times has been a common recurring theme in every couple of generations where people are pretty sure we're at the end. There's been some really, really nasty difficult times in our history where...

Auren Hoffman (02:04.578)
Right.

Joe Lonsdale (02:19.733)
where we, I mean, people forget even the 1970s San Francisco, there was like over 100 killings, right? There's all sorts of murders going on. There's all sorts of crazy bombs going off in the 60s and top people getting assassinated in our country. And you just kind of, you can kind of, obviously, the Civil War was just terrible. You can't even compare to anything even close to that. So I think people forget we've like, humanity generally has been through like a lot of dark times. And if anything, this is kind of like pessimism light right now versus the past. I think people are just...

It's almost like this repeat from 50, 60 years ago, where it's not even as bad as it was then, but we are caught up in this pessimism right now.

Auren Hoffman (02:56.45)
When I think like when you and I were like, let's say 2011 in San Francisco, it did seem like it just seemed like a much more optimistic time. By the time I left in 2021 San Francisco, it just seemed like it, like just in the air, in the water, it was a much less pessimistic, you know, much more pessimistic, you know, from the 2020, 2011, which was much more optimistic.

Joe Lonsdale (03:20.253)
Yeah, when you experience decline in a city for a decade, when you experience like monotonic decline, where things get worse and worse and worse and worse, and they're corrupt and they're dysfunctional, and you see mess, you see suffering in front of you, I mean, that kind of energy does cause pessimism. So, I mean, there's definitely external factors in society when certain things are broken.

people do get more pessimistic when there's certain challenges that get to be bigger, people get more pessimistic. And that's, that's actually when you need optimism the most it's when you need to go get together and say, here's how we're going to solve these things. And you actually it's an act of actually figuring out here's where the gaps are. Here's how you're going to solve it.

Auren Hoffman (03:53.998)
If you think of like technology, one of the ways to think about progress is just like the cost of goods going down over time. You know, in that lens, like, how do you think we can make more progress in things like healthcare, housing, education, etc.?

Joe Lonsdale (04:09.289)
And of course, there's a lot more factors to society than the cost of goods, as you know, as well. But if we're going to focus on that area in particular, in order for costs to go down, you need the system to be functional, right? So if you just look at the technology side, you need a more efficient way of doing it. You need a more productive way to do the service or produce the good. But in order for the more productive ways to win, you need a system where the best ideas win.

Auren Hoffman (04:12.396)
Yeah.

Auren Hoffman (04:38.028)
Yep.

Joe Lonsdale (04:38.057)
This is what's really amazing about a free society is that in general with a free society, you can have the best ideas when like if you go back to Roman times, you go back to even Queen Elizabeth, like getting rid of sewing machines, right, because they're too efficient, they're going to destroy jobs. In general, top down, people don't understand productivity. They don't understand kind of what's good long term for society with best ideas winning and they tend to block new ideas. They tend to try to get together. As you see a lot of these AI do-mers and others right now, even again, it happens every single time they try to get together and have some excuse.

to block new technology. And so for healthcare, for example, I do a lot in healthcare, it's 20% of our GDP. There's just all these ways in which markets are not allowed to function, in which you're not allowed to compete, you're not allowed to have new entrants, you're not allowed to have new innovative ways of doing things. I mean, there's, you know, you know this as well. Like when you start like an AI healthcare company and you have a better way, for example, of diagnosing diabetic retinopathy, which is how poor people go blind by getting...

overweight and getting diabetes and then they go blind if it's not diagnosed. For certain cases, like there's not enough doctors to diagnose that. So we built cameras that could diagnose it with AI. And it took us several years to be allowed to be paid for it. And only because we are extremely persistent, extremely stubborn, that we pushed this through. And you know, it's called the HEDIS codes. We didn't want to hear about these things. But basically, the government sets up these regulatory structures that protects the incumbents. And it stops, you know, doctors groups lobby against new things.

The health system's lobbying against new things. The pharma company's lobbying against new things. There's like seven big special interests in healthcare. That's why it's so broken. And there's things called scope of practice where you can't have a nurse in an AI system do something because it's banned in certain states, but not others. So you have some states working perfectly fine, other states like that. So I mean, healthcare is one of these things where, you know, I'll tell you a really important lesson for the US and for free societies is the more things become unfree, they become more expensive and then you get the populace trying to destroy everything. So this is what's really scary is

is we desperately need to make healthcare more free, which is hard work. You actually have to go through every single one of these things. You have to pull them back. You have to get rid of the regulations, get rid of the laws. I'm trying to do this with my sister or group. If you don't do this, Orin, it becomes so broken that the populace come along and destroy it. So like the left would love nothing more, the extreme left would love nothing more to destroy this market system in general in healthcare and just break the innovation. And I understand where they're coming from. A lot of them don't understand any better how systems work and they just want to work. And so like who cares? They're just going to have government do it top down because it's so broken.

Joe Lonsdale (07:04.125)
And but the problem is we don't fix this, we're going to get our innovation totally destroyed, right? And so, which is why it's so important to fix. But I mean, there are lots of good answers for how you get competition and innovation in healthcare. It just actually requires hard work.

Auren Hoffman (07:17.042)
It seems like in the healthcare world, we're in the worst scenario. You have systems like the NHS, maybe the government there pays per person one-third of what the US government pays or something, and you can get that system. Or you could have much more free market-related system and much more innovation come in.

Um, which would also be cheaper, but we're in this like weird middle point where it's like the worst of all worlds. Would you agree with that?

Joe Lonsdale (07:51.585)
The way it's set up right now, I wouldn't say it's the worst of all, but there's definitely bad. However, there's definitely lots of glimmers of hope. So let's, I mean, I think we should focus on some of the functional things as well. So for example, like one of my favorite companies here, there are a lot of other companies have been copying is Chenmed. And, you know, they've actually shown you could, you can reduce costs by about 50% while improving outcomes, even for the least fall off in our society by changing the incentives to value-based care and by really kind of giving the incentive to the doctors.

do not interact with the health systems unless you must because health systems right now are a fee-for-service world where their goal is not to coordinate, not to be proactive, not to be holistic, it's to maximize revenue. And so these health systems, all the wrong incentives are all broken. But if you can engage in value-based care, which these guys have, and of course Oak Street then copied that and scaled it up. A bunch of other companies are doing this now. I've started multiple companies where, or invested in multiple companies where you kind of go in. For example, I'll give you an example. The poorest...

people on Medicaid right now in our country, the 5% of Medicaid, which is the least well off, because Medicaid is already people who tend to be struggling, but the 5% least well off is like 45% of the cost. It's hundreds of billions of dollars a year. And these people tend to be chronically ill, oftentimes obese, mentally ill, homeless, like all sorts of issues. And it turns out that if you practically engage with them, you have a day-driven system, you have one doctor, multiple nurses, multiple people under each nurse.

and you run it like a really efficient system ahead of time to help these people figure out how to make them better off. You can both improve the results massively and you cut medical costs by 30 or 40%. And so there's things like this where you use data, you realign the incentives, you pay for results, you pay for management as opposed to waiting for fever service. And it's just like, it works amazingly well. And like we're doing this all over the country now. So despite the fact that our system is broken.

There are ways to kind of go in and fix it and realign things. And this is what a lot of us are trying to do.

Auren Hoffman (09:43.582)
And at some point it has to, like, we have to pay more attention to it because you can't have a scenario where it becomes 50% of the GDP or something, right? Like at some point. Okay.

Joe Lonsdale (09:52.117)
Well, you know, I push back on that. Obviously, it probably should only be like 10% of GDP. But as we get wealthier, healthcare is a thing we probably care the most about, right? Like in terms of I don't know how much of your money you'd spend to save one of someone in your family. But I think there's a chance that actually does become a really big part. Just imagine a world where it's just insanely wealthy. It probably does become bigger part of GDP for good reasons over time, you know, so big. Yeah, but I agree. But right now it has to be more efficient.

Auren Hoffman (10:01.77)
Yep, makes sense. Yep.

Auren Hoffman (10:14.782)
Okay, that's fair. Yep.

Auren Hoffman (10:19.242)
Okay. And then, and then obviously you're also spending a lot of time in like education, starting University of Austin, you know, where we're, we're taping this, you know, uh, in, in kind of the myths of, uh, a lot of people, um, going after higher education, going after universities, saying these universities are stagnant or in many ways corrupt. Sometimes people call them, um, you know, they're, they're really just hedge funds that happen to have like an educational component to them and stuff like that. Like, how do you see.

the future of higher ed in our society.

Joe Lonsdale (10:51.341)
So, you know, the reason we decided to found the University of Austin a couple years ago, is we had watched for a couple decades, the rot of America's great universities, you know, the America's great universities have, they've tripled the size of their administrations over the last 20 years, you know, Yale has more administrators and students Harvard has almost as many students, and these administrators. Yes, literally people think I'm making it up, go look it up. It's totally insane. It's like 7000 something. It's like.

Auren Hoffman (11:12.298)
Wait, Yale has more administrators than students? That is crazy. That's insane.

Joe Lonsdale (11:20.445)
It's, you know, these is insane. And not only are there more ministry students, these administrators themselves are crazy. Or like, like the average you talk to a DEI administrator, they're like, like racist, like low IQ, like tend not to like Jews or white people or it's just insane. I mean, some of them are nice people, I'm sure. But this is, this is like a bad ideology that these people have been brainwashed with. And, you know, it reminds me very much of the German universities in the 1920s, which by the way, were the best in the world by far, like by far.

Auren Hoffman (11:48.382)
Yeah, by far. Yeah.

Joe Lonsdale (11:50.549)
And then you have this like Naziism work its way into the German universities, became really prominent in there and really then spread out to the rest of society. And similarly, you have like this rot of this like kind of far left, woke, like illiberal nonsense, or whatever you want to call it, that's spread entirely. It's like, it's like, you know, cloned itself like with tens of thousands, hundreds of thousands of these crazy administrators and is now, and is now spreading outwards and it's, it's making it so you can't have conversations about things, these universities, you can't, you know,

They all admit that they have to be all these professors are saying they can't say what they think students can't say what they think It's it's truly a rotten broken culture there And this is why we want us we want to have one great American University that was not captured by this kind of rotten Whatever you're gonna call it woke neo-marxist postmodern, you know mess and we want to have a place where people could have open conversations You know, we've had six thousand professors apply since we announced this university a couple years ago We're you know, we're launching our first undergraduate class next year

Auren Hoffman (12:24.182)
You have to tiptoe around things. Yep.

Joe Lonsdale (12:49.109)
These 6,000 professors, they're not like people on the right. I'm sure some of them are on the right, but like the majority of them are actually probably the moderate left even. It's just that, you know, which tends to be where universities are. It's just that you need to be able to have open conversations, open debates and explore both sides of things without it being like an ideological war. And that's what it's become.

Auren Hoffman (13:05.31)
Yeah. And why is that even a left versus right? I mean, it seems like, you know, the idea of focusing on truth, the word truth, is even in most university mottos and stuff like, why is that a left thing or a right thing?

Joe Lonsdale (13:18.109)
you can you can be can be sure that if Harvard was founded today would not have Veritas as its logo like it's obviously not at all the spirit of Harvard today. And it's like these people, like the lady who runs Harvard, she's a social justice warrior who attacked Roland Friar, another African American because he published something she didn't like. I think she has overall maybe like 11 or so published papers by Imperial Review journals, which is about as many as you need to get to even apply to be a professor. So she's obviously a career bureaucrat social justice warrior. She's not

Auren Hoffman (13:22.894)
Hehehehe

Joe Lonsdale (13:47.945)
somebody who's a respectable person. She's a, she's a.

Auren Hoffman (13:50.166)
Well, how does that person like, I mean, I don't know much about her. She may be great. I don't know. But how do you know, traditionally these great universities were led by, in many ways, great people, great scholars in their own right. And they were also maybe great administrators and they were innovators. How has this happened now that it seems like a lot of these universities are kind of not

the run by more the bureaucrat or maybe the good fundraiser or something.

Joe Lonsdale (14:21.525)
They become they become ideological hotbeds. They've chosen for she was chosen for DEI reasons. They've been very clear that whoever they chose how to be fit for DEI there. So it's like this is not me being racist is them being racist. I'm telling you how they did their process. And it's in she's clearly not a great scholar. She's not doesn't have a lot of published work. She's clearly gotten very, very involved in these ideological battles her whole career. And that's her focus. And you see it on display with her talking at Congress. It's embarrassing. She's not she's not highly intellectual.

She's an activist who goes along with the ideological nonsense that's around her. And that is unfortunately, what's taken over the zeitgeist of these universities and it's spreading into our society and it's breaking a lot of our institutions. And these, you know, I got really passionate about this because I've built a lot of institutions and I know you have as well. And when you build something, you can't have two gods. You have to either have like functionality and success and merit, which is all part of one thing.

Or you have to have some other thing you're going for. And they've thrown merit out the window. They've thrown like, you know, the highly intellectual like pursuit of truth out the window. And they're instead focused on this ideological nonsense. And it's really, really breaking these things. And a lot of my friends and I saw this years ago and people frankly ignored us and thought we were kind of weird to do this. And you know, it's been a really frankly satisfying week as obnoxious as these people are testifying at Congress. It's been very satisfying to have thousands of people.

and hundreds of people texting me and emailing me and like asking to get involved in our university because they're finally realizing how broken this stuff is. You know what? Happy to have them on our team now. They take a little longer to figure it out. But happy to have them helping us because we need to fix this.

Auren Hoffman (15:58.722)
Do you think it's just a, I mean, the stat that I was not aware of that there are more administrators and students at Yale. I guess if you have so many people, like you kind of have to do something. You don't want to just sit around and do nothing if you're an administrator. So you start to create work for yourself and then that begets something and that begets something and all of a sudden you're just doing these other things. Is that just like the main, like if we had...

Joe Lonsdale (16:22.749)
Yep. Yeah, all of a sudden there's all of a sudden there's tons of grievances.

Auren Hoffman (16:26.32)
Like 15% of the administrators would we like not have any of these problems?

Joe Lonsdale (16:31.47)
I think firing probably 80%, 90% of the administrators would be a very good first cut. I think that the...

Auren Hoffman (16:39.298)
And that will never happen, right, at any of these big universities.

Joe Lonsdale (16:42.253)
Oh, no, these pieces are totally conquered. The boards are total cowards. Like to get to get what I what I learned over the last 20 years is to get out of your university board. You have to be a coward. And they purposely select people who will never stand up to them, never fight them, never do anything bold. Like the whole point is that you want to have it on your resume that you're on the board. And it's very interesting. If you see someone on a university board, like the vast majority of these, like there's exceptions for sure. You know, exceptions for, I think Recruzo and USC did a good job. There's like exceptions. People doing good job at certain places.

But the vast majority of these board members, they're cowards, they're pathetic, they go along to get along tight people, they're not people like, to me what makes a great man Roman is you stand up for your values against everyone else, even when everyone else disagrees with you, you fight for what's right, you don't accept mediocrity, you don't accept lack of principles, and these are not the type of people on the boards. But no, if you want to fix these universities, you'd first of all get rid of 80% of the administrators, maybe 70%, I don't know, there's probably some things they're doing, but you get rid of most of them. And then,

And then you'd also have to go into these professors and these groups. So what happens is, Orrin, is that these departments each get to select their own professors and there's a lot of subspecialties. And so you'll get these really narrow parts of the university with maybe 21 professors. And over time, they've gotten to the point where 18 of them are neo-Marxist and then three of them are just regular Democrats. And maybe they accept a fourth regular Democrat here or there, but that's very hard and very unlikely. Mostly they're just gonna accept neo-Marxists. And there's no chance that history department or the sociology department

will ever allow anybody, you know, who comes from the moderate side or God forbid the moderate right God forbid somebody who believes in markets or believes that there were some good things about the British Empire. I mean, you saw us with Neil Ferguson, probably the greatest living historian visiting right now, but in town is where this were chatting and you know, he taught at Oxford taught at Harvard, he's done amazing books and series, I learned so much when I talked to him. And you know, Stanford professors wouldn't even let him be part of the history faculty at the beach only at Hoover. And this is because like they disagree with him, you know.

Auren Hoffman (18:38.498)
That isn't new, right? Like, and I'm older than you, but even when I was in college in the 90s, like there weren't a lot of conservatives in history or in political science or something like that, yeah.

Joe Lonsdale (18:49.257)
It was never an ideological warfare. It was never ideological warfare quite like it is now. It'd be like, the ratios used to be, you can go back, look at the numbers Jonathan Heights done a lot of great work on this. The ratios used to be like, three to one, four to one, maybe five to one, but now it's like 17 to one or it's like infinite, or so infinite, because there's none. It's like, and what it is, is they've so conquered these places. And it's literally like a like a thing where they just won't allow anyone to even be a postdoc student, even be their PhD student, you know, who doesn't go along with them, like our

Auren Hoffman (18:59.726)
Four to one, five to one. Yeah.

Auren Hoffman (19:05.664)
Yeah, yeah.

Joe Lonsdale (19:18.497)
The average IQ and history stuff has just massively declined in this country because they're not allowing any other points of view. And it's a crisis, frankly, for academia because there aren't historians to hire. Even if they suddenly want to hire a really bright professor of history who believes in markets and wants to give that perspective alongside their Marxist perspective to their students, they can't find them because they haven't been lending them in their PhD program for 30 years. So, I mean, these places are really rotten.

Auren Hoffman (19:42.402)
Well, I guess I'm less worried about like the history professor, the sociology, even political science or something. I am much more worried like if that seeps into like engineering, math, computer science, like biology.

Joe Lonsdale (19:58.473)
Well, I understand where you're coming from. I actually do think it's a crisis for a civilization not to have like a functional understanding of history. I think a lot of our problems are from there, but that's fair. Let's take that aside for a second, even despite history and economics and sociology being broken. Economics is using quite as bad as the one place where like you tend to understand markets a little bit, although it's not always now. But no, I mean, the science is, and Peter Till's argument here is that the actual real problem is that we're not really making as much progress in the sciences, which is a

is something that, you know, we can debate and maybe somewhat true in certain areas. But no, yeah, the engineering departments have gone to be woke. And a lot of them have fallen a lot the last 10 or 20 years. And it really has kind of seeped into those areas in a way it probably hadn't as much 20, 30 years ago. It really has in the last 10 years, which is really sad.

Auren Hoffman (20:48.694)
Now on defense, I love to talk a little bit more about defense geopolitics. There's been a lot of like regulatory capture in defense. There's, how do we kind of break the power of the incumbents?

Joe Lonsdale (21:03.645)
Well, yeah, defense is a complicated area. So what you had is you had like a massive number of companies in the US and it was a very competitive and obviously the most functional defense market in the world by far in the 20th century, mid 20th century, especially you had actually really good people in government because for technology innovation, it was very centralized. So you had the best people in the world in the government, World War II and kind of for the next 10 or 20 years. And then it started to slowly fade from there.

Auren Hoffman (21:05.994)
Like the industrial complex, et cetera.

Joe Lonsdale (21:33.125)
was still very functional. After the end of the Cold War, we rightly lowered spend and we ended up centralizing a lot of it. You got these like eight to 10 big primes that really controlled everything. What happened was, is things started to fall even a lot further the next 20 years. You had a lot of big talent all really go to this distributed innovation world. Thanks to Silicon Valley on the margin, if you were really good, it didn't make sense to be in the belly of the beast in DC. You're just...

Joe Lonsdale (22:06.947)
So you have this massive acceleration in the gap between what's possible and between... Sorry, one second, Oren. Guys, you got it. You got it. You got it. You guys just be quiet and leave. Please, please leave, guys. I got to do this. Sorry, you can cut that out. You can edit that out. I apologize. I just can't focus when people are talking. So basically, this gap accelerates massively in the 90s between...

Auren Hoffman (22:21.191)
No problem.

Joe Lonsdale (22:32.073)
between like what's possible and between where these guys are. And it just starts growing and growing. And we really saw this at Palance here. When we started Palance here in 2003, we've been watching, because you know, at PayPal, obviously as you know, we had to rest these bad guys from the Russian and Chinese mafia and had to work with FBI and Secret Service. And I got to know some of these guys, you know, exposed to these workflows there. And it just became clear that the gap was growing so big. And you saw us after 9-11, the government in the U.S. spent billions, really tens of billions of dollars

about how we're gonna rebuild our systems to detect what's going on, to watch terrorists, to eliminate terrorists. And the way they were spending the money, Orin, it was just obviously wrong to anyone involved in the technology ecosystem on the West Coast. It was pathetic, frankly. It was very broken. And so the gap kind of at that point was like, okay, wow, something has to be done. And so we built Palantir. It was not set up for a new entrant to come in. So we had to be extremely stubborn, extremely persistent, even when things we were doing were like 10 times better.

it would take years sometimes to kind of shame them into working with us on something. It was obviously the right thing to do because there were some good allies that wanted to get, do the best, have the best answers. A lot of corruption helping insiders and in the, you know, I think, I think because of Palantir's success and then because of SpaceX's success as well, breaking through and being so critical to our national offense, you start to get a lot of people saying, okay, wait a second. This, we do need to go to the new guys. We do need to go to the outsiders. This is way more advanced. This is better.

Auren Hoffman (23:37.708)
Yeah.

Auren Hoffman (23:47.361)
Yeah.

Joe Lonsdale (23:57.673)
And so when Andrew came along, they learned a lot of lessons about how to do it. Andrew has now basically formed the third prime. So it's Palantir, SpaceX, Andrew. Andrew was three guys who were Palantir plus Palmer. Uh, obviously a proud, proud investor there too. They're doing amazing stuff. Palmer with his road runner. You know, you can show off this week, super cool new things that they're releasing and, you know, Trey and Brian have done a great job. They're building that company with him. And, and, and so, so now you have this kind of like rebel alliance of new things that are functional in both Palantir and Andrew.

have become this new prime, it kind of is helping new things get in, helping partnering with them. And, but I'll tell you what, I don't want to completely write off all the old companies. We do have some very functional parts and very talented parts, you know, within Raytheon, within General Dynamics, within L3. Like we've spent as a country, tens of billions of dollars on a lot of advanced technology. And sure, there are parts where Andrew is running circles around them. There's parts for my new companies running circles around them. They're not always the best innovators, especially when it comes to software.

because I understand software cultures. But for some of these areas, they are the best in the world. And so we're gonna be partnering with them. And you know, some of them, when they don't learn how to partner with you guys, and they don't work with us well, we're gonna run circles around them, and they're gonna shrink, and we're gonna beat them for contracts. And where they do, then we're gonna succeed. And what's happening now is you're finally opening up the DOD to a lot of these competitions. I'll give you an example. We've spent tens of billions of dollars as a country on EMP. It does not work very well on the battlefield yet.

Auren Hoffman (24:56.108)
Yep.

Joe Lonsdale (25:24.417)
or has not in the past. And my friends and I realized you can actually use AI to control power on very small time skills to kind of hit the guy I tried, you know, emitter all at once. And when you do this correctly, you could fire the EMP blasts in a directed way about 10 times further than anything else out there. And we spent tens of millions of dollars, we built this system in EPROS. We finally got them to let us into a competition. There's a big competition in the desert, you know, early this year.

And we shot down the hardened drones almost 10 times, I think nine and a half times farther away than these other companies that had spent billions of dollars in their solutions. And it's really surprised everyone. And you know what? We didn't get the biggest contract right away. The Air Force awarded, obviously, a giant contract right away, even though our stuff was better. But it became clear, but we did get a big contract with the Army and it became clear that our stuff's way ahead and that we're going to get a much more big contracts in these areas. And it's slow. The big guys, you know,

fight us every step of the way, try to limit our ability to get contracts, try to force us to sell the company. So it's still a very nasty area, but the generals and the funders are starting to realize that the best things are coming from the outside. So this is a hand-to-hand combat with Congress, with DOD, but I mean, things are definitely shifting in the right direction thanks to the success of the new primes.

Auren Hoffman (26:36.458)
Now, we're now at the 30 year anniversary of the last supper where Secretary of Defense Les Aspin got all these big primes to merge and it kind of led to this, I'd say more financialization of the defense industry. It seems like now we're maybe on the next era. How do you think the next 30 years of defense tech is going to look like?

Joe Lonsdale (27:01.345)
You know, so we have the three new primes. I think we're probably gonna have, you know, another kind of eight to 10 of them that break into like the steady state, you know, greater than billion dollar evaluation, like important companies running things. You have Sironics probably gonna be helping the Navy build tons of these drones. You have, you know, things like Apparis leading on EMP. You have other new companies coming up. They're doing exciting things. They may end up becoming major manufacturers for the DoD. They may end up producing a lot of missiles for them, things like that.

The challenge, Oren, is I don't think there's going to be like, like 100 big companies, right? It just doesn't make sense. You're still going to have the primes. A lot of the primes are still doing very important things. They're going to play a different role, but they're going to be there. And you know, spend is what it is. I think it's already quite high. I don't think it's going to go up that much higher. It doesn't make sense for it, too. We can't afford it. And so basically, like, you know, there's been about, I mean, I think, what, 2500 or so unicorns created in the last 30 years, give or take. And uh...

you know, maybe it's 3000, something like that. And I think I think eight of them have been defense unicorns. So we might have another fit 1015 20 maybe even 2530. But it's actually a relatively small part of the space. And I think right now, because other things are not working in SAS, and because people are confused what to do, you have a lot of people coming into defense. And I love it. I've been doing this for a long time. It's great to finally have everyone else looking at it working on it. I think they tend to be very naive how hard this is. And they tend to they tend to be overvaluing a lot of these things.

And I think I think there's going to be a lot of disappointment, frankly, because I don't think you're gonna have like tons of new great companies. So I do think it's good for the country that we're working on defense, but I'm a little skeptical of how much money is coming in right now. It's a little overdone.

Auren Hoffman (28:32.087)
Well, it is.

Auren Hoffman (28:38.486)
There is like you have these companies like Palantir and Inderol that are like set up to sell to national security and they make most of their revenue from national security. And then but you have a lot of great tech companies that have real tech and they would love it if 10% of the revenue came from national security. But it just seems like it's very hard to have just 10% it's like it's kind of like 0 to 50%.

You need to like there's kind of nothing in between because it's so hard to sell to these services and so hard to.

Joe Lonsdale (29:12.117)
That has been historically the case. And I think you're right. I mean, that's something that the government's also getting better at. I was with the guys who run Cyber Command and other places, and they're talking about this. So I was on the board of Illumio, for example, which is a great company we invested in early on, which is micro segmentation. It's basically cyber defense. And almost all of the big tech companies, big banks use it. It's a very dominant company with really, really hard stuff to build. You had the top talent from VMware and Juniper and Riverbed, etc.

And they were not, they're literally being used by all the big companies like no one in the government. And you know, in the last few years, they actually have started to grow in the DoD. And this is really to the DoD's credit. They're like, okay, wait a second. What is the very best technology in this space? What are all their companies using? And Lumio then of course, doing some effort to teach them and work with them. And, you know, I can't say the exact numbers, but I wouldn't be surprised if they end up being like, you know, 10, 20% of the revenue in the DoD over, you know, if you fast forward a few years, which is, which is very reasonable. And that's.

That's not something you would have seen 10 years ago. So you're right, it didn't work that way 10 years ago. I do think we're getting a little more open in the bowels of government to kind of work with the best stuff out in the real world, to work with what's called commercial off the shelf, COTS. So hopefully things are going that way.

Auren Hoffman (30:20.274)
So, you know, like when companies, even when like national security, whether it's intelligence services or defense department, when they do want to buy something from these companies that aren't like set up to always sell to them, they're often asking them to do all this extra stuff. And at least the companies I've been involved in, they, you know, the buyers always, I need, I want to buy your stuff, but I need you to do these six other things. And when you really dive into it, at least in my...

view, like they often don't need any of those six things. They're willing to pay a lot more. So it's enticing, but it does seem like everything slows down and it, and I don't know how to get away from it. I don't know if you agree if that's a problem or not.

Joe Lonsdale (31:01.373)
Yeah, I mean, we were we were joking earlier about the number of administrators at Yale. I mean, I don't think that you want me to tell you how many people there are in the procurement offices. TOT has hundreds of thousands and it's and then you have hundreds of thousands of people with a lot to do. There's a lot of little things get added on. And it reminds me a lot of how very big companies work too. They ended up buying through these checklists where, as you know, like certain SaaS companies, I mean, Adapar has finally gotten to the point now, 14 years in, where we like.

Auren Hoffman (31:09.438)
Okay, good point. Okay, so it's a similar thing, yeah.

Joe Lonsdale (31:27.925)
know, can compete with a checklist of the stuff that's been around for, you know, for twice as long for certain large buyers who just need everything before they'll buy it. And it's like very obnoxious, right? And that is how large institutions tend to work both privately and in the government. And I agree, it's very inefficient. So that's the name of the game. And so it is, it's the reason you have to be like 10 times better on the core stuff in order to win, because you're not going to have

Auren Hoffman (31:35.746)
Yeah.

Joe Lonsdale (31:52.957)
a long list of 180 things for everything until you're already a decade into the company. But hopefully for 10 times better you can break through and they can use you for the key thing that matters.

Auren Hoffman (32:01.642)
It's interesting. So I was involved in the company and they, they were, uh, they had a buyer interested at one of these three letter agencies that was super interested in, in like, at least learning more about it. I want to like test out the software of this company and, um, and, and the company that great, you could test it out for free, like just go to, like, we'd love to get your feedback. So go and the buyer was like, so excited to do it, but it still took over a year.

to get an agreement in place to allow this agency to test it for free.

Joe Lonsdale (32:33.937)
Yeah, that's, I mean, that's also depends on like, how much the bureaucrats are on your side. I think the secret, the secret to all this or it is that it's not really that it takes that long if everyone wants you to win and wants to go fast. But there's a lot of people in the basement who might not actually be on your team and they know how to delay things. And so much of the world so much of the world is power games and people, people pretend that they're really good. The bureaucrats are really good at pretending that's just my process. And it's just what's required. And it's just what I'm going to do. But like,

Auren Hoffman (32:51.11)
Yeah, yeah, of course, yeah.

Joe Lonsdale (33:03.113)
If they're really motivated, things can move faster. And this is, you know, I was just reading Prince Cass, it's a Voyage of the Dawn Treader, which is an Arnia book to my daughter. I don't know if you remember this book, but they show up on this island and it's been ruled, and there's like slave trading going on.

that is just bureaucrat in charge was all these rules about when you could talk to him and how they do things, how you have to do it is, is very sassified because Prince Caspian even with like just walks in and eventually just like throws the guy out of his position and takes over and fixes things which is a good thing to teach kids like sometimes bureaucrats just need to be like taken out of their position and removed and have things having specs you know

Auren Hoffman (33:20.546)
Huh.

Auren Hoffman (33:37.19)
From this conversation, you're like, you've got a super healthy dose of optimism, but like it's coupled with quite a bit of pessimism and realism as well. Is that, is there some sort of like perfect middle ground to get all this stuff done?

Joe Lonsdale (33:51.389)
You know, I always like to say like reality is a dialectic and there's extreme truths on both sides and there's things that are very broken and we have to be realist about what's broken. But then we have to realize that even though things are really broken, there are ways of getting things done and there are ways of being persistent and of taking the best and brightest and pushing through and winning. And that's what we've done in a bunch of these areas. I love going after things in government and healthcare and big parts of finance.

you know, all these areas where it's just very, very difficult. Like my sister Institute, we get laws passed and we work, we have to work with the house and the Senate and the state and you have to work with the governor. You have to, you have to work, you have to overcome a special interest, you have to get partners. It's a huge mess. But you know what, or in the places in the world, where there's really huge messes like that, those are the places where there's the biggest gaps. And those are places where the stuff you're doing is just so obviously right, compared to what's there because things are so broken, because things are so messed up, they've decayed to the point where you can kind of like

Auren Hoffman (34:40.875)
Yeah.

Joe Lonsdale (34:48.233)
show everyone that this is a bad thing and this is a good thing and let's help fight for the good thing. I think it's a very noble thing to do and we try to do it in a lot of areas.

Auren Hoffman (34:56.81)
Now I've known you for 20 years or so. Um, and my, at least my, if I play like my, my view of you over the last 20 years is of all the people I've known over the last 20 years, I feel like you've changed the least in terms of your views. Um, maybe that's completely wrong, but I feel like you are kind of the same person you were 20 years ago. Um, I don't know if you've ever like done an analysis of yourself, but would you agree with that or would you say, Oh, actually I have evolved a lot on all these types of things.

Joe Lonsdale (35:24.545)
think you evolve a lot around how the world actually works in terms of learning how systems work and how to get things done and how to and how you hopefully wiser hopefully more realist. But yeah, no, I've always been the obnoxious like, like too smart for my own good hero archetype charging in, you know, the front of the army to fix the broken thing and go after the bad guys. I think that's a, that's a good way for me to be and it's we're gonna keep doing

Auren Hoffman (35:30.174)
Yeah. You're wiser for sure. Right? Yeah.

Auren Hoffman (35:47.67)
Now you wrote an interesting piece called The Dissidence Guide to Philanthropy. What were some of the main takeaways on that?

Joe Lonsdale (35:54.849)
The main takeaway on that is that the way philanthropy should work today versus 50, 60 years ago in America, 70 years ago is very different. And, you know, if you have a society where like the organizations around you are basically functional and basically have like well-meaning people, I mean, I think it was totally fine even in the 1980s, frankly, to go put your name on a building and a university, for example, and, and everyone applauds you for it. It's a popular thing to do. And it shows you off.

and you're supporting this thing and you call it a day. And that's great. It's simple McCombs School of Business, where the guy started a hundred businesses in Texas and he's supported the business school here. That's you know, in the eighties and nineties, that's totally legit. I think if you do that today, you're, you're an effing idiot, frankly. And it's shameful and you should be ashamed of yourself. I think, I think, I think, I think McKnight doing that at Stanford today, it's probably because his brain doesn't work anymore. It's probably because he's so old that he can't think for himself and it's pathetic and it's sad.

Auren Hoffman (36:52.047)
Oh, okay. Wow. Okay.

Joe Lonsdale (36:52.105)
And so today, if you're going to do that, you're contributing to a decadent and broken system that is, that's hurting our free society. And if you want to do philanthropy today, you need to be part of a solution. So, so, so if you have a fundamentally broken system, you need to be something like a startup, you need to be something that thinks for itself. And if you have a system that's like creating more homelessness by creating incentives for homeless people to come and then like supporting them in a broken lifestyle versus trying to fix it.

Auren Hoffman (37:04.63)
So essentially you need a startup. You need to be a startup.

Joe Lonsdale (37:20.265)
And then you're giving money to a charity that's effectively buying more needles for them to do more drugs, or that's effectively like giving money to people who are going to make money off people suffering and increasing their suffering. Like you are a bad person, or at the very least, you're an idiot. And it's frustrating because you have all these NGOs, you have all this philanthropy today, which is virtue signaling. And here's the thing, it's tough, is that there's really like two ways to do philanthropy. One way is to be just

keep being part of the problem and being lauded for it because that's the popular, or do something that you're not gonna get lauded for as much as it actually helps. And I'll tell you what, the vast majority of people in the new philanthropy, they are not thinking how are they gonna love mankind, they're thinking how are they gonna be loved by mankind. So the vast majority.

Auren Hoffman (38:03.734)
Yeah, well, in some ways, that's the reason. If you think of what most people give, they're giving it things that they're very involved in, whether it's their kids' schools or their local church or something, and partially they're doing that because they get some, hopefully they're doing some good, but they're also doing it because they're getting some, they're getting kudos from their friends and their society.

Joe Lonsdale (38:23.213)
know they want to be loved. I mean,

Which is really, it just shows like a degradation of frankly of faith in our society. I think people don't believe in a higher power as much anymore, they don't think about it anymore, they don't think about what truly matters, they don't think about there actually is objective truth, what's good and what's bad. There's the, I think the idea, I think the idea, regardless of how you get there of there being a deity.

that they're being like, meeting in the world and the world actually matters and good actually matters versus evil and helping actually matters for us not helping. I don't think people think enough in these terms. And because they don't anymore, because they no longer really believe in anything, their instinct for charity is very much self serving. It's very much like what's going to make me look good and get a pat on the back and not create any headaches for my life. And so they end up kind of feeding into this function. And if you really want to be

especially if you're a person of faith, but hopefully even people who don't have faith, you just really care about the world. If you want to be impactful, you should stop and think not what's going to get people to applaud me. But what's actually going to like go actually fix a system that's broken, what's going to confront something that's not working, and lead to like long term prosperity leads to long term benefit for society. And there's just not nearly enough of that right now.

Auren Hoffman (39:38.142)
It's interesting, the way you think about philanthropy has some overlap with like the effect of altruists, but also has some core differentiation. In some ways there it's, okay, you got to do something that's good and that's going to have impact. But to them, it's like, in some ways it's just all math where she was like, no, actually, we've got to like change the system and we've got to do things today. Not things that necessarily just help humans like, you know, 10,000 years from now.

Joe Lonsdale (40:03.977)
Yeah, I haven't spent enough time reading all the effective altruist stuff. It's obviously had a bad year with a lot of kind of pretty bad people behind it. I generally think that a lot of these guys tend to be very naive about systems. And I mean, if you really want to help poor people around the world, like where do people not have enough food, where they not have clean water is generally places that don't have property rights and don't have a free society. You don't have a stable government. Right. So I think, I think going and like to Africa, if you want to like

fix things rather than give aid to props up broken governments to kind of keep misery going. You should probably be figuring out how to give money towards making sure those governments have property rights and have a free society because that's gonna be what actually helps them help themselves and helps people actually prosper. People are very bad at thinking about systems and frankly, it's because they don't want to have to deal with controversial hard problems. I think most people are cowards at the end of the day and they don't want stress in their life.

Auren Hoffman (41:00.054)
Now when people give money, like even when people do anything, they're not completely selfless. They're not completely about like making society better. There's usually some sort of selfish motivation or, you know, some, you know, which isn't necessarily bad. Like they want their name on the building or they want to get some sort of credit for doing good.

Joe Lonsdale (41:18.933)
I think it's fine to get to get to get and give credit to people for making society better for sure. I just think that they need to be making sure they're actually like not propping up a broken system or not supporting something has become dysfunctional that they're using the money towards something bold. If you look at how people do their business and their entrepreneurship, it tends to be a lot more effective than how they do their charity later. I think something happens or when people turn 65 7580 is they're not really able to like

create new models of how the world works anymore. So they're basically working off models they've created for themselves in their 20s, 30s, maybe 40s. Yeah. Yes, you have all these Americans today. You have all these Americans today in their 80s, who are supporting all this stuff. And they think they're good, good for it. And they're actually supporting the dysfunctional parts of our society. And they're, and they're propping up these kind of hateful, kind of anti market anti liberty things like like, like our like our legacy universities.

Auren Hoffman (41:51.094)
So if it worked back then, they'll just keep it going. And sometimes the world has changed.

Joe Lonsdale (42:13.617)
And I think finally this year, some of people are realizing it, but some people are just too old. They're just not going to know. They're just going to keep doing it. It's really a shame because if you think about wealth, even just being like half-confident, you tend to compound your wealth at quite a high rate. We have in our free society, it's progress that's worked, obviously. I think the number I like to explain to people, even if your return is only like 10%, you're going to double your wealth every seven years, give or take. And so that means what? Every 35 years, you're doing 32 times your wealth.

Auren Hoffman (42:26.526)
Yeah, there's a lot of very wealthy 80 year olds.

Joe Lonsdale (42:43.037)
And so someone's 35 years older, they, you know, even if they're about the same, there should be over 30 times wealthier. I mean, that's a lot of wealth, right? It's like most of the wealth in the world is in the hands of these 70, 80, 90 year olds. And, and right now, that's actually, you know, I mean, not that there's not wisdom with age, but there, I think a lot of them are just missing the fact that the world's changed. And if they want to fight for their values, they need to stop doing what they're doing.

Auren Hoffman (42:49.652)
Yeah, yeah, yeah.

Auren Hoffman (43:05.746)
And is there a way to like, you know, it's, uh, it's hard to like convince somebody who's 20, let alone someone who's 75, like, is it hard? Is it, is there a way to actually like convince people to change or?

Joe Lonsdale (43:19.453)
I go to these things and I speak on the on the board of the Reagan Library. I got to go to like the big think tank gatherings for people who share my values. I, you know, there's, there's a lot of different events and you go speak and you try to try to shake them out of their stupor and try to make them realize it. And it's worked with some of them and we get, we get them doing better things, but it's a, it's a, it's a tall order right now. We, we need, we need everyone working on it. Everyone should be working on grandpa. Wake the hell up. Stop, stop supporting the broken thing.

Auren Hoffman (43:43.07)
Nope. I guess, can you imagine a world where like, like there's red and blue of everything, there's a red and blue asset manager, there's a red and blue university, there's a red and blue shoe company, there's red and blue, you know, whatever, um, like it, it seems like a lot of stuff is moving that way. I don't know if that's necessarily like a good thing. Yeah.

Joe Lonsdale (44:04.129)
Well, these are stupid tribes, right? I think it's very unfortunate because there's I think it's all of our job to like attack the things that are that are, you know, that are closer to our side. And so listen, I can go on all day about the broken part of the far left blue side, but there's like a lot of really stupid things in the far right. And that doesn't, you know, and of course, it's like everyone gets angry, oh, Joe, but there's much worse things on the other side. And it's truly our brains literally our program just like, attack the other extreme on the other side. And I listen, I do think obviously, our institutions are conquered by the far left. So I'm obviously, obviously more worried about that. And I have a lot of smart friends.

Auren Hoffman (44:26.679)
We out.

Joe Lonsdale (44:34.157)
who are more worried about the far right. And I appreciate they're coming from the other side. I mean, the tribe I'd like to be in is like the smart, middle ground, competent people who are gonna like keep markets and keep populace on both sides of Bay and keep our civilization functional and keep it honorable, frankly, because I think there's a lot of dishonor right now on a lot of extremes on both sides. And so, I mean, I'd hope it's not just red blue. I hope there's like something about like some kind of like functional strong.

kind of middle ground of people who are competent and are not going to let things break.

Auren Hoffman (45:05.738)
Is there anything just in the party system itself, like you have this kind of duopoly on power, obviously with these two parties in the US? Is there anything there that could be done where or is that just like it's just so baked in there's nothing we could ever change there?

Joe Lonsdale (45:22.977)
That's very hard. I mean, listen, I think there could be a really amazing candidate and movement for a third party. That'd be very impactful. I think there's a lot of people trying. I don't think no labels is going to get it right. But I think it's true. If you can just if you just have like five or six senators in the middle, that could swing things either way, you have a very strong moderate power block. And that I think it's very possible that does emerge. It would require some real serious leadership required. I'm really good at policy. I'm not sure I'm really good at politics. So that's another different type of skill sort of.

know, if you ask Jared Kushner, you know, that's it's become like a contact sport, right? This is a very aggressive sport right now. Not this. That's not what I'm doing. So but I hope some good people figure it out.

Auren Hoffman (45:56.715)
Yeah.

Auren Hoffman (46:02.646)
All right, last two questions. What is the conspiracy theory that you believe?

Joe Lonsdale (46:08.669)
conspiracy theory, I believe. You know, there's definitely, there's definitely a really strong and powerful deep state. They do oftentimes coordinate with each other, although there's also actors acting independently, they go along with them and do what they imagine they want to do. And they definitely target people here in the US with a deep state with the power of the of the administrative state.

very inappropriately, whether it's targeting Palantir, back when Peter spoke about Trump, whether it's targeting Elon inappropriately, whether it's targeting people around me and my family in the past, and harassing and causing trouble. And I think that's a huge, huge problem. You've seen it throughout history. It's no surprise it's happening here too. We need to limit the power of these things make them accountable because it's a it's a usually powerful thing. They definitely act if you saw, with the pace of which these deep state got things done for Obama versus Trump for the same types of things, they would work like two or three times faster for him because they didn't like Trump.

Even for things I agreed with Trump was doing, you know, the deep state was against him inappropriately. So I think it's really real.

Auren Hoffman (47:11.374)
Do you think that there's more just they, obviously, a bureaucracy is going to work faster on something that they want to happen than if you ask the bureaucracy to do something they don't want to happen, they're going to move slower, right? Do you think it's like a true conspiracy or do you think it's actually just like that's just the way biocracies are?

Joe Lonsdale (47:30.077)
I think it's conspiracy where they get together and they figure out how to attack people that they don't like and they want to take out on the other side. And I think they oftentimes coordinate. We've seen now lots of leaks around this with the FBI and others. I think there's definitely a very dangerous deep state that needs to be rooted out. We need to be firing a very large number of people and then making what's left accountable the same way we need to get rid of the star chamber in the 17th century and then make everything what's left accountable as well.

Auren Hoffman (47:53.046)
What's the star chamber? I'm not familiar with that.

Joe Lonsdale (47:55.581)
So there's a time in British history where King Charles I had a bunch of powerful nobles around him who created basically a group of people that would investigate people based on whatever the official government wanted and make rulings and make decrees and make rules. And it was basically an arbitrary administrative state that it was one of the greatest abuses that came from King Charles over a period of a couple of decades, which ultimately led to him having his head chopped off. And eventually, when you had the Glorious Revolution in 1688 later on,

Again, you basically put in rules to stop that from ever happening again. And the American founders were very inspired by this, which is why we didn't have an administrative state when we started the country in the late 18th century, although we've now forgotten the history and don't teach anymore. This is why history is important. Orin is not just STEM. We need to understand these things.

Auren Hoffman (48:39.408)
I agree history is important. Yeah. Okay. Last question. We ask all of our guests, what conventional wisdom or advice do you think is generally bad advice?

Joe Lonsdale (48:57.821)
You know, I actually think that we probably encourage far too many smart people to start their own companies these days. I obviously have built a lot of companies and I think it's a very good thing to do if you're obsessed with it and you love doing it.

But I think it takes a very unique personality to be a founder. You have to have very strong opinions. You have to be like slightly like maniacal in terms of your obsession. It's kind of like trying to train for a gold medal in the Olympics. You have to be willing to have lack of work-life balance. And you basically, yeah, something like that too. And you basically have to like, it's almost like you can't see yourself doing anything else so you do it.

Auren Hoffman (49:31.394)
You have to be somewhat disagreeable too. Yeah.

Joe Lonsdale (49:41.589)
But it's not something, there's just this thing where we're trying to encourage all these people. We want people of all backgrounds and everyone to try building companies. And it's like actually no, in general, you only should build a company if you have no other option because you're just obsessed and you have to do it. And it's fundamentally very unhealthy. And it's a much better risk reward to join a high growth company and find ways to add value to it. That's what the vast majority of smart people should be doing.

Auren Hoffman (50:04.97)
Yeah. Oh, okay. That makes sense. I like that. That's really interesting. All right. Thank you, Joe Lonsdale for joining us on World of DAS. I follow you at JT Lonsdale on Twitter slash X. I definitely encourage our listeners to get you there. This has been a ton of fun.

Joe Lonsdale (50:18.977)
Thanks, Zoran, appreciate it.

Auren Hoffman (50:20.802)
All right, that was great. Thank you. That was.