Shyam Sankar - Celebrating Heretics - [Invest Like the Best, EP.462]

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Hello and welcome, everyone.

I'm Patrick O'Shaughnessy, and this is Invest Like The Best.

This show is an open-ended exploration of markets, ideas,

stories, and strategies that will help you

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My guest today is Shamsankar,

the CTO of Palantir Technologies.

I think you'll find by listening to Shams

that the business itself, their mission

and how they built it and indeed him in his life

are completely fascinating.

We talk about his entire worldview,

which I find personally the most interesting.

This need to re-industrialize the United States

after decades of moving so much of our production

and as he would argue,

therefore, our learning of how to innovate

and make things off of our own shores.

We talk about the history of heretics,

people who have against the odds,

design solutions that have driven so much

of our success around the world.

Please enjoy my conversation with Shamsankar.

Shams, I think the most fun place for me to begin

because it's an area that you're interested in

that I'm fascinated by is a history of people

in American military lore,

who you call heretics.

You refer to them as heretics,

people like Hymen Rickover and Andrew Higgins

who designed 90% of the boats that landed at Normandy,

John Boyd, who invented the Udalupe,

which was one of the great biographies

of a military figure that I've ever read.

Talk to us a little bit about

how you would define a heretic in your use of that term

and why you're so interested in that group

of people in US history.

Well, I think they're really founders.

They're founder figures.

They get obsessed with delivering something

that it makes no sense

because they're fighting,

particularly in the military context,

you're like fighting the bureaucracy,

you're going to end your career,

you pay extreme prices for it.

So there's almost like a pathological obsession

with winning, which I really relate to both personally,

but also that's what I see in great founders.

In the present moment,

it's really important to like encourage the hidden heretics

who are in the military today

to recognize your heresy matters.

And frankly, if you look back at history,

the only shit that ever worked,

the things that helped us win all the wars

were the things that the heretics actually did.

Nothing that went through the machine delivered anything.

I think all change comes from these heretics

and they only later become heroes.

If you think about Billy Mitchell

who invented the Air Force,

he was court-martialed and died penniless and depressed.

Not only after his death,

did we invent the Air Force

based on his original heresy?

I'm just fascinated with what motivates these folks

to keep doing this.

And I guess I relish a little bit in their rebellion

and the victory that the rebellion brings about.

If you could have people study any one heretic story

to understand this general idea,

is it his story, is it someone else's,

which one would you pick?

I'd probably pick Rick Overs.

So I'm in Rick Overs,

born in a shuttle in Poland,

came to the US when he was six,

had one of these near-miss moments where,

in those days when you landed at Ellis Island,

you had 10 days for someone to come pick you up.

His mother gave someone money to go send a telegram

to the father who'd already been here.

And that guy just pocketed the money.

On the 10th day,

there was another guy who arrived at Ellis Island,

who bought them one more day, who knew them.

And then he ran out, got the father.

So it's like this near-miss

where this guy almost didn't even end up here

who would have been sent back to Poland.

But he was this feisty character.

I think it was five foot two, very short.

He went to the Naval Academy.

He was so unlikable that in the yearbook

in the Naval Academy, they have torn out his picture.

He's just one of these difficult people.

In World War II, he drove a coal ship.

He was not some exceptionally high-performing

senior military officer commanding a destroyer

or a carrier or anything like that.

But after the war, he went to Oak Ridge.

And he observed the vestiges of the Manhattan Project.

And he had this idea we could build nuclear power summaries.

And he'd had this experience on diesel-powered summaries,

which suck.

And they're basically surface ships

that happened to go underwater for like an hour.

This became this thing he was obsessed with.

Talk about Hootsbowl.

Oppenheimer himself thought this idea was gonna fail.

So you have Opie telling you you're stupid

and this isn't gonna work.

And you're just gonna go for it.

So he started on this project.

And he built the first nuclear submarine

in seven years, start to finish.

The Navy aided him so much that his first office

for this project was literally the women's restroom.

They're like, what can we do to humiliate this guy

in quitting?

But he just kept going.

And if you actually look at his personal memoirs,

you can see that the humiliation got to him,

but in a way that he could channel it to be like motivating.

It wasn't like he was somehow a nerd to the pain of it all,

but he could push through it.

And I think recognizing every major project you do

is going to push you in these sorts of ways.

How do you dig deep?

How do you grind through the pain?

And he created a really unique culture

in naval reactors, which is alive today.

So I think part of what's really cool

is that our nuclear submarine force

is one of our last remaining asymmetric advantages

against the Chinese, and we built in the 50s.

What a legacy for this guy to have built.

And then the engineering culture that he created,

he was in this unique role of both being a human

who would invent the technology

and therefore was qualified to think about how to regulate it.

So whereas the Russians of Mariners,

it was spent roughly six months at sea

and then six months in Sochi recovering.

So their white blood cells could regenerate

because the radiation is chilling sucked.

We've had no deaths due to nuclear incidents

in our submarine force.

And he designed it to a standard.

He's like, I'm designing this thing

so my son could be in it.

It's 100 times safer than what we believe

the minimum standard to be.

And that obsession, it's not a manager's view of the world.

It is a founder's view of the world.

But one of his legacies, he was an admiral for 30 years.

And even as an admiral, it was very difficult.

Zumwalt, who is the chief of naval operations for a while,

he said the Navy has three enemies,

the Soviet Union, the Air Force, and Hyman Ricover.

I remember reading the book about John Boyd,

who three times he was the best fighter pilot

then he helped develop the F-16

and then he came up with the military strategy concept

that was instrumental in some of the US wars in the 90s.

And he was sort of a bastard as well.

Highly disliked, really bad father, highly disagreeable,

but incredibly important in US military history.

You don't seem to have that kind of personality.

You seem, by all accounts, very likable within Palantir

and outside of Palantir.

Say a bit about your own disagreeableness.

Where does its surface?

It seems like this is a field in which you have to have

a very clear view of how things should be,

which we'll talk a lot about in a few minutes.

And then this disagreeableness and resilience

and persistence to make it happen.

And that seems a little bit at odds

with your personality from what I can tell.

Curious how you think about that.

It surfaces in certain ways.

As Karp would say, I'm not everyone's cup of tea,

or you can very clearly see it as getting the early days

of Palantir, you'd be dealing with the government.

And it's easy to think about as a monolith,

but you have operators who want to use your software

but are not in charge of buying it.

And you have the IT people or the program

who's in charge of building what you would be building.

So your structural threat to them.

The advice is to go along and get along.

Those guys are the people paying you.

Why don't you just do what they want?

The problem is if I did what they want, it wouldn't work.

And so that's where the disagreeableness comes in.

It's being ornary about, no, I'm going

to deliver the thing that actually works for the operator.

I'm going to piss off literally everyone along the way.

They are knives out going to try to kill you.

We have to sue the army to compete at some point.

And I think in that vein of being truly committed

to is the product excellent.

What else could it be doing?

You can think about the whole Udalupe

of four-deployed engineering is that.

It's this continuously solving

through back propagation of what should the product be.

That's like the motor of innovation.

If I think about Palantir's story and success

in your part of that story,

your personal worldview seems really important.

And you having a strongly held worldview

seems like a key component of being all that

do what you've done over the last 10 plus years.

I would love to hear the formative experiences

that contributed to that worldview.

I'm curious to just like get a high level

of what your worldview is.

Maybe even more interested in how you came to it

because you've got a very unique personal backstory.

I think there's no singular event.

I think there's a combination of family history,

the environment that I grew up in.

Starting with the family history part,

we fled violence in Nigeria where my father,

we've frankly almost died to settle in the US.

And that happened pretty young in my father's life

in his early mid-30s.

It's a pretty jargon experience

where it gives you a whole new lease on life

after that point where you think about,

you have a deep amount of gratitude

and perspective on the trials and tribulations

that may come ahead.

But it also grounds you in a profound understanding

of the counterfactual, what makes this country so special?

Sometimes it'd be unmooring,

not to have those experiences, actually,

because it's easy to take from granted,

it's easy to become cynical.

But that's a really powerful rooting.

In particular, because my father didn't have

the classic immigrant story where he came here

and became successful, which I think is the great thing

if it happens to you, but it's also a facile journey.

It's easy to appreciate.

Dad started businesses that went bankrupt.

It was very hard, but having that rooting experience

that created a graciousness and perspective in him,

he was always so thankful for the opportunity.

I took a lot away from that over time,

especially as I grew up and understand

and that awareness that was happening.

The second thing I think is really important

is growing up in Orlando in the 80s and 90s.

It was this profoundly optimistic period.

I mean, you could say it was probably pretty optimistic

everywhere, but in the shadow of the space coast,

you were bombarded with this idea that technology

was gonna make the world better,

that there was a structural positive some view

of everything and it was still motivating.

People had ambition around these things.

So I think that set a frame for me

for how I thought about things

and how I want to spend my life and energy,

I think that's really it is this commitment to building.

Part of what's interesting about the heretics

that I'm drawn to is that they're all builders of some sort.

The conversion from heresy to herism

is a result of an empirical thing they built.

John Boyd was alive to see the success

of his innovations for Gulf War I,

where the US destroyed the fourth largest army in the world.

It's hard to think about now,

because we think about it as almost a foregone conclusion,

but leading up to it, there was a lot of uncertainty

that worldview is centered in an understanding look.

I think the US is the greatest force of good

that exists in the world that as a country,

we understand that there's something special about founders.

There's a reason we call them the founding fathers.

If you think about just empirically,

Europe has created zero companies

worth more than 100 billion euro from scratch

in the last 50 years.

Almost an astonishingly bad track record.

We've created all of our trillion dollar companies

from scratch in the last 50 years.

The primacy of people and being in a culture

and environment that allows that to happen

that doesn't subjugate the human,

it doesn't snuff out human flourishing

that allows you to pursue these things.

And that may seem trivial,

but the heretics are all a version of that.

It's not like Polyannish,

where there's no resistance to these creatives.

It's like despite the resistance, you can succeed here,

which is really not true, I think, basically anywhere else.

What was your dad like personally?

The pieces of his personality that I said

always stuck with me.

Every spare moment this man had,

even though he was so busy and he was just grinding,

he would be on the phone trying to help someone.

I had this weird memory of someone who,

almost like I had this sort of engineering autism

that I think a lot of us have,

but he met someone who had totally disfigured teeth.

And he just had the actually profound kindness

to tell him like, you should get cosmetic surgery.

And that guy is so profoundly thankful that,

no one else has the balls to say that.

This actually changed his job prospects.

It changed his life.

And so he's just one of these people,

you clearly can see the positive sum this in.

I'm like, hey, I'm just gonna keep paying it forward.

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If you had to identify the component parts

that make America the thing that you think

is the greatest country in the world,

what are the key components?

Obviously, maybe democracy is one,

but I don't want to take for granted the things

giving your life experience and your unique perspective

that you think most add up to this being a place

worth your life's work to extend their interest

to protect their interests, et cetera.

A belief in exceptionalism and greatness.

No army that lost its morale ever won the war.

And so believing in yourself, believing that greatness

is possible is a precondition to being able to express it

and realize it, and a lot of cultures don't have that.

The other thing, which I know sounds really simple,

but is a complete plasticity of thought.

Culturally America is a place where people do change their minds.

Okay, this isn't working.

Let's do something different.

Or I observed that thing working,

even though it goes against the orthodoxy

of everything I've learned, we're moving, we're pivoting.

And you're people still arguing about shit

that happened 300 years ago.

And some of these cultures are so rooted in the past

that they can't update their priors.

And so a culture that's capable of learning,

you can call a plasticity, first derivative of learning,

but how can you make progress without that?

What does greatness mean to you in general?

And also I'm curious how you think about it personally.

If you are personally in pursuit of greatness,

what has that meant?

What does that require?

An aspiration that's substantially bigger than oneself,

the focus of American greatness is on American prosperity,

the American worker.

How can we go do things that are actually enriching

our civilization, our people, raising their own aspirations,

inspiring them to go on and do great things?

There's this unstable equilibrium in civilization

that pulls you towards nihilism.

And greatness is the antidote.

It's the countervailing force to saying,

no, actually it's worth investing in our institutions.

It's worth going through this painful journey

because what we're going to get on the other end

is something better, something that we all aspire for,

something that you will be proud to pass down to your children.

Is there an example of greatness that you've witnessed

in someone else firsthand that most stands out?

The obvious one to me is Alcs Carp,

is ability to really manage and unlock talent

is something like I've never seen before.

Those are some of the most profound lessons

I've really learned about talent, you know,

from the very early days,

he modeled our entire company as an artist colony.

We have more in common with the Hollywood talent agency

than we do with a typical software company

in terms of our approach to looking at humans

and this first principle approach to the individual

and how do you grow this deep resistance

to a cargo cult like process

and every manner or fashion that corrods

all the things that actually create value.

And I think that's important

because if you drive that to the extreme,

you actually get something that looks more like the Soviet Union.

On the other end of this,

it's how do you maximize the potential of the people

in front of you and you're advocating

for their growth and their ability?

Which also involves a lot of,

you have to have a structural personality

where you're not threatened by other people's successes.

You actually relish and the other people's successes

and that's the parallel between Alex and my father.

If I was running an organization

where my key goal was to unlock talent

in the way you just described,

how do you and he do that?

What's the practice of unlocking talent?

Maybe we could just start with the preceptive.

How do you think about the talent to begin with?

So really talented people are highly uneven.

They're very good at some things.

They're okay at another set of things

and they're really bad at some other set of things.

And usually the trick is,

where are they in their own journey of understanding

what those things are?

And particularly for high achieving people when they're young,

they misattribute what their superpower is.

They think there's this thing they do

that requires a fair amount of effort

and therefore they get a dopamine hit when they succeed.

It's probably something they're not even bad at,

they're just okay at.

Superpowers are effortless.

In some sense it's almost like not even rewarding

to exercise your superpower.

My analogy for this is,

Superman could fly, he could see through walls,

but that wasn't some sort of arduous thing for him to do.

It's just something he could do.

That's usually something you learn comparatively.

You're like, oh, this thing that's the lizard brain effortless,

almost dotless for me.

Other people who are really smart can't seem to do

or I do just way better.

And embracing that is the first step.

Helping them understand like,

hey, all of your contributions to the world

are going to come from your superpower.

Everything else is basically a waste of time.

So how do you figure out how to get into that configuration?

So there's some releasing of ego around that as well

as understanding that, okay,

this is what I need to focus on.

The other part of this is kryptonite.

There are some set of weaknesses you have

that aren't just I'm kind of average

or maybe a standard deep below average.

It's like you're like six devs below average.

It's not like something you can work on.

The only strategy for Superman around kryptonite was to avoid it.

Yeah.

And so can you be okay with that?

As the artist, what is your process of accepting them?

How do we help you?

Except how do we help you understand actually

at the point of acceptance you become more valuable?

And we're going to be able to unleash you further

to be able to do things.

And then you have to create an environment

that supports them through that

because the discovery of kryptonite usually

involves you being exposed to it.

You're going to make some sort of really bad mistake

that probably will have real consequences.

Hopefully you learn from that mistake.

May take more than one time to get there.

But you don't want to create culture

which is like, you fuck this up, I got to fire you.

Oh, I'm so glad you learned that this is not what you do

for this.

Yeah, exactly.

I remember doing something that I really screwed up

once that had consequences for the company.

And I sheepishly went into Alex

and just completely honest.

And I didn't realize at the time there was no grant strategy

behind this, though, than my commitment

to just always being honest.

He was very appreciative, he was also in pain

as he internalized what this was going to mean.

But he valued the fact that I wouldn't try to hide it.

And I took away from that, how important that environment

was going to be.

And how do I scale that to the organization?

What do you think your superpower is?

I think there's actually a narrow sliver.

If you thought about it in the Poundter context,

the intersection of forward deployed engineering

and product does get interface there.

One inch on both sides of that interface,

owning that almost as a dictator, that's my secret power.

I'm going to come back to forward deployed engineering.

But I want to ask one or two more questions

about the creation of an environment

for the discovery of superpower and kryptonite

and doing one's best work and unlocking the talent.

I heard a story once and maybe I wasn't supposed to hear.

So I wouldn't say what the exact story was

or who the person was at Poundter.

But this person joined Poundter

and was very quickly given an extraordinarily difficult project

around which this person had no relevant experience

and was given relatively limited resources

to solve a problem which was truly global in scale.

Meaning the impact if this person didn't solve the problem

would have been bad.

And they described it as the most formative

and important and most stressful professional experience

that they had had.

But on the one hand, I loved hearing this story

because wow, you can learn so much

when there's high stakes and lots of autonomy.

But it also struck me as quite scary

that someone with this person's experience

was given this high stakes opportunity slash responsibility.

And I'm sure that happens all the time in Poundter.

So some of it seems like going straight

into the deep end is key part of this

in such a high stakes business with militaries

and governments and people's lives and things.

How do you balance how much leash

to give someone like that?

Let me start with an analogy.

How did Bruce Banner become the incredible Hulk?

It wasn't progressive overload.

It's not like he lifted a little bit more weight every week.

It was a near fatal dose of gamma rays.

50% chance he died.

50% chance he turns into a big green monster.

And there's absolutely an element

where we're taking people and just irradiating them.

Perspectively, you're not sure

if they're going to come out the other end.

But you have some belief that they have the raw talent and potential.

And then you want to create an environment

that has enough transparency and flow of information and exhaust.

That if you see that this thing is really going off the rails

without them having to seek you out,

you're able to push in and help them.

Then a lot of environments don't have that by default, actually.

You would have to like manage them.

You have them do reports or check ins or whatever.

You got to create an environment where it's okay to ask for help.

The reason this model is really valuable

is that I think the alternative model,

you've judged it by the counterfactual,

the alternative model doesn't actually work.

So this structured career ladder with progressions,

it's perfectly designed to make you feel comfortable

that you are growing.

It gives you some belief that there's a linear path to follow

and you'll learn these things.

But actually, it's all fake.

On the other hand, if you're willing to just suspend this belief,

throw yourself off the deep end.

The maximal rate of learning will be coincident

with your maximum ability to tolerate pain.

So now you're in over your head,

you're working on a problem, you don't even know.

This is the environment that you're going to learn

at the fastest possible rate.

You're only limited by your motivation and ability

to endure through the discomfort of getting there.

Then you will find that if you look back retrospectively,

you're like, holy shit, I grew in all these ways,

I learned all these things.

None of what you could have predicted, specifically Xante.

And then if you just are willing to do that,

seriously, just keep jumping off the deep end,

go after problems, you're frankly not qualified to go after,

but there is some belief you have the raw potential to do.

You turn into a superhero.

I think that's actually why Pounder's a Founder Factory.

Did you have your own gamma ray moment?

Was there an original moment like that for you

where you discovered your own potential?

The article talks about the deployment at the COIC.

I think that was a seminal one

where it was leading the deployment.

It was all on me.

And it was never obvious until basically the last second

whether it was going to work or not.

And it allowed me to learn a lot of the lessons along the way,

which is really where I internalized,

oh, success looks like a lot of pain.

That instinct to figure out how to reduce the pain,

like how do I do this the next time with less pain,

is exactly the wrong instinct.

If you were giving a commencement speech

to a group of people that heard this conversation,

how would you urge people to seek that out?

Like if someone is pre-gamma exposure

and they're interested in that test for themselves,

how can people expose themselves to that test?

I think this is the conspiracy of the people around you

who give you that chance.

I don't know why Kevin Hart sired me

as some Stanford grad student coming to talk to him,

but the fact that he took the bet and just threw me out there,

that was the first time I got to jump off the deep end in many ways.

So I really think, how can you find it?

You're assessing the people who are hiring you,

so much as they're assessing you.

Is this an environment that I think is going to bet on me

or is this an environment that wants me to be a Ville cow?

Are they going to be able to tolerate my eccentricities

or are they going to try to squash that?

How do you know someone's worth betting on?

The other side of that equation,

new, unproven talent, how do you know?

At some point it becomes a lizard brain,

you get enough reps in doing it.

But early on, I think the early indicators

would be a first derivative proof of some sort of sui generis.

Do they create anything from zero to one

and then expression of agency and initiative?

Just the simplest way I'd say it.

If I give this person an inch,

can they turn it into a mile?

And the worst sort of bet to make is I gave this person a mile

and somehow they turned into an inch.

Yeah, it's an incredibly powerful idea

and it seems like the culture of Palantir.

I mean, obviously there's tons of founders

that have come out of this,

that have mega agency or something like this.

If you think about Palantir's future for the next 10 years,

now 19 years in, what do you hope changes most in the next 10?

Obviously it's now a huge company.

It's one of the bigger companies by market cap in the country

and in the world doing lots of really interesting work

with lots of interesting customers.

But generally speaking,

what are your hopes for it over the next five to 10 years?

All valuations downstream of the culture,

continuing to be an environment where a new person can come in

and just have huge responsibility,

being charged with people who've been here 10 years or not,

it's like that or structure.

I call it a quantum org structure.

I don't think a flat org structure is optimal.

That doesn't actually work.

I think what you want is an org structure that can crystallize

is the right structure to solve the problem as it exists today

and is able to reform as the problem manipulates tomorrow.

And you can see the pathology of big companies

as they go through some sort of big reorg every five years,

even if you just steal a minute,

probably most of them are wrong even that inception.

But if you just steal a man and say,

hey, they just reorg,

this is the right org structure for this company today.

Every day the entropy is against them

and every day it's slightly more wrong than it was before.

If you're so ossified and committed to your structure,

that you have to wait until it's totally broken

before you reorganize it again,

that's a fundamental weakness.

So that plasticity and how your commitment

to working backwards from the problems,

that is how we generate value

and that has to be consistent.

And I think if we can protect that

and promote that, promulgate that culture

in the future generations, we're gonna keep winning.

What critique of Palantir do you take the most seriously?

When you have a structure like this,

you don't get to spend nearly as much time

with people as you'd want.

The rate of irradiation is very heterogeneous.

There's some sort of like bimodal distribution

for how long do people say a Palantir?

The probability that you'll stay for a decade plus

if you've stayed three years is incredibly high.

But roughly around the three year mark,

everyone faces this crucible where they look around

and they say, this place is so fucked up and crazy.

And they have to understand,

oh, but that's the feature of it and then they'll stay.

Sign up for it or not, right?

Or they'll say, this is the bug of it

and I gotta get out of here and it's not gonna work.

The critique I take most seriously

because I think with a little bit of help,

a lot more people can make that hump.

And that's the future of the business.

So those people.

We have you to blame for how many freaking pitches

we have to take that involve some forward deployed,

something or other in a company these days.

You were the one that really pioneered

the success of this model at Palantir.

Everyone is saying it now that every company has to have

forward deployed engineers or forward deployed.

So and so is to be successful.

Obviously, I think that's not true for every company.

It's true in Palantir's case for sure.

Can you tell us the story of what this term means

where it came from and why it's powerful?

We could start by maybe thinking about my critique

of the conventional software industrial complex,

which is that you're sitting,

let's just say in Palo Alto and you're building

this piece of software and your essential feedback loop

on is this software valuable is, can I sell it?

And if someone's willing to pay for it,

it must be valuable.

That's an okay feedback loop.

There's a stronger feedback loop,

which is, is this software valuable?

Did it deliver the outcome?

The only way you can assess that is actually in the field

with the end user on the factory floor, in the foxhole.

So in our case, it wasn't gonna be enough.

You have this weird division between the IT buyer

and the operator.

The validation is gonna come from the operator.

The idea was really almost like build software

through back propagation.

Hey, how do you go to the person who has the problem?

You're showing up with your best thesis

of what you've built in the metaphorical Palo Alto.

But then you are not just sending a sales engineer out there

whose job is to try to like ring up the sale.

You're sending someone out there

who is obsessed with whether it's going to generate

an impact in the world or not,

and is willing to continuously solve backwards

and is technically up to understand the full stack.

How would we take the specific and learn

how to generalize it over time in terms of the product?

One way of thinking about this is

there really are two types of engineers.

There are people who know how to build the right thing

and there are people who know how to build it the right way.

And their dopamine hits comes out of different things.

The people who know how to build the right thing,

they're more like Magyver.

Their high in life is, I solved the problem.

In their mind, solving the right problem

is 80% of the work.

On the other hand, you have engineers

who are more like artists in the traditional sense.

Don't you see how beautiful the thing I built is?

The architectural elegance, the scalability of it,

that's what gives them the high.

Never mind that it doesn't solve the problem anyone cares about.

It's arc on its own, it should be appreciated.

And I think about this like vector math.

So the four deployed engineers skew

towards this hacker mentality,

the product engineers skew towards this artist mentality,

and you have an unstable equilibrium

where you're trying to align these vectors

in a way that you're gonna go upwind.

If either side dominates, you don't really have a business.

And that's why that scene between them,

you actually need a dictator like figure to manage

and decide, and many of the outcomes,

I think this model is super valuable when you think

about your customers existing of some sort of power law

in terms of how useful the next marginal thing

they're gonna be asking for is in terms of

the overall development of the product.

If it's a Gaussian, you should just survey

all your customers and average it out and figure out

what to build.

That's like a traditional product development process.

If on the other hand, you think some percentage

of my customers are living in the future.

Yes, only they are only a handful

of people have this problem today,

but I can assess that this is actually

a really valuable thing to solve that no one else has solved.

We should solve it now and effectively have a monopoly

on the capability to do that.

We'll be five years ahead of everyone else

if we lean into this problem.

You can only surface that in this sort of

forward to point engineering way.

The only thing about forward to point engineers

that's worth saying in the tealian sense

is the importance of secrets.

Peter talks about the importance of secrets.

If you're gonna do something really impactful,

there has to be something true about the world

that you believe other people disagree with you on.

Orbis Speed is born out of one of those secrets.

For that part of 15 years, our software's been used

to make things in the world.

The one thing you could not tell anyone before COVID

is that their manufacturing software doesn't work.

People would point at their ERP system and be like,

look how great it is.

I spent $5 billion, $10 billion doing it,

but as a forward to point engineer,

when I would go to the final assembly line

on the factory floor, everyone's using Excel.

There's a contradiction here

that no one is somehow forced to reconcile with,

which is really what they're saying is this software

so it'll fit for what I'm trying to do.

I hit the eject button, I pull the data out to Excel

and I'm like handling my own solution.

That should be an obvious sign

that something's not working.

What are the limitations of it in the sense

if you have X-Wars you shouldn't try this model

or you need this to try this model,

one thought would be the product needs to be expensive

because it sounds like an expensive process

to deploy people on site,

highly trained, expensive people and so on,

so you need to be selling a very expensive product.

But if you were giving advice about use

or don't use this concept of forward to point engineering

in your software business,

how would you frame it up to other entrepreneurs?

I would say that you have to believe

that you're gonna be able to capture meaningful value

for the problems you're solving.

So your problems you're solving are really big

and therefore imply there's a lot of value behind them

and if you can solve them in a deep way,

you'll be able to capture that.

A lot of the problems we're solving like to get at bat,

you're not gonna get paid a lot upfront.

You're actually gonna invest a huge amount

into the customer to go do that,

but you would do that because you believe

that actually in the end,

we'll be able to capture the value,

a portion of the value we're creating,

our economics will be downstream of our customers' economics.

The other part is that your ambition

extends beyond a linear box.

We always struggled when we came into the commercial world

where you had the gardeners of the world

and they have this sort of box.

This is my enterprise architecture.

I've broken up in all these boxes.

What box do you fit in?

The answer for us is, well, we don't fit in any box.

We fit in all the boxes.

If some sort of heterox thing,

you're solving for all the problems in the seams.

Like you're basically solving for the fact

that architecture diagram was made

by some mid-level product marketing manager.

It's never been used or validated in anger.

It's never actually solved the problem in the real world,

but the cargo cult of the IT buyer

just keeps believing they should buy it.

I think if you fit into that,

doing forward to putting it in would be crazy.

Why would you do that?

But if you're like us and you don't fit into it,

you need some way of just scraping and clawing

to deliver enough value

that the institution has to confront.

But even though it's heterodox,

even though it's heresy to my enterprise architecture,

it works.

It probably took until I read Jeremy's profile

of you and a Palantir that I really understood

how Gotham and Foundry and the product

and the business worked.

It's interesting how Palantir,

someone inaccessible from the outside

unless you read a fairly detailed description

of what is literally going on in the product.

And I think the early years of Palantir

were especially exploratory,

trying to figure all this out

with all your efforts with Alex and the team.

Could you just explain what Palantir is?

It's such a basic stupid question.

But again, until I read a detailed account,

I actually probably couldn't have done so.

And so I'd really be curious

how you like to frame it or explain it.

This is actually like the hardest question

for the world for me.

We have built an enterprise operating system

where our core thesis is what makes this stuff really valuable

is decisions not data.

Ghost of John Boyd's Udalupe,

what we're really providing is an operating system

that allows you to bring all of your enterprise data together.

It solves for the impedance mismatch between like,

yeah, look, all this data I've collected,

it was collected and stored in a way

that makes sense to the underlying transactional system

or makes sense to some part of my institution,

but doesn't actually represent

how the humans of my institution think

about the problems that we're facing.

So that we represent what we call the ontology,

which is not just a model of the data.

It's also a model of the actions.

We call that the kinetics.

If you're gonna make a decision,

you might be allocating inventory.

How do you do that?

So this ontology layer almost becomes

like an API layer for the business.

It makes the business programmable.

And that changes the rate at which you can compound on top of it.

So now you have this abstraction layer

that you can use to build applications

that manage your value chain.

From the hand of your supplier to the hand of your customer,

you can call it a value chain.

You can also call that a decision chain.

Your whole business, almost if you just squint at it,

it's just a series of decisions you're making.

Every one of those decisions you wanna have in Udalupe,

I wanna make the best possible decision I can have today.

More importantly, I want the first derivative

to be good.

I wanna learn tomorrow how to make a better decision

than the one I had today.

Could you give an example of a customer

where you showed up and maybe describe the circumstance

of their data or their systems or something?

Then what you did, what the process is of establishing

and building the ontology,

which is a very good appropriate but fancy word

for mapping reality onto a system

versus jamming reality into a pre-existing system.

And then what sort of transformation

that enabled at that customer

that would have been impossible with the former system,

just bring it to life like a simple example.

Two things I just wanna put down that would make this

make more sense.

The first is that we wanna make software

that makes you more different, not more similar.

We think about it as alpha not beta.

The second thing is that we are a wildly inductive company.

We would never show up to a customer

with some preconceived notion of,

this is the aerospace ontology.

I'm gonna pick an aerospace example on a second here.

It's rather all the values and understanding

what makes your aerospace company different

than all the others.

How do I make you more different there?

That's the differentiation you're competing on.

When we first came to Airbus,

Airbus was in the midst of ramping the A350.

The A380 was a wonderful plane,

structurally unprofitable program.

So the A350 was this bet that the whole company

was effectively riding on in 2015.

The first time you make an airplane,

you're always gonna have issues.

There's a learning curve to the production.

And one of the most important things to figure out

as quickly as possible is,

what is an issue that is just a non-conformity

that like, hey, I'll give this guy some training

and he'll learn how to figure it out.

It's teething pain, he'll go away.

And what is a recurring issue that is actually

a design defect that I need to go work with my suppliers

or upstream?

How quickly you can solve that becomes fundamental

to the shape of the ramp and the cost of the ramp.

The first thing we did is we just started sitting

with users on the final assembly line into loose.

These are wrench turners effectively.

And understanding, hey, what makes your life suck?

What's hard about this?

What's the challenge in working on these non-conformities?

Basically, they're going through Excel.

They're looking at reports and SAP trying to figure out

how do I bucket all of these issues that are coming in.

So we just help them automate all of that.

And the ontology at that point was really related

to parts, sequencing of work, defect rates,

everything related to quality.

Once you had this immense quality asset though,

you were able actually to pivot it to realize,

okay, now I'm up the learning curve.

It naturally leads to the next problem,

which is production planning.

So quality to production planning to then in service.

Now you have the greatest data asset possible for this tail.

As this plane enters service,

how do I help maximize the uptime of this asset

for my customers?

How am I going to compete against

the other aerospace manufacturer?

That's the natural evolution that we see

with most customers.

You start with one problem.

But of course, they exist in the context

of this connect decision chain.

What's the difference between dealing with military customers

and government customers, which you did for a long time

and commercial customers?

There's a lot more non-market forces in the military.

The military is the only institution in the world

that profoundly divides up supply and demand.

The beating heart of most companies

is that integration that sails an operation planning process.

You have the combatant commands,

we call them that deal with real world events.

If you're fighting Russia,

this is the European command, you come.

And then you have the services,

like the Army, Navy, Air Force, Space Force, et cetera.

Their job is to man train and equip.

That's the supply side.

You have a group that has no responsibility for demand,

essentially deciding what to build, how much to build,

how am I going to man train and equip this?

And then they present these forces to the combatant commands

and say, this is what you have to solve this problem.

That adds an additional level of complexity.

So if the demand side says, hey, I really want this.

This is the capability we need.

They can't buy it.

So how do you kind of square this?

So I think you have all these other non-market forces

to deal with.

But I think one of the things that is really advantageous

to being both a commercial and government-oriented company

is that the intrinsic rewards on the government side

are so high, so motivating.

It enables you to get through and solve really hard problems

in a way that is kind of like a rising tide

for the whole business.

How would you define the state of our military today?

I know that's a big question, but it's an important question.

You've gotten to see so many sides of it

and serve many aspects of it.

How would you describe the state of the US military?

We are the best military in the world.

Our uniform service members are better than we deserve.

I actually had someone tell me, hey,

when are you going to stop being shocked at how good

this E4 is at building this app or doing this thing?

It's like the amount of talent is eye-watering.

I think we encumber them in a lot of process.

We deprive them of a lot of agency.

And I certainly have a lot of critiques of the bureaucracy.

But I think the structural challenge we have

is actually something that we just need to observe

from a distance from the military we have today per se,

which is the whole point of the military

is to deter our adversaries from conflict.

If you look back over the last 10 years,

we've not been able to deter a lot of conflict.

We had the annexation of Crimea in 2014,

the militarization of the Spratly Islands

after they told President Obama, we will not militarize it.

They militarized Spratly Islands.

We've had a pogrom in Israel.

We've had the invasion of Ukraine.

We have unprecedented gray zone phase zero operations

by the Chinese and the South China Sea.

I would say arguably in the last year,

it started to restore deterrence.

Whatever you think about it, midnight hammer

was massively deterring operation.

Maduro is massively deterring.

You have it on multiple levels.

With midnight hammer, it's obviously the overwhelming strength,

the precision of what we're able to do,

the incredible complexity of the operations,

no other military in the world could have done that.

But we need to view that as a single strike

and the deterrence capability against a peer adversaries,

can you generate that strike every single day

until the enemy submits to your will?

You think about Maduro.

It also shows our capability, like literally,

the raid happened the day the Chinese were in town.

Maduro has all these Chinese and Russian weapons,

then as well, and they don't seem to work at all.

And that sends a very strong message to everyone

who else who thinks that their security

is coming from buying Chinese and Russian weapons.

Now, I think we trace back,

and this is what I really wrote about in the 18th thesis.

So if we start, we say, we've lost deterrence.

Let's be clearied about that.

In the last year, we started regaining it.

What happened?

Because we had it for a long time.

We were the sole superpower in the 90s,

and we spend a fair amount every year on defense.

People want to talk about narrow things

like acquisition reform or the mix of weapons.

I think it comes back to people.

It comes back to the heretics.

At the dawn of World War II,

we were the best at mass production.

Effectively, our country invented it.

And in order to create an industrial base,

we took the number two at GM,

who was previously the number two at Ford Bill Knutzen,

who was a Danish emigree, who was really the perfector

of mass production.

And we direct commissioned him a three-star general,

and we put him in charge of war mobilization.

And Knutzen was a world-class engineer.

And what do we do?

We gave him the authority to go meet

other world-class engineers all around America.

We had one key advantage in World War II

in terms of timing, which is that we had Len Lies.

There's a period of time that we actually mobilized

production when we were not fighting.

We were building stuff that we gave to our allies

to the Brits in particular and the Soviets.

But that allowed us to build factories

and re-tool existing factories and hit a production ramp

so that after Pearl Harbor happened,

we were basically at full rate production

and were able to go after these things.

And put this in context of our adversary,

the Germans, they were actually better engineers than we were.

They just made a very small number of very exquisite things.

Now, if you come to the present moment,

we sound like the Germans.

We make a very small number of truly exquisite eye-watering

ly exquisite things.

And our adversary is the world's best at mass production.

So this should give us all a little bit of discomfort here.

The second part of this is the nature of the industrial base.

Today we call it the defense industrial base.

I think it used to be the American industrial base

until the fall of the Berlin Wall.

Only 6% of spending on major weapon systems

went to defense specialists.

IE companies that only did business with the defense department.

Most of that spending, 94%,

went to what I call as dual purpose companies.

A missile is single use.

There's no dual use missile.

But the idea that Chrysler would build missiles and minivans

meant that all the R&D that they were doing

on production, material, equipment, machine tooling

could be leveraged and was subsidizing our national security.

That we recognized that freedom and prosperity

were two sides of the same coin.

We're so far away from that world today.

General Mills, the serial company, used to build torpedoes

and inertial guidance systems.

Kodak, film company also was a key supplier to Corona,

which is our first spy satellite.

But this is the industrial base that won World War II,

won the early Cold War and really deterred our adversaries.

And it's only a consequence of becoming the sole super power

that everything changed.

And it changed in two ways.

One that 6% number today is 86%.

So 86% of major weapon systems come from defense specialists

only.

The other part of it is the nature of the industrial base.

We think about it as North of Grumman.

Much more accurately, it was Jack Northrop.

It was Lee Roy Grumman.

It was William Lear.

It was Henry Ford.

It was Henry Kaiser.

You had founder figures.

They were their own sort of heretics.

What we would recognize in the valley today,

that's where this talent was.

It was in the industrial companies of America.

And we were betting on these people,

not just their institutions, deliver this sort of capability.

In 1993, there was a very famous dinner at the Pentagon

called the Last Supper.

We had won the Cold War.

I think in a democracy, it's very reasonable

for the people to say, we want to spend less on defense.

So what exactly is our threat?

So we slashed the defense budget.

And in this dinner, the secretary of defense

told a subset, I think it was 15 of the 51 primes.

We had 51 primes today.

We have five.

They told him, you're all not going to survive.

The budget's getting cut.

We give you permission to consolidate.

Maybe some of you should exit the defense business altogether

and know that some of you may go out of business

and we're not going to save you.

And this just set off a merger frenzy

that led from the consolidation from 51 down to five.

Now, most people look at this

and I think they take away the wrong conclusion,

which is like, oh, this is when we lost competition.

When we had competition, it was much more dynamic.

I think the much more profound consequences.

This is the moment of profound financialization

and conformity in the industrial base.

You lost the crazy people.

They went to tech.

They went to other parts of our economy

where there was enough positive some energy and growth.

And it wasn't just about dividends

and buyback ratios and financial engineering.

It was about real engineering.

The world-class engineers, why should we celebrate

a hymenic over?

Where are Kelly Johnson?

Kelly Johnson was the founder of Skunk Works at Lockheed.

In his lifetime, he built 41 airframes.

That is insane.

Many of which we still fly today.

He built the U2 in 13 months.

But the timelines we're talking about are just,

you can't look at that and think anything other than,

this is an artist.

This is like divine what he's able to do.

And so much of what I think we've gotten wrong is,

those things were messy and chaotic and hard and frictionful.

And over time, we've tried to install lots of process

to make these things less messy, less chaotic.

As a consequence, though, they end up not working.

We need a little more crazy back to get these things to work.

How do we undo this?

I'm reminded that the Churchill quote

won't get it exactly right.

Something like the US always does the right thing

after trying everything else first.

And a lot of what's happened is that we have

shipped the capability to produce physical things

off our shores to optimize for a variety of things.

But it's much cheaper and more scalable and easier.

And we've become primarily a country

with all the market cap that rests on technology and IP

and extreme talent.

The small number of exquisite things, exquisite people,

exquisite researchers.

We've done an amazing job there.

But we don't make much here anymore.

A lot of it happens in China and overseas.

How can we reverse that?

It seems so imbalanced and so daunting

as to seem impossible.

But of course, I know you think it's critical.

So what is even the first step in being able to do this?

What you said is exactly right.

It is daunting, but critical.

So we have no choice but to lean into that and start.

The best time to start would have been yesterday.

The next best time is today.

Let me also give the case for why it's critical.

Because I think we're screwed if we don't do this.

The biggest lie that we bought from globalization

is this concept of we will do the innovation

and they will do the production.

Well, you have to recognize that innovation

is itself a consequence of productivity.

To put it in terms that I think our audience here

would understand most directly, what motivated Google

to do the research behind the attention

is all you need paper in 2017.

If you ask them, they'll say, well, the team was working

on an incremental 3% improvement to Google translate.

You cannot think of something more banal

leading to something more revolutionary than that.

So if you don't have the input stimulus

on improving production, you're actually not

going to be able to capture the innovation.

And that's literally what we're seeing

play out in the marketplace today, which is, okay,

they went from making a battery to making the whole car.

Wushi went from basically a cheap pair of hands

for pipetting contract research in the farm industry

to actually now 50% wall clinical trials

are drugs that are created in China.

So we have seeded the innovation.

It's not how it's taken away from us.

We just seeded it because we had completely incorrect reset.

So now we have to re-attack that.

We should do this with some asymmetric advantage.

I think we have a couple of them.

I don't think it's true that we're not great

at building things in this country.

Look at Elon and the progeny of Elon.

We do know how to manufacture things here.

And we're going to have to think about manufacturing things

in new and novel ways.

In addition, it doesn't all have to be new.

It's like four general motors.

These are world-class manufacturers too.

We have that capability.

But we also have new ways of thinking about this

with much deeper vertically integrated production,

thinking about the production process itself

is something that's more iterative and software-like

that you're going to keep upgrading,

co-locating R&D with production itself.

So I think these sorts of trade crafts

are the things that we can lean on.

And probably the last piece I'd say is,

AI is David's sling shot here.

If we can give the American worker superpowers,

if you can make the American worker 50 times more productive

than a worker anywhere else,

you're going to change the efficient frontier

of what can be made here.

I think as a consequence,

we should be re-industrialization maximus.

The free traders out there like say,

like maybe we can friend shore or whatever.

I think that stuff can let us off the hook too easily.

It fails to solve the problem.

The other example I'll give you from Patrick McGee's book,

Apple and China is that great book.

People love to say something like,

well, we don't have the machine tools engineers in America.

You could partly get two people in a room to talk about it.

You could feel a whole stadium in China,

but then you look,

Apple has spent the equivalent

on an inflation-injusted basis in the last five years

of two and a half martial plans,

building talent and capacity in China.

How about we try to spend one martial plan here?

I think the problem is we're not even trying.

Part because we're daunted,

because parts of our economy don't recognize

that actually this isn't going to keep working.

You're going to lose everything, not just something.

That's why I feel an urgent call to action

to say like we are in an undeclared state of emergency.

And it's not just manufacturing the physical things we think about.

I even think about this in terms of drugs.

80% of our generic drugs come from China in one way or another,

whether it's the APIs or the finished product themselves.

That is a huge problem.

Today, your child has an ear infection.

That's pretty trivial.

You think I'll have some generic antibiotics and it'll go away.

If you have great power competition with China

and the wheel of the American people to fight

when they have to really con to play,

hey, my fibral might die of an ear infection.

So we need to take these things much more seriously

and further down the supply chain.

I'm glad we're starting with rare earths,

but there you could say we had to get punched in the face

to mobilize around it.

Maybe one of the galling things we should all think about

is we've been staring at this rare earth's problem

for the better part of 15 years.

We more or less had solved it for like two billion bucks.

It's roughly a rounding error

relative to everything that we're doing.

And now we're on a trajectory to do it.

So I think part of it is just starting.

I would love to bring everything back.

I think making a marginal improvement

at even 10% dramatically reduces the adversaries leverage.

I just was reviewing my notes ahead of our conversation today

from Graham Allison's book on China,

Destin for War with China.

Can you give your perspective on how you think about China

as an adversary, as a country?

I highly recommend the book Apple in China.

I mean, it really gives you the steep sense

of how tightly integrated arguably our most important company

is with manufacturing there.

It's this very strange circumstance I have to admit

where I've been to China.

It's another place filled with human beings

and interesting things and amazing interesting culture

and all sorts of positives.

It's a hard thing to wrestle with

that they're an adversary in the traditional sense.

But I think there are components of that

and the nuance is important.

I'd love to just hear you describe

how you think about China as a political entity,

as an adversary, as a country.

It just feels like an especially important thing

to understand your view on.

When we won World War II,

we spent our own money to rebuild Germany and Japan.

Microelectronics moved to Southeast Asia

as Apple China documents and chip wars documents

because we helped move it there.

Yes, we got cheaper goods in return

but the economic development of these countries,

they're flourishing in order to create

global stability was part of the calculus.

Same thing with admitting China

to the World Trade Organization.

The problem is they cheated the whole way through

and even if you go back to a pre-Dang Xiaoping era,

they call us the big enemy.

I think part of it is our own naivety,

our own belief that capitalism and human flourishing

is a natural consequence of prosperity.

So, okay, they're saying these things

but as they get richer, they're gonna change

their perspective on these things

and we're all gonna find some way

of having a positive some view on the world.

That's essentially what didn't happen.

I think the challenge for us with the CCP

is that it's not enough for China to be prosperous.

America must fail.

Just see this through simple acts.

If you look at agriculture, it is totally their prerogative.

It's a business decision

whether you wanna buy American soybeans or not

or you wanna buy Brazilian soybeans.

I do not begrudge them one bit.

It's totally different thing

when you're trying to smuggle in agricultural funguses

so we can't grow soybeans.

Now, if you start going down to the laundry list

of what's actually happening,

that's the shape of what's happening.

There are formidable adversaries

in the sense that our conception of war is kinetic.

It's the lone heroic cowboy against the odds

winning through heroism.

Their conception of war is deception.

It's the general who tricked the adversary

to get into the valley and then flooded it.

It's a cultural thing.

You wanna win without firing a shot.

So, a lot of the things that are happening

are below what we would consider

the threshold of conflict

but it absolutely is conflict.

It is in their system, system destruction warfare.

It's waging war through all the means

because they're gonna wage it

where they have asymmetric strength.

The American Calvinist sensibility

is structurally positive sum.

We're gonna turn the other cheek time and time again

over and over again.

But there will be some line.

There'll be some point at which we just react.

And when we react, the best quote I have from the Admiral

that I like is, it's no longer John Boyz, Udalupe,

observe, or yet decide act.

It's the American Udalupe, observe, overreact,

destroy, apologize.

What we wanna do is prevent this from happening

by having enough deterrence that we're not provoked

to being in a position where we even need to react.

You've mentioned the idea of asymmetries

a few times, nuclear subs being an example

of one of our last huge asymmetries versus others.

What are the most important asymmetries

in your mind for the US and for China?

Where do they have an asymmetric advantage against us?

Where do we have it against them?

And what do you hope shifts?

This is a great question.

Their principal asymmetric advantage

is long-term planning.

They actually can't pivot on a dime.

So let's go back to Gulf War I,

which we talked about with John Boyz.

They saw the devastating violence we were able to do

in basically four days to the fourth largest army

in the world.

They said, okay, we have to systematically map

all the critical dependencies of America's military

technology and invest against it.

And they have been doing that since 1991.

The frog is kind of boiled in some sense.

And it's a little bit of an easier game

because they're playing a home game.

But that's the map they've been on.

And it's been a steady journey.

If you look back, they broadcast their intent the whole time.

There's no surprises that were there ever.

Our asymmetric advantages that were crazy.

The AI phenomenon was not in their long-range plan.

It wasn't in our long-range plan.

But when it happened, our whole economy pivoted on a dime.

And even the Chinese models, those are a result of distillation.

And so our ability then to be unpredictable

because we ourselves do not know what we're going to do.

That's our key strength.

That comes back to the heretics.

Where does that unpredictability come from?

Because it's not our bureaucracy.

Our bureaucracy is incredibly predictable.

It's not the steady-eddy managed decline.

It's the crazies.

How do we get more heretics in this part

of the American story?

Because there's obviously a massive profit.

And I would argue status motivator in the private sector.

All these companies that are popping up

with amazing founders, the potential rewards are extremely obvious.

The heretics that you described at the start of the conversation

that's definitely not true.

You mentioned dying penniless or whatever.

How do we create the right set of incentives

for more of our most talented people to go be heretics

in this part of the American story right now?

There's two incentives.

One is recognition that we need the heretics.

I think Ivan Rickover enjoyed his celebrity for a big period of time.

And just being known as the guy who did this

is itself a sort of reward.

Then the second part of this is definitely financial.

Like one of the arguments I've been making is

the cynical view of defense industrial complex in particular

is something like, these are greedy warmongers.

Well, they picked the wrong industry then.

Because on the greedy side, you should be in tech.

You should be in some other business.

These are crappy businesses.

They have 9% operating margins or something.

They're valued alike less than two times revenue.

So we actually need to make our primes more valuable.

That would help us continue to attract the heretics.

How do you make the primes more valuable?

The facile critique of the primes is somehow,

they're the problem.

The system's the problem.

The primes are just downstream of the consequence

of the incentives the government gives.

And I think the worst incentive is cost plus contracting.

Your upside is capitated.

You're not supposed to take any risk.

The government basically pays for your R&D.

So you have no skin in the game.

And yeah, you're still able to make a small number of exquisite

things, but that system is anti-heresy.

You can only do the conventional thing

that the government's agreeing that you should do.

You think about the Higgins vote.

Andrew Higgins built that vote on his own.

There was no space.

In fact, that's why the Navy kept projecting it.

It wasn't the Navy's idea.

But then 92% of all votes in World War II

are the Higgins vote.

The heresy is the vote that won the war.

How do you create an economic incentive where that's the case?

And I think companies like Andral

or Pioneering that on the hardware side

where it's like, hey, I'm building a product.

These are my specs.

These are my opinions.

I'm absorbing the risk.

You should buy it if you like it or not.

Part of the reason for profound optimism right now

is I would not have started all this advocacy

if I thought I was just screaming into the wind

it's like having done this for 20 years

for the first solid 10 years we were alone in the darkness.

There's like SpaceX on the launch side in us.

And then if you look at the present moment,

there are now hundreds of founders

who are building in the national interests

with a US capital stack one of our other advantages

of over $100 billion invested in the projects

that they're doing that are actually changing

other department things about the future.

This is the window in the moment for this stuff to happen.

Increasingly in conversations that I have in the Pentagon,

I hear some of these new entrants are talked about as plan A.

It's not plan B, it's not, hey, we'll see,

maybe this will work in the future.

It's like, no, this is the plan.

And we'll have to have backups if that doesn't work.

That is unrecognizable from the world I started in 2006.

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If you were the president for a day tomorrow,

what would be your executive orders?

What would be the things that you think

could carry the most freight to create

some of the change that you want to see?

I have narrow ideas, like this is a narrow idea,

but I would try to blow it up.

Okay, you want to bring pharmaceutical production back

to the US.

If you try to do that for generics,

the business case will never work.

It's too hard, it's too much of a subsidy.

But what you really want is you want to redevelop

a skilled workforce that understands how to make drugs again,

and you want the production capacity

that in a time of crisis, you could go from, say,

making branded drugs to generics.

So why don't we manipulate patent length

and say, look, drug companies,

if you make your worldwide supply of your branded drugs

here in the US, I will extend your patent length

such that you recover two extra cat-backs investment

to go do that.

That's a simple business case

that every former company would underwrite in a heartbeat,

and it provides the catalyst to go generate that capacity.

I think there are a lot of things

in the American economy that look like that.

We go back to the story I was saying

between prosperity and freedom

that Chrysler built many vans and missiles,

and four built satellites until 1990, General Mills,

like you just go down the list,

the entire economy looked like that.

I think it's a consequence of being really the sole superpower

and the Pentagon, the old Pentagon, in particular,

being the last bastion of communism except for Cuba.

Every country gave up on communism,

including Russia and China, except for Cuba

and the Department of Defense

that made it both a bad business

and then seemingly no threat.

So you could just be a prosperity company.

You'd be a single purpose company

that just cared about being a company.

I'm not sure that's actually a stable

or healthy society or civilization

that we have to recognize that we have obligations

across freedom and prosperity.

You mentioned the notion that we are crazy

and can pivot and attack opportunity

is an amazing part of the U.S. culture.

What do you think, what's the other side of that coin?

What are the negative aspects of U.S. culture in your view?

And I'm gonna ask the same question

zoomed in on Palantir specifically

of how to cultivate the culture that you want.

Palantir seems to have an incredibly distinctive culture

and I'm gonna ask about Sean Bombs and things like this

inside the company, but first at the U.S. level,

what are the things that you wish

were different here about our culture?

Some problems required sustained effort.

So if you can pivot really quickly,

maybe you pivot it to solving the problem,

but that means you can pivot away

from solving the problem and get distracted

and lose sight of what you're trying to accomplish here.

It's like a feature bug.

It's not an unequivocal feature,

but if you're in a competition,

you wanna play to your strengths

and that usually involves things

that the adversary is unable to do.

It helps that with the nature of populating the U.S.

was that all the heretics from the old world came here.

So we have an unfair advantage on that.

In terms of maintaining a culture,

the critical lesson that I've learned over and over again

is the entropy of the universe is against you.

If you don't invest in your culture every single day,

you will lose it.

There's nothing about culture that is self-sustaining

that says true for America, the country,

as it is for your company.

And then the best cultures are really almost cult-like.

Your culture is highly differentiated.

It should actually kinda be hard for someone

to inorganically insert into your culture.

Otherwise, it's not a very differentiated culture

whatsoever.

That requires flag bears.

It requires people who are true believers.

So it starts with recruiting.

Not every human has a disposition

that they wanna be part of a cult, essentially.

Some of them are just structurally mercenaries

and they're evaluating everything in life

really through the lens of what's my next job.

You wanna try to deal with your company

with people who really think of the present job

as the calling.

That engenders the primacy of winning.

They're always thinking about how to win today

because that's the whole game.

If you win today, you have the right to win tomorrow.

Rather than the other side of that is getting lost

and I wish the world could be this.

I wish the company could be this way or that way

or something, which is unmoored.

It's an aesthetic of how you wish the world to work

rather than both how the world does work

and what is required to win today.

In a company like Palantir,

what do you personally wrestle with the most?

What are the trade-offs that I'm always fascinated

by trade-offs?

It just seems like so much that what happens

hinges on a couple key choices.

Can't do everything for everyone.

What do you personally wrestle with the most?

The most important decisions from my seat

is really what projects are worth outsized investment

that we think are gonna define the future

of what our customers need

and therefore the future of the business

over the next five years.

So then how do you get the right talent on those projects?

How do you discover what those projects are?

I like to think about it.

It's like my backlog is something I reprioritized

dynamically relative to reality.

Here's my roadmap.

Here's all the things I want.

It's like a approximation at a point in time

of what I think are the most valuable things to build.

The second some new data comes in,

I'm going to rip that up and reprioritize it.

Having a culture that lets you do that

is that is really fucking painful.

People don't like it, the world is shaken up,

it generates a lot of chaos, but it's the right thing to do.

So then managing that so that your culture

enables you to do that, the cost of doing it is worth it

because the return of so outsized,

that's the whole business.

I'm extremely sympathetic to that point of view

of changing plans very quickly.

I've also experienced the whiplash that it creates

in a business.

How would you coach someone that believes this,

but understands it's really hard on a business

if you're constantly changing your mind

and pivoting your resources around?

What have you learned about the ways to talk about that

with your team of implementing it,

of communicating around it?

I'm curious how you do it.

There are always degrees of these things,

but the first order issue, I'd say,

is it hard because you want to exist

in a business that isn't painful?

There's a great Greg Le Mans quote,

who's a world championship cyclist,

and someone was asking about a championship performance

and he almost looked incredulous

and he was like, you know, it doesn't get easier,

you just go faster.

And so what do you think a championship performance feels like?

It feels shitty, it's really painful, it's really hard,

and your ability to win is basically,

can you survive more pain than your competitors can?

So then there's this weird phenomenon

where if you're doing something world class,

it's really painful.

Also, if you're totally failing, it's really painful.

So then having some discrimination to know

which of these two worlds am I in?

And the worst world to be in is where you have no signals,

like you're just plotting along,

but it's managed to climb is really what's happening.

So then is the pain we're experiencing,

generating results or not, and orienting people to that?

The other part I'd say is,

you can't move the whole company at once,

even the company as small as ours is only 4,500 people.

Every change is itself a mini insurgency inside the company.

Now, we think about it like you're campaigning.

Who are the people who already believe what you're saying?

How do you add incremental weight behind what they're doing?

How do you help them succeed more?

Are you trying to generate momentum

or are you trying to deal with the drag

of bringing everyone along?

My experience has been momentum

is the thing that aligns the whole company.

And so you should be waking up every day

in the midst of these pivots just working on momentum.

People will catch up.

What are your favorite ways to do that?

This is a communication question.

Palantur gets so much attention now

from public markets and everywhere.

It's one of these exciting places.

So there's more scrutiny on the company.

It's choices what it does.

You don't get to operate in an obscurity

like you did in the first batch of time.

What are your favorite methods for that internally?

Very tactically.

Celebrating the heretics, celebrating the successes,

creating venues where everyone has some ability to revolt.

Every employee's first AMA with me,

I end it by telling them to tell me to fuck off to my face.

It's very uncomfortable for them actually.

They're almost not sure if this is like I'm trapping them

into something that's gonna get them in trouble.

But how can you say you have a flat culture

if you can't tell the boss to fuck off?

It's a small gesture,

but it's trying to set the conditions

understand like, hey, we are a company

that's committed to taking the very best idea

regardless of where it comes from

and then putting all of our wood behind those arrows.

And most of those ideas are usually some variance

from what we're currently doing.

Otherwise, it'd already be the current best idea.

You gotta be careful how much you institutionalize.

But we've institutionalized

minimally two times a year.

We have these weeks of revolt

where people are allowed to go build whatever they want.

Where almost I like want the people

to have a chip on their shoulder.

The whole point is to prove that we've been fucking up

and doing it wrong and inspire us

with the thing that you've built.

And then if you have a culture

that is just profoundly truth-seeking

and if the truth is still charismatic

that now that I've seen it, I can't unsee it.

This is obviously the right answer.

Let's go.

It's not as hard as it may sound.

To move and pivot on these things.

The AI time is so remarkable.

We all have to deal with this new thing at the same time.

Probably like any crisis,

there's both opportunity and danger

bundled in the coming of AI for Palantir II.

How do you receive this new technology

and make sure that you get better because of it

and don't get disrupted because of it?

You were a disruptor with this enterprise ontology concept

killing the old rigid database systems.

You had an innovation now.

If I wanted to create a Palantir competitor,

it would be much easier just by virtue

of the technology that's available.

The only way you can do that is by disrupting yourself.

To the point of institutionalizing rebellion

and holding that up,

it is the perpetual motor of self-destruction.

I think about it as the most valuable thing

is not to defend the modes or something,

but as to go charge after the new opportunity.

One of the things I think is unique about AI

is how much it plays to the beginner's mind.

Obviously, the first adopters of AI for us

were the youngest hires.

To the point of generate momentum,

I didn't really bother with the people who were cynical

or dismissive of it.

I let the young people generate just overwhelming productivity

that almost in some sense humiliated

or inspired other people to get on board.

And there's a similar phenomenon.