EP #38 Palmer Luckey's AMA: The Politics of Winning the A.I. Race

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Visit Phoenix Edu at a budding 360 this year, after I sat down and had a conversation with Palmer Luckey, I opened it up to the A360 membership. It was a vibrant conversation, to say the least. We had people just, you know, on the tip of their seats. One of the things that Palmer mentioned to the audience was don't follow your passion, follow your talent. Something I'm still trying to understand and think about whether I agree with. After this, I'd love to hear what you think of that. So get ready for an intense Q and A with Palmer Luckey, the young entrepreneur revitalizing the defense industry and someone who's changed all of our lives with Oculus. My massive transformative purpose is to inspire and guide entrepreneurs to create a hopeful, compelling, and abundant future in humanity. And that's what I'm doing with this podcast. To open up every relationship, every conversation I have with you, to inspire you, to support you in going big, in helping uplift humanity. If that's of interest to you, please subscribe to this podcast. Allow me to share with you the wisdom that I'm learning from the most incredible moonshot entrepreneurs on the planet. All right, let's jump in.

First off, I love listening to you. I think you're just hysterical. You're like a brilliant young guy that has a shit ton of money doing cool stuff in the world.

But it could be I'm just like that.

Yeah, so I think it was Winston Churchill. It was about war, where he said, we sleep soundly in our beds because of rough men that stand ready in the night, willing to visit violence upon those that would do us harm. So this is a moral question about I think we've been in the middle of a cyber war, a psychic war, for the last three years, probably longer, but it really came to the surface, I think you're a freedom fighter. I think, and I think it's people like you that could maybe, perhaps save us from some of the very communist people, that many that run tech companies.

I mean, you have to remember that they, so far, they've won. I did get fired from my own company after they bought it, so. So that's a very, very, very. I hope that's true. But thus far, the communists running the tech companies sure seem to be pulling a, Pulling a fast one on me.

Yeah, well, I think you're doing something about it. So if you could wave a magic wand and have something happen, what is, what are you, what are you hoping to do with everything that you're doing? Right now? It's a defense company, but behind that, you know, I think, you know, violence is never an option unless it's the only option. Right. So what do you, what are you hoping to see happen? What would you like to see?

I mentioned earlier this idea that there's no moral high ground in leaving problems as important as defense, which is violence, to less competent people. If you believe that it will be used at all, which seems a reasonable belief to have, then you should want really smart people thinking about how to do it in the best and most limited and most precise way. You, you shouldn't want people to say, you know what, there's going to be collateral damage, because we only have bombs with this level of accuracy and this level of damage. I mean, in a perfect world, you could have a grain of rice that goes straight into the head of exactly the ISIS general that you want to kill. And there's no collateral damage. There's nothing bad that happens outside of that very precise strike. And that's also going to limit the potential for humans rights abuses and for mistakes, and it becomes much more accountable. Basically, if you can get violence to the point where it's so precise that it is only enacted upon those that you intend it to, it's very easy to today for someone to say, oh, well, that was just collateral damage. Based on the limitations of the technology in the future, you'd say you are accountable for every single person that you kill. And you have to be able to answer for why they are dead and why you killed them. I think that makes it easier for our democratic processes to regulate this. Like, I don't think the right way to limit our ability to commit human rights violations is to similarly limit our ability to do the right thing. I don't think that we should give NATO squirt guns like the Right thing you have to do is give them the powerful tools and rely on democratic institutions to, if not be perfect, at least course correct. Away from the, from, from the bad decisions that are made.

Intelligence and accountability.

Exactly. And I would. I'll finish by saying if, like, I'm more afraid of evil people with pretty good technology than good people with really good technology, if our democratic institutions fall apart, they are going to do a lot of harm. Whether their technology is great or bad. It'll just be different kinds of harm.

Yeah. Thank you. And I hope you use your brilliance to help eradicate a lot of the evil in the world.

I hope that our democratic institutions make the decision to use my technology to do that.

Hey, Jag, good to see you.

Hello.

Yeah, we go. Hi, Jag, good to have you here.

Atlas Society. So, Palmer, you mentioned what happened to you at Facebook where you were essentially ousted for not conforming to the dominant political culture. Looking back, there have been some developments. Brian Armstrong, Coinbase saying, we're going to be a mission focused company. If you don't like it, we'll pay you a very generous severance package. What Elon Musk has done at Twitter, exposing some of what happened there. So have things gotten any better?

Yeah, I think that things are getting better for two reasons. Some are in specific companies like mine, where the common mission is what unites people and what brought people in. And it's not partisan. So, for example, I'm the founder and the CTO of Anduril. Our CEO, Brian Schimpf is a Democrat and he does fundraisers for Democrats and I do fundraisers for Republicans. But guess what? We get along perfectly fine because there's so much we have in common on national security. And we tell our employees that's what we're here to do, that's what we're here to work on. And we can disagree and argue within the realm of what our mission is, but if it's not relevant to our mission, you got to do that on your own time because we cannot afford to be a partisan company when you have to work with the entire country from administration to administration, from, you know, Congress to Congress. So that for my company, it's pretty easy. Like, you know, Coinbase has been doing this. I think the other one is what you're seeing in companies is other companies that are not necessarily required to be, you know, ideologically neutral are starting to move that way because of rising interest rates. I think that crazy political monoculturalism was a zero interest rate phenomenon. Is the thing that companies can afford to get away with. They can afford to get away with it when money is cheap and growth is for everybody and you can basically just do lots of dumb things and still succeed. And I think as companies are having to realize, no, we do need to compete for talent, we do need to actually compete in the marketplace, we need to make money. They realize they can't afford to have these crazy witch hunts going on regularly in their own ranks. So I'm actually optimistic that this was kind of like a Sodom situation where it was just like, you know, it happened because it became things got out of control because it was so easy for your business to succeed even as you were bad. So I'm hoping for a return to sanity, that's all.

Nice. Great question, Jag. Thank you. Harsha.

Hi Kama, this is for you. So you mentioned about those robots that you need to control remotely. So I was working at Microsoft Robotics building a lot of humanoid robots and then my team went and started doing Hololens and I went and built Holosuit exactly. For controlling, it's a full body thing and I couldn't get into Lockheed and all they kind of really, as you said, this US system was not there. So now already Indian army and Indian Spaces is using it. So please come and visit us here and I would love to talk to you. And I mean exactly the same kind of problems that startups are having. I started it here, I had to go to India to get the vision done. Now I've come back to Silicon Valley exactly because of your thing. So please visit us and we can.

That's awesome. My dance ticket's pretty full but send me an email and if anyone else does it's just palmeranduril.com so my name and my website, I'm pretty easy to reach. But I mean the reason you couldn't get into Lockheed, they're a cost plus contractor. They make money by making things that they can charge then a percentage of profit on top of they are not incentivized to reuse existing technologies unless they are forced to by the government requirements. And so if they were going to do what you were doing, they they're not going to want to license it from you as an existing technology. They're going to want to convince the government, oh, you need this. And you're going to need to pay US for a 15 year research program where you're going to pay us to design this from scratch and not look at anything that's been done out there.

And by the way, once they've tasted that they're never going back.

No. And the funny thing is it's a self reinforcing negative loop where yes, you can make a lot of money doing that way, but only with tiny margins. And so their business is always terrible. Lockheed is only worth about $100 billion on $67 billion in revenue. Isn't that nuts? They're worth a 1.5x multiple of their revenue. And it's because they basically make, they make tons of money, but their margins are so low that they're not actually that good of a business.

So let's go to Mike. Thank you on Mike number two.

Sorry, if anyone's from Lockheed.

Charles, you're up next on Zoom. Where are you and what's your question?

Palmer, thank you for what you're doing for our country. I had about to get your opinion as to the relative strength of the United States on the global stage. Especially, you know, we've read about the hypersonic missiles that Russia and China have and we evidently were falling behind that technology. But we also listened yesterday to the fact that, you know, in five years, whoever is winning the air race may actually win it for the next century. And so I'm just wondering in your involvement in the defense industry if you have any thoughts on where we stand competitively. Thank you.

We're in a pretty good position right now. The biggest problem that we have is that China has really pulled themselves up by their bootstraps over the last couple decades, enabled unfortunately by a lot of very bad US Foreign policy decisions. There's this kind of myth that is unique to America and I think it's based on our media, our comic books, our movies, our video games, our stories about things that are going bad. And then at the last second, the brilliant guy has the twist of the mind that saves everything with just the exact right idea. I think we're actually past that point with China. That's not how reality works in the real world. You can make bad decisions that cannot be undone without decades of work. So I'm talking about like bringing back advanced manufacturing of the United States. It's not about bringing back a few machines. It's about training an entire lost generation of manufacturing process engineers, fabrication engineers, people who didn't get into those degrees because there's no opportunity for them in this country, even as China has hugely concentrated their resources there. So these are things that are going to be much harder than like one bill, one factory. It's going to take us literally decades to solve it. And so we need to figure out how are we going to get through the next few decades? I think right now we're in a pretty strong military position. But China also gets a lot more for each dollar they spend. People point out that we spend two or three times as much as them. Well, I'll tell you, as someone who has built millions of virtual reality headsets in China, they get a lot more than two or three dollars worth of value for every dollar that gets spent in China. They are very efficient. They know exactly how to most efficiently use that money. And so I get that we've got a few things we can hope their economy collapses. That's one thing that could happen. And then, then there's, if their economy collapses, they'll be too focused internally to be able to go on these kind of, you know, escapades abroad and, you know, try to take over democratic nations. They'll probably have to stop arming all of these other countries around the world that wish us harm and wish our allies harm. But, but, but, but at the end of the day, the, I guess the last thing you said, which is there's this theory that AI is going to, you know, to, to, to. The winner in AI goes all two, two quick things there. One, Russia actually tried to become the leader in military AI before the US was making it, taking it seriously. One of the quotes that's in the Anduril pitch deck actually to our investors was a quote from Putin speaking to a bunch of high school students, trying to convince them to work in the defense space. And he said, the country that leads in artificial intelligence will become the ruler of the entire world. I was like, wow, that's so honest. That's like James Bond villain type dialogue. We will rule the entire world. And he says that because he thought it was a way that they could potentially asymmetrically oppose the United States. China believes the same thing. I think that if China gets ahead in AI, we might have to take drastic action on the economic side where people are like, oh, what if they figure out how to make things for a tenth of the price of the United States? Won't we all just buy stuff from China? Isn't that economic collapse for the US and to which I'd say history has shown that when situations become that unbalanced, the United States and our allies will just decide, okay, we're just cutting off imports from them. Like, we are just, we're cutting it off. It doesn't matter how cheap it is. It doesn't matter the harm. We have to stop this problem. I think that is one of their worst case scenarios because they cannot live without us for not yet. They still need us. They still need the west, they still need us to make microprocessors, they still need us to make their technology and they still need us to sell stuff to and to sell them agriculture because we grow everything.

Thank you for your question, Charles. George, good to see you.

All right, good to see you too. Hey, Palmer, over here. Thank you. I loved everything you're doing, everything you said. I was on the edge of my seat. I'm an emerging VC here in LA on Tap Ventures and so my question you mentioned your pitch deck, so I kind of want to go back to that and pick your brain about would have loved to have been there when you were starting the first VR company. What would you advise on special founders like yourself? What do you think as you look back? What makes you special, especially when you were just starting out 20 years old, right. And I'm sure you probably have similar friends in your community. What would your advice to me and some of the other VCs? Be here and being able to work with founders like yourself and help you with your journey.

To be honest, Oculus was very much a case of the right technology in the right place at the right time with very little planning or thought behind it. And I wouldn't model your investments after that because look, I was working on VR because I loved VR. I truly believed in it. I had decided as a gamer that VR was not just the next thing in gaming, but the final thing in gaming. And that's what I wanted to be working on.

What science fiction was your most inspirational for that, by the way?

Oh man. Well, probably of course, Neal Stephenson's Snow Crash. But I also like Sort It Online. And as a child my favorite book was 20,000 Leagues under the Sea, which is a highly technical book. I wish more writing was like that today. But anyway, the point is, I happened to be working on VR at the time when modern rendering technology and display technology and motion tracking technology simultaneously made good VR viable. I could have been just as passionate five years earlier and failed. I could have been just as passionate 10 years earlier and failed.

Timing is everything.

It really was. And I don't want to act like I was like this savant who saw the future. I made an irrational, insane decision. I was like, I'm going to drop out of college and work on my VR toys because that's what I want to do. That sounds like a lot of fun. And I would say that is not a good way to start A company. I mean, we've talked about this. But one of my bits of controversial advice to founders is don't follow your passion, follow your talents. Because people are told, oh, follow the thing you're passionate about. Like, Anduril was not me following my passion. I did not want to work in defense. I did not want to be building weapons. But I felt like it was something really important, and I felt like I had the talents that I could use to do really good things in that space. People say, oh, it must be more fun than VR, right? Nope, VR is way more fun. I had a way better time every single day. But weapons is important, and so I want to work on that. So I think that follow your dreams and follow your passion. That was great advice in the 1970s, when the number one most desired job for children was astronaut. Astronauts were fighter pilots, PhD, mathematicians combined. And today, do you know what the number one job that kids want to be is? Content creator. No, it's a YouTuber. And then the next one is professional gamer.

Yes.

I think it's really dangerous to tell people, follow your dreams when their dreams are so bad. And so what I would advise to you, if you're an emerging vc, I would say basically ignore Oculus. We did a lot right. But it was crazy. Good luck, too. I would look more at Anduril. You want to find somebody who is rationally looking and saying, I have this certain set of skills and so do my co founders that's going to let us solve this problem that matters. And that's what, here's how we're going to do it. Here's why we're going to do it, here's why we're mission driven. Not because they say, oh, I just love doing this, or I have this dream. I've always wanted to be that. In my experience, it's the ones who are mission driven, who feel like they're driven by that goal, that are going to be the most successful. Also invest in people who are angry and have something to prove. I think that's a big part of why Andrew's done so well is because I was fired. And I'm enraged by that. And I just. I had a big chip on my shoulder. And I'm serious. It sounds like I'm just making a quip, but, like, there's a lot of founders I see where some of them were wronged by their former employer. Some were wronged, they felt, by their industry. Others were wronged even directly by their families inflicting some financial hardship on them. And A lot of. There's a lot of good founders out there who say, I'm going to show them. They'll see. They'll all see. And that's what gets up in the.

Middle source of energy.

It's infinite. Yes. We don't need nuclear.

Thank you, George. Let's go to Roger. Hey, Roger.

Hi. This is a question for everyone. I'm Roger Hamilton from Genius Group, and this time last year, our summit, the big theme was the Metaverse. That was all about the Metaverse. And Metaverse never had its mass viral wow moment the way AI has this year. And we know it's OpenAI, and now we see Google, Microsoft, while we see also Meta, not really talking much about the whole Metaverse anymore. So it seems to me that the AI graphics that we're seeing and what's happening in terms of rendering virtual worlds could accelerate the wow moment for the Metaverse. So my question is, do you think it's going to happen sooner rather than later? Any predictions? Which company would you put your bet on as to who might be the one that creates that wow moment for the Metaverse, and will it be Meta?

I mean, you know, the Metaverse, parallel world that exists alongside and amongst our own, merging the digital and the real. You know, I think it's not just virtual space, you know, purely virtual space. It's that combination of the two I. So running backwards in order, I don't think the first big wow moment that we see is going to be from one of the big players. Why? Because the big players have to make bets, and they can only pick a few of them. Right. They can pick one or two things and bring their massive resources to bear on that handful of bets. But that means that they're competing against hundreds, if not thousands of companies that have a few people that are trying.

The furry little mammals.

Yeah, exactly. You know, the furry little mammals that are eventually going to turn into people. There's a whole lot of them, and they're all trying different things and maybe none of those.

And they're crazy things that big companies would never try.

They're crazy things that would never try. I mean, one of the most powerful things with Oculus, when we launched, we started shipping these development kits. We got them out to 55,000 people and 55,000. I'd say most of the game developers made garbage. Maybe a couple hundred made things that were okay, but there were a few dozen that really opened your mind. You saw and said, oh, my God, this is the future of gaming. This is the future of computing. I get it. Even on this primitive hardware. And I think it was because we had so many people working that inevitably one of them would find that magical thing. I don't think it's going to be a big company. It's going to be one of these many.

Roger, why did Google Video fail and Larry spend 1.65 billion to buy YouTube.

Yeah, exactly. Why it's this exact.

Why did they fail?

Oculus got bought as well.

Right.

Because the whole mindset of having a.

Bigger company, there's one reason why they failed was that the lawyers, oh, you can't allow that video to go up on Google Video.

But this is true even today. So you have things like Horizon World, which is Facebook's Metaverse platform. And like, it's one of the reasons it's bad is the lawyers. You know what the best Metaverse platform is right now? It's VR chat. Why? Because there's no copyright enforcement and mass copyright infringement and anyone can make anything with no lawyers involved because there's not enough money to be even worth suing the people running the company. That's the, that, that's the world that has the most active users, the most worlds, the most creativity.

Last question, we're going to go to Josh on Zoom. Josh.

Yes.

Hello everyone.

Zooming in from Denver. It's a fascinating chat and absolutely love the obvious passion in the group here. It's a great reminder for us all to dream bigger and specifically as entrepreneurs with these high tech and very detailed concepts, how do we tie them into our simple daily routines or day to day living from a simple basis?

I mean, I often like to look at problems from the perspective of how I would solve them if my technology had. It wasn't my technology. I see a lot of problems getting solved where people are trying to find every use case for every shiny new thing and they're like, oh, we're going to do VR education. So is it actually better than anything or is this just iPads for education again? Or it's like, oh, we got to buy iPads for every kid and that's going to turn every kid in the country into a super genius. No, that's not true. People are doing it because it was shiny, not because it was the best solution. And look, I'm a big believer in, for example, the metaverse, broadly. My email signature for 10 years was see you in the metaverse. So you can't accuse me of being a trend jumper. I was crazy my, my whole career. But, but nonetheless, there's so many new companies that are like, oh, the metaverse solves this problem, that problem. I have to look at them and say, does it really? Or would this be better with. Solve with like, a. A pen and paper. Like, you're trying to keep track of the things that are going on in your day. So you put on the VR headset and you're visualizing all of the different places. I'm like, God, you literally just need this. That would be better. Straight, like. And also phones. Like, phones are actually better than AR&VR for some things. And so, like, when I'm trying to integrate. When I'm trying to integrate, you know, this thing into my daily life, I'm trying to make sure I don't fall into the trap of using tech for the sake of using tech in my everyday life, for trying to solve a problem that doesn't need it, that doesn't solve it. It's hard for me because I'm a gearhead. I'm a. I'm a techno head. I love the technology.

But he had a rule of no unintentional gimmicks. Yes, it's going to be a gimmick. Make it intentional and lean into it.

But otherwise, don't play yourself. You can tell everyone else, this is incredible. Incredible. As long as at the end of the day you say, this is so dumb.

All right, guys, let's give it up for Stacy from Mike and for.