From PayPal Intern to Starting 4x Billion-Dollar Companies - Joe Lonsdale Interview

Episode 578: Shaan Puri ( https://twitter.com/ShaanVP ) sits down with Joe Lonsdale ( https://twitter.com/JTLonsdale ) to talk about how he leveraged one internship at PayPal into one billion dollar success after another. Today Joe is Managing Partner of 8VC and an early investor in Anduril. Want to see Sam and Shaan’s smiling faces? Head to the MFM YouTube Channel and subscribe - http://tinyurl.com/5n7ftsy5 — Show Notes: (0:00) The One Reason strategy (3:18) Learning Global Macro Finance from Peter Thiel (5:35) Taking multi-million dollar bets at 4:30am (8:43) Hire for raw IQ over expertise (10:33) Nurturing employees into unicorn founders (12:24) Solving hard problems with Addepar (13:53) Always “Being on” (15:32) How to spot opportunities for new businesses (21:10) How Epirus landed a military defense contract (27:09) Getting hits in hard domains (28:24) Business Idea: AI-powered Estate Planning (29:19) Business Idea: Business Process Outsourcing for local government (30:58) Big swings vs. base hits (31:49) Idea vs. execution (32:38) Focus vs. diversity of thought/attention (33:33) Insights from Elon’s inner circle (35:36) Joe Lonsdale’s unfair advantages (38:48) How to invest your time to make your first $1M (40:40) Working on an A+ problem as an intern at PayPal (43:15) Be within 2 standard deviations of top talent (44:14) Early days at Palantir (46:56) Building a top engineering culture (48:31) Borrowing trust as 21-year old defense contractor (52:22) Peter Thiel’s biggest contrarian bet — Links: • Joe's Twitter - https://twitter.com/JTLonsdale • Joe's blog - https://blog.joelonsdale.com/ • Joe's podcast - https://www.americanoptimist.com/ • 8VC - https://www.8vc.com/ • Addepar - https://addepar.com/ • Palantir - https://www.palantir.com/ • Epirus- https://www.epirusinc.com/ • OpenGov - https://opengov.com/ • Prologis - https://www.prologis.com/ • Lessons from Peter Thiel - https://joelonsdale.com/lessons-peter-thiel/ — Check Out Shaan's Stuff: Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano Past guests on My First Million include Rob Dyrdek, Hasan Minhaj, Balaji Srinivasan, Jake Paul, Dr. Andrew Huberman, Gary Vee, Lance Armstrong, Sophia Amoruso, Ariel Helwani, Ramit Sethi, Stanley Druckenmiller, Peter Diamandis, Dharmesh Shah, Brian Halligan, Marc Lore, Jason Calacanis, Andrew Wilkinson, Julian Shapiro, Kat Cole, Codie Sanchez, Nader Al-Naji, Steph Smith, Trung Phan, Nick Huber, Anthony Pompliano, Ben Askren, Ramon Van Meer, Brianne Kimmel, Andrew Gazdecki, Scott Belsky, Moiz Ali, Dan Held, Elaine Zelby, Michael Saylor, Ryan Begelman, Jack Butcher, Reed Duchscher, Tai Lopez, Harley Finkelstein, Alexa von Tobel, Noah Kagan, Nick Bare, Greg Isenberg, James Altucher, Randy Hetrick and more. — Other episodes you might enjoy: • #224 Rob Dyrdek - How Tracking Every Second of His Life Took Rob Drydek from 0 to $405M in Exits • #209 Gary Vaynerchuk - Why NFTS Are the Future • #178 Balaji Srinivasan - Balaji on How to Fix the Media, Cloud Cities & Crypto • #169 - How One Man Started 5, Billion Dollar Companies, Dan Gilbert's Empire, & Talking With Warren Buffett • ​​​​#218 - Why You Should Take a Think Week Like Bill Gates • Dave Portnoy vs The World, Extreme Body Monitoring, The Future of Apparel Retail, "How Much is Anthony Pompliano Worth?", and More • How Mr Beast Got 100M Views in Less Than 4 Days, The $25M Chrome Extension, and More

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Shaan Puri?

  You have now created by my count at least four billion dollar companies directly, probably more than that. What would you say you are doing different than the average good founder?

• 0:11Speaker 01

  So it's like, I have some unfair advantages, right?

• 0:15Speaker 02

  I feel like I could rule the world. I know I could be what I want to. I put my all in it like my days off on the road.

• 0:23Shaan Puri?

  Okay, Joe, thanks for doing this, man. And thanks for inviting me into the morning workout, the cold plunge and everything in between breakfast.

• 0:30Speaker 01

  Good to have you here, Sean.

• 0:31Shaan Puri?

  So I want to start with lessons learned. You, one of them that we were talking about this morning when we were doing a workout was making decisions on blended reasons or having like a blended strategy for how you're, we're going to win, we're going to win doing these five things. And why that sounds like a good idea to the average person, but is actually a very bad idea. Can you explain that?

• 0:49Speaker 01

  Yeah. And I wrote this piece online, like nine lessons from Peter Chill I sent to all of Palantir. That's been like sent to all of my other companies as well. And it's one of my favorite pieces and that's one of them in the, it's one of these logic things where usually there's like one reason that dominates everything else. And that's just, that's just the nature of the world is that, is that when something's successful, it's kind of like the power law rule, right? Like an adventure capital, like fund even, there tends to be one thing that's successful. It's like bigger than everything else. And that's true inside of companies as well. It's very unusual, extraordinarily unusual for there to be like two similarly equal, like, like, like products or revenue lines or something like that.

• 1:23Shaan Puri?

  Right.

• 1:23Speaker 01

  Especially early on in a company. So usually if you, if you think you have like two or three reasons for doing something or five reasons for doing something, what that means is that you actually haven't figured it out.

• 1:32Shaan Puri?

  You have no reason.

• 1:32Speaker 01

  Reason. You have no strong reason yet.

• 1:34Shaan Puri?

  Yeah.

• 1:35Speaker 01

  Like that means you have five weak reasons, which is not good. You want to find like, what's like one really strong thing you're driving towards. And that, that's how startups work. And this is, it's a really seductive trick. I mean, first of all, you have to be taking a big risk to even do a startup. It feels like rather than like, you know, most people, a lot of people like to incubators because they're like, oh, I don't want to do one company. I'm going to do 10 companies. And like, by the way, that's like much less likely to have a big success because you're not focused. And then, and so, but so even within a company, they're like, they're trying to do the same thing. They're trying to be like, well, here's five ways I'm going to make money. And like, no, no, no, man, if you really want to do a company, figure out the way you're going to make money. And that, and that tends to be how it works, you know?

• 2:07Shaan Puri?

  And that applies to revenue streams. So eight revenue streams. Means you probably don't have one awesome revenue stream.

• 2:11Speaker 01

  Exactly.

• 2:12Shaan Puri?

  Growth strategies, if you have seven things we're going to do for growth means you haven't figured out.

• 2:16Speaker 01

  Which one's actually the one that's gonna work?

• 2:17Shaan Puri?

  The one that's gonna just compound like crazy.

• 2:19Speaker 01

  And it may change, it may change over time, but what's the thing that's working now you're pushing on? Yeah.

• 2:23Shaan Puri?

  And then the other version of that is blended reasons for doing something. I think I read once that Reid Hoffman uses the same philosophy. And he said, he gave the example of, oh, if there's like a trip to China and I'm deciding, should I go to China? It's far away. It's going to take two weeks and should I do this trip? He's like, my chief of staff came with like a list of pros and cons.

• 2:39Speaker 01

  Yeah, it's like multiple pros.

• 2:40Shaan Puri?

  Multiple pros and then a couple of cons. That's almost impossible. It's a guaranteed way to make mediocre decisions is to do long blended lists of.

• 2:48Speaker 01

  If you don't have a key reason to be there, like stick to your work. Yeah.

• 2:51Shaan Puri?

  Exactly. That's what he said. He's like, if we don't have one reason that that alone is worth doing, then we should just say no. Is that something you do?

• 2:58Speaker 01

  Reid was one of the key, key minds at PayPal, of course, with Peter Thiel and others. So who knows who actually came up with these ideas? It may all be Reid's ideas and I'm recycling, but he's a very smart guy.

• 3:06Shaan Puri?

  Well, I say them as for mine now. So I think that's, that's the best way to, you know, the highest compliment is to meme an idea and to, to let it spread. And so Peter's helpful with that. He's, well, what are some of the other things? Like, do you remember? I mean, even at the beginning, one thing I kind of wonder is you've been around a bunch of special people, Peter Thiel, Elon Musk, all this stuff. Is it clear in early, like in the early days, like, do you remember the moment where you're like, oh, this person's kind of different? They are that five standard deviations.

• 3:35Speaker 01

  Yeah, no.

• 3:36Shaan Puri?

  And intelligence or conviction or whatever.

• 3:37Speaker 01

  One of the, I mean, we all try to set strategies for ourselves and goals and whatnot. And like, I remember in college, I thought, wow, this is a really good opportunity at Stanford to reach out to a bunch of successful people and kind of learn from them, see who I, see who I admire, see who I want to be like. And, you know, I, I've met some of the legends of global macro finance who I'm still in touch with. I met a bunch of other big business people and run Fortune 500 companies. And Peter, to me, had by far the most interesting intellect. He was, he was clearly just one of the smartest people I'd ever met. And he was interested in some of the same things I was interested in. He'd taken some of the logic farther than I ever had. So, so, so I always learned the most from conversations with him. So that's, that to me was one of the reasons he was the most attractive to try to work with and try to build with.

• 4:14Shaan Puri?

  And so before you start multiple other companies, you do Clarium, which is his hedge fund, I guess is the way.

• 4:21Speaker 01

  Global macro fund, yeah. It's like the most fun part of finance. There's all, there's lots of parts of finance. Finance is like all sorts of areas. Global macro is looking from like the highest possible perspective. Everything going on in finance is like the bond yields around the world, the flows of money around the world, how equities are being valued. They basically, it's like just from very top down, like what is happening in the world of finance and how do you map it out? And you look at relationships, you understand, yeah, of course, like, you know, the Australian currency is going to be really correlated with the price of metals and there's different ways in which they can get way off and you can create a regression trading system if they're way too far off where you can make money based on the reversion. But then you say, oh, normally I would trade this, but actually this is happening because China just like, you know, invaded this thing over here. So actually it's not a good time to do it. And it's just, it's this really, really fun map of the world.

• 5:05Speaker 01

  And we were really interested in like long dated oil prices, what was happening with oil. We're very interested in how Fannie Mae and Freddie Mac, which are the two big giant housing groups, they'd gotten to be much, much bigger in the US in early 2000s. And they're probably, they had these giant mortgage backed security portfolios that are worth trillions of dollars and they had to hedge these portfolios, basically. And I won't go into all the details, it's a little bit esoteric, but based on how they were hedging their portfolios was completely changing the global fixed income markets, completely changing the pricing of bonds. We found some really interesting ways to do things there. I, I, my favorite, my favorite story that I'll give you is just to give, so, so we were working at the hedge fund, markets open, we were in San Francisco, we're in 555 California, right? It's that big building downtown, like after, after nine 11, I think Peter had a parachute in his room. I always told him, you should have parachutes for us too, but anyway.

• 5:49Shaan Puri?

  There's one parachute, okay.

• 5:50Speaker 01

  That was just a joke, but it's probably, but no, so it's like a cool office on the fourth or second floor and, and the market's open at 6:30. So the traders are supposed to be in at 6:30, except the first Friday of every month, you had to come in at 5:30 because the non-farm payrolls come out still now, the first Friday of every month at 8:30 AM on the East Coast. And it turns out, this is a very important number because it shows you what's going on in job growth and the whole economy, you know, based on the Bureau Labor Statistics numbers. And, and what was really cool is Kevin Harrington was our head of research, is like genius, crazy physics, biology, interesting guy who's, and he ended up being on the National Security Council later, like super interesting, smart guy. And he like had mapped out this thing I'd helped him with where we realized. That they were adjusting the numbers wrong based on seasonal adjustments. And so we were able

• 6:33Speaker 01

  to predict what the number would hit or miss. And this thing would move bond markets like crazy, like hundreds of billions of dollars would move around based on this number. And we figured out they're systematically misdoing it. This is totally legally. You're allowed to do this in finance. So we figured, okay, this is a mistake. 75% of the time, we can make money trading this. And then we can adjust it, make it even better based on where the market was positioned. So the market's going to be surprised. And we can kind of tell there's a good chance it might be. We take a big position, like the night before or whatever, and then like make a ton of money that morning when it worked. And it was

• 7:00Shaan Puri?

  At 4:30 in the morning.

• 7:01Speaker 01

  With about 75% chance. And so if you do it enough, you're going to do it well over time. And it was the most fun thing because we take these like giant positions on this thing. And you'd be there with like Peter and Kevin.

• 7:10Shaan Puri?

  Is this just like the highest stakes game of poker?

• 7:13Speaker 01

  It's the most fun highest stakes game of poker. And you're like, literally personally have like a few million dollars riding on it at a time as early in my twenties. These guys, you know, Peter probably had a hundred million dollars riding on it every time. And you're like high fiving if it goes right, or you're depressed if it goes wrong. It's the most, it's just most fun highest stakes game of poker.

• 7:27Shaan Puri?

  Is he sweating? Or what's his?

• 7:29Speaker 01

  Everyone's like, what's gonna happen? It's like so exciting. And then you're like, I remember so many like celebrations. We'd all like go to like our favorite breakfast place afterwards if it worked out. It was pretty cool.

• 7:40Shaan Puri?

  Yeah, what you do if it didn't work out?

• 7:41Speaker 01

  Yeah, sometimes we go there anyway. But for some reason, my mind, this is maybe who I am. I remember all these times that it worked out. I barely can remember the times it didn't. I know it didn't sometimes. But like, maybe this is like a serial entrepreneur sort of thing where you just gather the good memories, you know?

• 7:54Shaan Puri?

  Right.

• 7:54Speaker 01

  So it's like, but I remember it was, it was, it was a fun time.

• 7:56Shaan Puri?

  That's a certain entrepreneur survival tactic.

• 7:58Speaker 01

  Yeah, you can't remember all the traumas.

• 8:01Shaan Puri?

  Because if you know, if you remember how hard something is, you're very less likely to start it again or do another thing.

• 8:06Speaker 01

  There's no freaking way I would have built all these companies if I had to force myself to like think about that too much, you know?

• 8:11Shaan Puri?

  The way you just described like the global macro fund, you're pretty young when you're doing this. And that's not what you were doing just before. So it's not like you had tons of experience.

• 8:19Speaker 01

  My little brother got me reading like a bunch of economics and finance stuff when I was young. So I kind of had a weird both computer science and finance background. So and I had opinions about it. So that's like so weird. Those are like my two things. And so So I knew that world pretty well. And yeah, you learn a lot being in it. You just do. You just have to be in it to do it.

• 8:36Shaan Puri?

  But I mean, credit to them for betting on you to be able to do that. They could have hired somebody who's been doing that for 20 years.

• 8:42Speaker 01

  This is, we talk about lessons from Peter Thiel. I think one of the most important ones I've seen from him that I've definitely taken to heart in what I've done is I'd much rather hire, I'd much rather hire for talent and ambition and hard work than hire for expertise. So almost, and there's exceptions, right? So if you have a company that's already really working and already really scaling, and there's like a machine that has to be run, you want to hire the guy who knows how to run the machine. That's fine. That's like, that's like, that's the operator who knows what they're doing already. But when you, before you've actually built the machine, or when you're doing something with a group in like high finance or whatever, you want to hire for raw IQ and hard work and just iterating and figuring it out. And that's, that's a different skill set than the people who run the machines.

• 9:23Shaan Puri?

  What's your way of filtering for that IQ? Well, you know, how do you interview or what are the signals you look for?

• 9:29Speaker 01

  This is like super hard. I think you start with like-

• 9:32Shaan Puri?

  Hard math problems at people? What are you doing?

• 9:33Speaker 01

  We used to do that at Clarion. We had these really hard problems. I remember my friend Suji over at Dropbox, one of his partners there at his new, at his new ventures channel, he was like the highest scorer on this test I gave. He's a smart, smart, smart guy. Yeah, we had to do really hard tests. But you know, once I already had around me a bunch of people who are really top talent, it's like they knew people like, oh, who is the smartest guy in your physics PhD at MIT? Who is, you know, things like that. So it's like, you kind of, you kind of get a network. It's already really solid. And then you go out from there.

• 10:01Shaan Puri?

  And so let's go more on that. So two things. One, Ben told me something that like, there's some number, I don't know the exact number, 20, 30 people who have worked at your companies that have then gone on to start, like unicorn companies. Dude, what is that? What is that number roughly?

• 10:15Speaker 01

  Oh gosh, you know, I don't actually keep track of the official number, but there's over 20 people who've worked directly for me who've started huge companies. And it's something I'm really proud of is that we've had a lot of super talented people. And you know, in some ways it's like, I like to like back my mind like, oh yeah, I'm a great guy. I take credit for shaping them. But in some ways it's like, they're already really amazing. And, and you know, and, and so I was like, maybe I'm just going to convince them to have worked with me ahead of time. So it's like, there's a-

• 10:37Shaan Puri?

  Well, there's a nature nurture thing, right?

• 10:38Speaker 01

  Yeah, there's, and there's some of both. I do like to think that we've given them useful frameworks, just like I learned from Peter. Thiel might've learned some of these things from me too. But, but I mean, one of the one, and you know, not all of them have even backed, like some of them I backed, some of them went off and then did it themselves. And you know, which, yeah, usually they let me back them.

• 10:54Shaan Puri?

  Yeah, that's the worst when you didn't get the call.

• 10:56Speaker 01

  You know, actually, I'm still proud. I'm still, I'm still proud of like, I'll tell you the, the guy who came right out of school to help run Atapar with me. And, and I was like, he became president of the company, super talented guy. And I did not know what I was doing, even though I just already done a palantir. There's all these mistakes I was making because there's like things I didn't realize I had advantage of palantir. And you know, Atapar is a multi-billion dollar company. Now, it's great, but there's things that took longer. There's mistakes, but there's also obviously good things we did because the company worked out really well. And I think he had, he had like, went off on his own and he had like, you know, his own tough time or whatever for a little while afterwards. And then he ended up partnering with someone. And he started a company that became worth $3 billion in like four years and he sold it.

• 11:32Shaan Puri?

  Wow.

• 11:32Speaker 01

  Which I'm like, oh, wow, that's pretty fucking cool. So, but I was like, and you know, and I, and I, he didn't have, they didn't bring anyone else into that company, but I was still really proud of the fact that I'd worked with this guy. And then he'd gone on and had like crazy success. I mean, it's a cool feeling, you know?

• 11:44Shaan Puri?

  But for the record, it's always, I'm more proud if I got to invest too, right?

• 11:47Speaker 01

  I know, come on, it's to carry your buddies.

• 11:49Shaan Puri?

  Yeah, exactly.

• 11:49Speaker 01

  No, it was most of the, like, 95% of them, it's like, people will bring me in and I'll still like help and we'll coach and work with them together.

• 11:55Shaan Puri?

  So let's do a big hit number two, Atapar.

• 11:58Speaker 01

  Yeah.

• 11:59Shaan Puri?

  You explain like, explain in layman's terms, what even is Atapar? And then I want, I have some questions for you, but let's first do the, the, explain like I'm five years old, what is Atapar?

• 12:07Speaker 01

  So Atapar is, is the leading wealth management technology company in the US. And so there's people who work at what are called RIAs, Registered Investment Advisors. There's tens of thousands of these and they will help you or your parents or whoever kind of manage their wealth. They'll give you reports. They'll do your trusts and estate. They'll just do everything around kind of the wealth planning. Man, it was really freaking hard. We built all this stuff and we like hooked up to Schwab and Fidelity because those are like two of the biggest, everyone's heard of those, right? The biggest custodians. And we had all this wrong data in the reports, like what are we doing wrong? And it turned out the data coming from Schwab and Fidelity was oftentimes wrong. I'm like, what is wrong with this space? It's like, the whole thing's a mess. So it was, it was a hard company to build. It took about three or four years before we really got to the point where it was useful to people.

• 12:49Shaan Puri?

  And so you didn't give up though during that time?

• 12:52Speaker 01

  Oh, no, that's like the last, like you have to have a personality where you're not going to give up. I mean, I'll give up if it turns out someone else has already solved it perfectly. Like if Atapar already existed, it would have been a stupid thing to do that. And I learned that, then maybe you give up and pivot. But the fact that it's just a hard problem, you're not going to give up. You're just going to like double down and like fix it, you know?

• 13:06Shaan Puri?

  Interesting. So you're, you're a. You don't give up if it's too hard to Bessie.

• 13:10Speaker 01

  It's like, that's better. That means once I do solve it, it's gonna have this giant moat. Like, Adipar is the biggest freaking moat. We were talking earlier about guys like Rocket Internet will like go around copying things and annoy people. Like, good luck if you want to try to copy that. You gotta take a billion dollars in 10 years, you know, like, no chance, no chance.

• 13:24Shaan Puri?

  You talk about hard work. I, when I was doing research for this, I called somebody who works on your team, and I said, tell me about him. What's he like? What's it like to work with him? One of the things I said was like, he's always on. I've never seen him just go like, go dark, go off, or just like, turn his brain off, or be like, I just wanna chill on the beach and just drink Mai Tais and not do anything. Is that accurate for you?

• 13:44Speaker 01

  This is like my game, though. I mean, I think you have to love what you're doing, right? So like, you shouldn't play games you don't, you don't like, you know? If you don't play, you're not enjoying the game, you gotta switch it up.

• 13:52Shaan Puri?

  Yeah.

• 13:52Speaker 01

  So this is, this is, this is, this is why I'm doing this, because I really enjoy it. It's really fun. I'm really good. I think one of the, you know, Aristotle would talk about how like, one of the highest pleasures is like, is like, using your mind in its highest capacity, right? So that's like, he's playing like, you actually enjoy chess more than checkers if you're good at both, because chess has more levels to it. It's a more complicated game. And so you, you want your mind to be engaged in interesting, complex, useful things that are getting things done. It's like a positive part. I think it's how humanity works.

• 14:18Shaan Puri?

  Right. How do you still recharge or just get clarity of thought? Because one of the challenges is if you're always on, you might not have that chance to step back and reassess.

• 14:29Speaker 01

  You do need open time for creativity. I've noticed when I over schedule myself, I'm not nearly as creative then. And I think the cold plunge helped, right?

• 14:35Shaan Puri?

  Yeah. That was a quick, 60 second, 51 second reset we had.

• 14:40Speaker 01

  I think I stayed in for the full.

• 14:41Shaan Puri?

  Yeah, you actually did two plunges. That was pretty good.

• 14:45Shaan Puri?

  What is this typical schedule? Like, what's a day in the life? Because you got your fund, you got companies, you got all kinds of stuff, you got your podcast.

• 14:50Speaker 01

  My number one, my number one is 8VC, and 8VC has a build program, which is my favorite part of it. A third of our money now goes towards building new companies. So my favorite thing is like, the strategy for recruiting talent and then strategy sessions with, you know, to figure out what we're gonna build.

• 15:03Shaan Puri?

  Right. And so when you, you said, strategy for talent, what was the other one? Strategy for building the company?

• 15:07Speaker 01

  Yeah, you're basically, when you're, the way I look at, the way I look at opportunities for new businesses is you're looking for conceptual gaps in the world. You're saying like, here's, here's where this industry is now. Like, here's how this thing is working. Here's how this process is done in the economy. And here's where it could be if it was using like, the right new technology, or the right new incentives, or this, or this right effective cultures, or whatever it is that like, could be better about it. And the question is not just, it's actually very easy to find conceptual gaps in the world. I'll put forward, if you spend some time with like a few smart friends and you like study an industry and talk to people, you're like, you usually will find, oh, wow, this thing could be done this way. And so the harder question is not just what it could be done, but like, what's the path to get there? What could we put in place that would allow us to get it there? How do we build this thing? How much is it going to cost?

• 15:51Speaker 01

  How do we, how do we make the people want to? So there's a lot of things, for example, in like healthcare and hospitals that are done completely wrong, but it makes hospitals more money. So, so, so, so it's like, so even though it's like clearly not the right way of doing things, they're not going to just fix it. You have to find some way to get from here to there with the actors being willing to do it.

• 16:07Shaan Puri?

  Right. So let's do an example. So giving an example, either maybe something that you're this top of mind because you're thinking about it right now. Maybe it's not all figured out or a recent one.

• 16:16Speaker 01

  Yeah.

• 16:16Shaan Puri?

  So a recent one. Was a gap and a path that you kind of figured out?

• 16:18Speaker 01

  Hundred percent. So it turns out that there's tens of thousands of loading yards around the country in logistics. These are places where trucks come, they get in line, they drop things off, they move things around, they pick things up. And it's just, it's a pretty interesting area. And like the biggest warehouse company in the country is Prologis. And it turns out the founder's investor with me is based in, based in, you know, nearby in California. We're back there. And then it turns out there's like a handful of the biggest carrier companies like Ryder, you've probably heard of and others. And we actually sold a company to Ryder, so we're close to those guys too. And so, so because we knew a bunch of these guys, we started analyzing what can we do with AI to make your yards better? And what we figured out is that if you put just a couple of cameras in, at first we thought we need six, but just a couple of cameras, you can kind of watch and map out where everything is, map out how efficient the gate is, map out the processes,

• 17:03Speaker 01

  create accountability incentives for people to go faster, create ways of peeling the carriers if it's backed up to like, to use the other loading yards nearby, just like basic little ways in the margins of like making these things work better and, and, and timing them and creating, because you want a little bit of competition. People always respond well, you know, if you do it properly. And so we've mapped this out and we ended up founding a company with a really strong AI team. And, and we ended up kind of co-founding it with this, these like, you know, the warehouse companies, the carriers and others, based on their needs. And it's really cool because the way we built it with them is we have like a few hundred million revenue already built in that we can scale up into their, into their yards they already own. And then we can have something all the other yards want to use as well.

• 17:39Shaan Puri?

  Let's do more detail. So you, you're already kind of in adjacent to that world because you've done stuff. But how does the brainstorm work inside your office or wherever? Like when does somebody ask the question? Hey, could you use AI for these loading yards? Like, how did, like, take me all the way to that? Like, where does a question like that even come from? Where does the nugget of insight come from?

• 17:57Speaker 01

  So my partner Jake's in charge of logistics and supply chain. He's the, he's the kind of biggest driver here. And he's, you know, done some strategy sessions with, you know, our, our friends running these different companies. We're close to, we'll get together. I have a vineyard in Napa Valley and we like bring every year like the hundred top logistics CEOs. And we'll like, you know, drink and strategize and hang out, you know? It's like a good way to.

• 18:15Shaan Puri?

  And you're kind of asking them questions to try to find their pain points.

• 18:18Speaker 01

  What are your problems? What works? What are you spending money on? What are you seeing? And we'll bring like new entrepreneurs and we're backing and like get their take on things. And we'll bring what are called EIRs, entrepreneurs and residents, you know, who will talk with them and iterate on the idea.

• 18:29Shaan Puri?

  Right.

• 18:30Speaker 01

  So we kind of knew loading yards is a big thing. Let's go talk and iterate on ideas, what we could do to apply new things to it. And, uh, you know, in this case, there's a really strong AI team that happens to be in the UK that we'd met through other friends that like had worked on some really cool visual problems. We thought was very, very good for this and ended up recruiting them as co-founders, which, which worked out really well. So we're constantly on the lookout for like separately for talent.

• 18:49Shaan Puri?

  Like napkin math, you're like, okay, so if we can improve the loading yards by this, that's the size of the prize. And then that kind of clears a hurdle for you.

• 18:56Speaker 01

  Yeah, this is, this is, and you know, the other thing here, which I don't love, but it's definitely helpful is California had some new regulatory rules about things you had to actually map out as well. So they were going to have to do something anyway, but why not create more value based on, and then, but then like be the thing they, they put in when they're going to have to do it anyway in the next year.

• 19:11Shaan Puri?

  Right.

• 19:11Speaker 01

  Yeah, the rules coming up, there's like, you know, logistics has had a few of these things. There had some rule on telematics where you had to like, I think for purposes of not making people drive too long, you had to like record things differently, which was kind of an insertion point for a couple of telematics companies we helped back as well, which is the thing trucks, the trucks and stuff. So there's things like that where the regulatory thing was helpful too. And then, yeah, you just, you sit down, you map it out, you know, you've known the people for a long time. I mean, the, one of the unfair secrets of business is the more success you have, the more it's like a platform for a bigger thing you could do next time. And that's just the way it is. You just got to keep in the game. Cause like, it's like the, I think when I was really young, I used to think, oh, I could start a business and make a lot of money and then go to the beach. And then that'd be like fun. And that's like, that's not nearly as fun as the fact that once you've already started and successful once, now you get to do like bigger things more easily.

• 19:52Shaan Puri?

  Right.

• 19:52Speaker 01

  So it's like, it's like, and then that's why like, I think when you're young, partner with someone else who already has an unfair advantage, help them use their unfair advantage.

• 19:59Shaan Puri?

  Right.

• 19:59Speaker 01

  Something with them. Now you have all these extra unfair advantages. You could do it again. So this is, this is like, there's like this naive thing where like you're like this lone business founder. I think you can do that, but it's so hard.

• 20:08Shaan Puri?

  Right. Why play the game on hard mode?

• 20:09Speaker 01

  Yeah. Why play the game on hard mode? Why not? Why not find? And there's so many places in the world where there's unfair advantages. And like, and unfair advantage, what I mean by that is like, every time you have a success, you now have the respect and attention and understanding of all these people who will then help you do the next thing, right? And, and once you prove you're competent once, then, you know, there's, you know, I have a bunch more things I could be doing now. If I had more competent, like young people around me who want to be entrepreneurs and partner with me. We have a bunch of them, but we always need more because there's the only thing we lack. We don't lack ideas. We don't like money. We lack really talented, hardworking people with persistence, you know?

• 20:38Shaan Puri?

  I love that. That was so good. Can I come back for seconds? Can we do another example, another gap or another origin story of, of one of these ideas that, that I think is it makes?

• 20:47Speaker 01

  I'll give you another crazy guy. I mean, these, these are, these are, I'm, I'm taking big swings right now. So these are going to sound a little crazy, but like, I was pretty bullish on China like 15 years ago. A lot of us were, I'd like, I thought I was opening up. A lot of my friends there were like reading Milton Friedman and free economy stuff. I'm like, this is going to be great. There's so many smart people there. So we start making bets that we start working there, doing a bunch of stuff. And then this guy Xi Jinping takes over. And then like, I'm told by all these different senior people there, like Joe, yeah, none of the stuff that you want to work on here is going to be allowed. It can't be foreign. And I'm like, oh, that's too bad. So I just stopped working there as much. And then I kind of hear from them like terrible things are happening. And then a couple of them disappear. Then I hear he's making all these engineers work on defense. Like, okay, this is pretty effed up. I'm kind of, I'm kind of nervous about this now.

• 21:27Shaan Puri?

  Right.

• 21:27Speaker 01

  And we start mapping it out. At the same time, you know, we've done Palantir, started in 2003. So this is now like 2015, 2016. And I wasn't, I'm not running Palantir anymore, but I'm still an advisor watching it. And like a few of my guys there are noticing that the fence, the defense world in the U.S. has gotten to be like a lot more dysfunctional, a lot more broken. There hasn't really been, so what happened in defense is all these companies consolidated in the 1990s after the Cold War spending went down. So they all merged and became like these giant primes. And these primes started acting a lot more like government agencies themselves, like not super nimble, not super adaptive. Kind of like the way they get the contracts is by having the right lobbyists, not necessarily, but in the after that to convince con, we call it innovation in theater. They have to pretend they're innovating, but they're not necessarily great innovating because that's not, because they're so big, they have no competition.

• 22:09Speaker 01

  And so we're like, oh, this is kind of scary. All this stuff, like none of the best engineers are going into these primes. Their stuff's getting worse. Meanwhile, China has the best engineers. They're getting better. This is, we better do something. And so, so three of my best ex-pallater guys, they partner with Palmer, of course, start Androl. You've talked to him before. So, so I backed them early along with Peter. And I'm like, okay, guys, we're back in defense. Let's figure out what the hell else to do here. So we, so we basically mapped out like, what are 20 new possibilities in defense? I want, I want to find 20 of them just to see, and then we're going to choose what's the most important one.

• 22:36Shaan Puri?

  And by the way, is that something you tell your team? Like, come to the table. I want to hear 20 ideas.

• 22:41Speaker 01

  Well, you have to have like a guy whose job it is. You have to have a guy who's helping them. You have to have like, advisors who are able to like get them into the right places to talk and explore. But let's, yeah, let's talk to our, let's talk to our smartest friends in the space. Let's talk to our network. I want to hear, you know, you want to hear, you know, about 20 ideas of new things like, and I want to see where we think gaps might be. And we come back and there's like, eight or nine pretty good answers, a few things that are bad answers. But, but you know, we find some interesting stuff. And one of the areas that's pretty cool is it looks like there might be new possibilities in, in EMP, in electromagnetic pulse space. And it's really directed EMP, of course. You don't want to set one of these off and screw up all your stuff. But what this, what an EMP does is it fries electronics, right? And so it turns out that if you can direct these, what it is, that you're taking microwave energy and you're shooting it in a blast.

• 23:24Speaker 01

  You can actually turn things off. And the government has spent billions of dollars on this stuff, but they hadn't really applied any of the new, any of the new chips, basically at all.

• 23:31Shaan Puri?

  And you want that to protect against like drones, for example?

• 23:34Speaker 01

  That's one, that's one of the really good ways of doing it. So basically you can have a chip. You can, you can basically control power in very small time scales. You could take, you know, take, you know, the graphene nitride emitters and you could build this correctly with a top tower. There turns out there's like a co-founder who's a friend of a friend of mine from Stanford, who's a genius who helped figure a lot of this out also. And, and you could shoot down things like 10 times farther away. And, and you, you know, theoretically you could use this against missiles and turning their guidance systems off. You could use it against a truck coming to your base really fast. You just blast it. You know, it might be that the truck has a terrorist coming to shoot you and you want us to turn it off. It might be there's a pregnant lady. They're trying to get to the base to give birth. Like you don't want to necessarily have blown it up, right? So it's good to blast it and you're not turning a truck off. You're not killing the person. So pretty cool, like non-lethal way of like stopping stuff that's giving you trouble.

• 24:16Shaan Puri?

  Right.

• 24:16Speaker 01

  And, and long story short, we were able to. Put together money, put together a prototype and you know with about with less than $30 million in this in the second round. We got to the point where we were we fought our way into a contest against the other primes. And so so basically, one of the key things in government is like, we're always trying to get them to have contests. The primes do not want contests.

• 24:34Shaan Puri?

  How do we compete on merit, not on longevity relationships?

• 24:37Speaker 01

  I'm not gonna be better at playing golf with the senator.

• 24:39Shaan Puri?

  Right.

• 24:39Speaker 01

  But if you can let me into the contest, then maybe we can win, right?

• 24:42Shaan Puri?

  How do you convince them to do the contests?

• 24:43Speaker 01

  That you push the the Congress so they make laws to allow competition. You have there's competent generals, there's competent admirals.

• 24:49Shaan Puri?

  People want it, yeah.

• 24:50Speaker 01

  You know, thanks to Palantir and SpaceX, people had seen outsiders massively outperforming and they're they're more open to the ideas. So we're pushing things in the right direction.

• 24:58Shaan Puri?

  Gotcha.

• 24:58Speaker 01

  And and they say do this contest and like, they didn't really take us seriously because the other guys had really spent billions of dollars on this. Like, what can you kids do, right? It's kind of like the old mindset in the US, the 1950s, 60s is like, innovation is expensive. Outsiders aren't going to be able to do it. And that was true 50, 60 years ago, but long story short, we ended up shooting down the hardened drones nine and a half times further away than than the other guys. They actually had to use they had to use binoculars to like, watch us like, shooting them down really far away. And and people were just like, flabbergasted.

• 25:24Shaan Puri?

  Like, everybody was lined up and it's like, okay, we'll see who who performs. He's like, you're gonna need binoculars to see ours because it's gonna be out of range compared to whatever else is doing.

• 25:31Speaker 01

  I think I think there people are just totally shocked and and yes.

• 25:34Shaan Puri?

  That's Eperus, is that the name of the company?

• 25:36Speaker 01

  Eperus, Eperus is a cool name. Eperus was a name in Legend of the Bow of Theseus. Theseus started Athens and his bow had infinite arrows. And so this is kind of like a bow with infinite arrows because you can keep firing the pulses.

• 25:46Shaan Puri?

  That's cool.

• 25:47Speaker 01

  There are 10,000 of them.

• 25:47Shaan Puri?

  If it wasn't Palantir, like a Lord of the Rings reference?

• 25:50Speaker 01

  Palantir was Lord of the Rings, so Eperus is more is more more real mythology. Palantir is more in the fake mythology world, but no, I have we have quite a few things named after Tolkien and stuff. It's an inspiring story. The idea with Palantir, Palantir is a seeing crystals, right? And in the story, this is super dorky, but in the story, they're built by like, the elves of the uttermost west. And they're basically this thing created for the humans to get rid of the bad guys. But then 2000 years later, a bad guy takes over the technology.

• 26:14Shaan Puri?

  Right.

• 26:14Speaker 01

  And is using it for evil. And so the idea with Palantir is we thought. We're very civil liberties obsessed. We wanted to build it in a way that would like go after the bad guys, but then we got to watch the watchers and be really careful about how the technology is used because it's very obvious if you're doing something to kill the bad guys, that a bad guy could use this for something horrible.

• 26:31Shaan Puri?

  Right.

• 26:31Speaker 01

  And it's, it is a dangerous area. We believed it was a necessary thing to create and we, you know, we ended up eliminating thousands of terrorists. So we were happy with the results.

• 26:40Shaan Puri?

  So what's fascinating to me is that not only have you had multiple hits, but they're in areas that are different, but also just hard areas where I don't even, those are not even idea, I don't think about these like the logistics yards or EMP pulse technology. Like these are so in different domains. I'm curious, um, is that, uh, is that intentional? Meaning do you like, because most of the entrepreneurs around me in Silicon Valley were like, oh, B2B SaaS, you know, what's a problem? Oh, let's make a to do list app because I know that problem. I'm so familiar with it. Is it a strategy for you to go where to fish where other people are not fishing? Or is that just what happened?

• 27:17Speaker 01

  No, I think it's definitely, definitely a strategy of sorts where you don't want to build like yet another like restaurant app or yet another to do list app because it's like, that's what every other 21 year olds thinking about. Like, this is probably why I missed Stripe early on. It's we'd been at PayPal and I had to like see every payment app. There's like literally hundreds of payment apps. And I was like, oh God, you know, because it's like, because Peter would make me take the meetings after, but I didn't want to do it anymore. So it's like, no, you want to, listen, there's, there's parts of the world that are big parts of the economy that are very important, that are not as exposed to technology cultures. And so you want to kind of take your, our advantage is we have a really tough technology culture and let's figure out how to expose it to something that's not likely to have seen that before and then find ways to work together to fix problems.

• 27:55Shaan Puri?

  And what are some other ideas? Either, um, I want to either hear ideas that, um, you're not doing just because you can only do so many things at once, or it might be that would work, but it's too small for me, or it's, it's not like kind of using my, my current platform can do bigger things, but this happens to me all the time. I see ideas that somebody could do that. I'm tempted to do it because it's so clear to me, but it's like, That would be not the right game for me to be playing right now.

• 28:20Speaker 01

  There's so many things. If I had the right talent, I'd be doing more. You know, I do a lot in the wealth management world. I think that the process of starting a trust and like the actual legal workaround, this stuff could be very automated with AI. You can have like a smart lawyer and like a few smart engineers. You could like have a whole new trust company and a whole new like a state management company. We have SaaS software for state stuff you'd plug into. I have a lot of distribution for this ready, but I would need like the right engineers and AI people. And I'm not sure if it's bigger than a billion dollar or two billion dollar business, but it's like, it's still worth it, you know, and it saves a lot of time. So, but I'll give you a really big one I want to do, but I don't have the right people around me. Local government, we just sold OpenGov for 1.8 billion dollars. And in local government, there's a lot of lessons from this company, a lot of mistakes. It took us 12 years. Zach Bookman, the CEO, my co-founder, did a great job.

• 29:05Speaker 01

  We learned that you only can really do things they already have a budget for. There's about 90 things local governments pay money for software to do. And OpenGov does about 40 of them. So we learned this bitch really well. Like this is like a big, right? It's a lot of processes. And anyway, the idea is that there's trillions of dollars spent by local governments. And a lot of them can't find the right staff for certain processes. And a lot of them have people retiring soon too. So I think, I think a BPO, a business process outsourcing thing for certain tasks for local government, that is augmented by AI could be like just a huge business to basically help them with this. And I, right now, it's not a standard way they work. But I could see if you do it really well, it could become a standard way. And that's the kind of area where you can make tens of billions of revenue before anyone even notices you because it's such a big part of the economy. So that's another.

• 29:46Shaan Puri?

  So what would the first like six to 12 months of that company look like?

• 29:50Speaker 01

  You'd basically have to find early partners willing to trust you and work with you on outsourcing some, one of those 90 processes. And it'd be, it'd be something like where you're like augment their ability to do licensing and permitting faster. Or you're augmenting some of their grunt work on tracking their assets and asset management. Or you're doing something for their budget for them automatically. It's way faster. The CFO doesn't have to hire three people. They can only hire one person, which is you. Or something like that. But you have to go in and figure out what processes our city is even willing to let you do. And it's a very unnatural thing because it's not how they work right now. But it's one of those things where there's like a secular trend towards like, you know, local government not having enough money. So if you can find ways to save them massive amounts of money and make a higher quality service, there could be something there.

• 30:29Shaan Puri?

  Right. All right. I want to play a little agree or disagree game. So I want to say a statement and I want to hear you agree or disagree with that. So the first one is on on this idea of big swings that are solving like huge problems, mission oriented things versus like getting just getting your first win under your belt. A guy came on the podcast and he said, my theory is you first you go get your nut and then you work on your noble mission. And he's like, you know, you go and you develop your skills, you get make a few million bucks, you get personal autonomy. And then you should pick a noble mission, a noble quest and go on that. Agree or disagree with that philosophy?

• 31:05Speaker 01

  I agree. In general, I think it's a really good thing to do. You want to have a solid base before you do something. It's like a huge, crazy, risky quest. You don't want to be like poor for 12 years while you're while you're doing something if you can help it. I mean, I'm not saying that's going to be the path for everyone, but if you can do what he said, that's a really great way to do it.

• 31:19Shaan Puri?

  Okay, another one. A lot of people say that ideas are cheap, ideas are a dime a dozen, execution is everything. And I agree that execution is very important, but I think ideas really matter too. I think that project selection, picking the right market to go after is a is a huge lever. So I think that the execution is everything philosophy is BS. Agree or disagree?

• 31:42Speaker 01

  That's a tough one because I've seen a lot of good ideas with the with the they're actually aren't worth that much because they couldn't actually bring together the talent to do them. So I you do you it's necessary, but not sufficient. You do need both.

• 31:55Shaan Puri?

  Right.

• 31:55Speaker 01

  The execution is the harder part, but you're right. You can have amazing execution. And I've seen this and people going after the stupidest ideas and it's not going to yield something. So so you need both, but the ideas by themselves are not that valuable.

• 32:07Shaan Puri?

  Okay.

• 32:07Speaker 01

  That's what I'd say.

• 32:07Shaan Puri?

  Another one. Focus is a superpower. And I would say that like we were talking about this earlier. You you recognize the value of focus and just compounding one thing. But you've also done a variety of things. Agree or disagree that, you know, focus is the way to go. Focus should be the strategy.

• 32:27Speaker 01

  Focus is clearly the right strategy for the most successful people in the world. If you look at the wealthiest people in the world, they nearly all focused and compounded over a very long length of time. If you look at Palantir and Atapara, the two companies where I focus full time on them, they're my two of my most important companies. It's a I think when you're having impact on the world in different ways, sometimes it's okay to do different things. I think I think philanthropically, I think for me, coaching entrepreneurs, something I enjoy. I think I'm I think I'm obviously creating a lot of value right now. But I think I think as an entrepreneur, as a business person in general, it's you, especially if you haven't already had like a giant win. You should just focus and get that giant winning compound.

• 33:04Shaan Puri?

  You're friends with Elon. What's something you've learned from him? Or something you admire about him? Maybe that the rest of us don't know by, you know, we only know him from the outside.

• 33:13Speaker 01

  Yeah, I

• 33:16Speaker 01

  I mean, I guess I'd say I really admire his boldness and his like, obviously it's, it's, he's really good at focus. He's really good at saying no, even to friends about anything. It's just not like tied to what he's like really passionate about and focused on to win. And he's just really, really bold at like clearing like nonsense out of the way and clearing mess out of the way. And just like going right for the thing that that matters, right for the substance. So I think, I think most people in my life would be, think I'm maybe too bold or too direct or too extreme. And Elon's like a whole step further, which I think is great to see. I'm like, okay, I could do better at this.

• 33:48Shaan Puri?

  There's more here. Yeah.

• 33:48Speaker 01

  I could be, I could be more myself in that direction and I'd be more successful. You know, I'm obviously done very well, but, but, but I think he's a whole other level of bold. And that's something that it's good to see that for me because it reminds me that that's like, that's a good direction for entrepreneurship.

• 34:02Shaan Puri?

  You know, is he focused though? Cause he's got like five things, you know, he's got Twitter, he's got SpaceX, he's got Tesla, he's got Neuralink, he's got Boring Company, he's got so many things. What is, how do you square that? Is that, is it focus or is it?

• 34:15Speaker 01

  I mean, I think he was insanely focused for a very long time on, on the things he was doing and on scaling them. And I guess, I'm sure there were two companies for a very long time after doing one company for a very long time. And, uh, you know, he's at a level of success, again, societally where there's things that really matter for society that only he can do. So it makes sense. He was expanding. I think I told you, uh, earlier, you know, my partners are allowed to work up to six things at once. And I think when you're like coaching and like managing things and stuff, I think that's about the right amount. I think if you're just operating, you want to do like one or two at most.

• 34:47Shaan Puri?

  Right. Yeah. Last question, because I think we gotta go, but what? The whole, my whole thing when I come to an interview like this is what's the one question that really matters? Like, forget the hour, like, what's the one question that really matters? And all the questions I've asked you have been beating around the bush of this one thing. So now I'm going to ask you it directly, which is you have now created at, by my count, at least four billion dollar companies directly, probably more than that. I call that the entrepreneur's grand slam. You have done something that anybody who wants to make one successful company would be, would be envious of how, wow, how does he do it? You know, you see also a lot of other founders, you meet them through your fund or just people who probably come up to you. What would you say you are doing different than the average good founder?

• 35:34Speaker 01

  So I have some unfair advantages, right? And it's actually not that hard once you've been really successful to like to do it again relative to the first time. But what am I doing differently? I have a huge talent apparatus. So we have people at like dozens of universities. We have all sorts of things we do.

• 35:54Shaan Puri?

  What does that mean? You have people at universities? What are they doing?

• 35:56Speaker 01

  It's like you'll have fellows who apply. You'll have people who run your program there. You'll host parties and meet talents. You'll you'll have a certain playbook we've built since Palantir of knowing how to show up.

• 36:05Shaan Puri?

  So you have like a scouting department?

• 36:07Speaker 01

  Yeah, you have like a huge talent scouting department and works in different ways, different places and and it's really talented people. We spend a lot of time and each of our partners and I, that's our job is to scout for talent and to use our network. And the more wins you have as smart people, the more you get to meet their smart friends. And so so we have a huge advantage in talent, first of all, because that's really key. We have a huge advantage of like knowing the people who run a lot of big industries and like having good relationships with them, having them as advisors, having them as being part of things we've done where we can like understand what's happening in those industries, get quick feedback and iterate on ideas. Like, like one of the biggest mistakes founders make is they have an idea and they're afraid someone's going to copy it. They're afraid the idea is valuable. It's really dangerous to think that ideas are too valuable because then you just don't share them. You think that they're yours. And so one of our advantages is that is that one of the Peter Thiel thought experiments

• 36:50Speaker 01

  was imagine there's five founders who each have an idea and like four of them are like secretly working on it. And and one of them is like talking to everyone and iterating like which of the five is going to win, right? So it's clearly the guy who's iterating a ton. And so if five people have the same idea, we're able to have that same idea and then like iterate faster than anyone else because we know everyone running everything and we know how to get back, you know, how to know how to get to the right answer much, much more quickly. So not only do we have the best talent, but we are able to iterate ideas with people who respect us, with people we involve. And then whenever we start a company, maybe this is a mistake because maybe I could have had a lot more money, but I've always been like a minority owner of my companies. I've always been like someone who might have like, like when we start all the build program, our fund might take 20% and our and when my team and I might take 10%.

• 37:32Speaker 01

  So we might have 30 total and like maybe 35 or 40, but but like, but we have something where it's less than half and we're very generous with the founders, with the early employees, with the advisors, with the partners. So like when we start these things, Like just even from the beginning, I don't have to wake up in the morning being the only one worried about this thing. There's like, there's not authority smart people waking up who that's their focus and they're, and they're on it. And that's such a big advantage to like, have other people like obsessed over this thing. And our people who truly feel like co-founders, by the way, I think is one of the big mistakes. You're like, I'm the founder and you guys are the, you're working like, like, what are you getting from that other than your, other than your ego? Like I'd much rather, there's so many companies that people don't even know I'm the founder of and, and the people, and that's way better. Cause first they're not going to harass me about that stuff. And, and like, there's people who are proud founders who get to be

• 38:14Speaker 01

  out in the press doing it. And, uh, and, and they're, what they're going to sleep bored about this is their reputation and their focus.

• 38:20Shaan Puri?

  In the intro, I'm going to say something like this guy has started more billion dollar companies than anybody in America, which I think is an amazing claim to fame. Uh, but forget about a billion. Let's talk about a million. The name of the podcast is my first million. And I went and read a Quora answer that you did. Somebody said, if I want to make a million dollars, how should I invest my money? And you said something like this, you said, I'll pull it up. You go, if you want to make a million dollars, it's not about how you invest your money. It's about how you invest your time. And you said, uh, it's about how disciplined you are with investing your time. Um, how should somebody who wants to make a million dollars invest their time?

• 39:01Speaker 01

  You know, it's, yeah, it's right. You can't just make a million dollars from investing for probably the average person. Maybe you can't over like 50 years or something. My, my grandma passed away at 103 last year and she was a multimillionaire having grown up in the depression just from saving money and cutting coupons. And that could, that could work for a hundred years.

• 39:15Shaan Puri?

  Being thrifty.

• 39:16Speaker 01

  Being thrifty. Like that, that is a thing, like over a very long time horizon.

• 39:19Shaan Puri?

  I think you'd say like she bought one stock or something also like.

• 39:21Speaker 01

  My grandfather worked for Abbott and she held it for like 60 years. It happened to work really well. Great. You know, it's really good for my, for my cousins and their inheritance. But, you know, she was a wonderful lady, but you know, in general, that's not probably how you want to make, make money. You want to make money, especially these days. I mean, gosh, going back, back then it was probably a lot harder, but these days there's so many places with your time. You can learn how to help build things, how to help create things, how to help be useful to other people. And like, that's what you want to be doing. You want to be finding what are you passionate about? What are you good at? You have to figure out what you're good at. There's, you have to be willing to say, this is what I'm not good at. This is what I'm good at. And then who else is good at this too? Who I could maybe learn from, who I could be like, and spend your time, try to find a way to help those people, try to find a way to learn how their businesses work, be part of a business and growing it. And that's, that's how you see how everything works. And you know, if you're

• 40:05Speaker 01

  talented enough and that the people you succeed with, they're probably going to be able to help you do something new later.

• 40:09Shaan Puri?

  And that's what happened to you, right? That's how you spent your time. My understanding, if we, if we walk back in the journey, it's you're in college, you go to Stanford and you, you end up working at PayPal. You become an intern at PayPal.

• 40:21Speaker 01

  I tried a couple of times. They rejected me the first time I applied, actually.

• 40:24Shaan Puri?

  What happened? Why did they reject you?

• 40:25Speaker 01

  As a freshman at Stanford, and I remember being at a whiteboard with Max Levchin, and he probably doesn't remember this. He was the co-founder with Peter on the tech side and arguing about some tech thing.

• 40:32Shaan Puri?

  Was PayPal already a big deal? Is that why you wanted to work there?

• 40:35Speaker 01

  It wasn't that much of a big deal yet. Like Peter Thiel wasn't who he was. Elon Musk wasn't who he was. Like those, you know, their companies combined to start it. But I saw like all the smartest people, all these people I admired and all these kind of iconoclasts going there, like people who thought differently, you know?

• 40:48Shaan Puri?

  And so you, you try one year, rejected, try again the second year, you're in. What's your job? You're an intern at PayPal. What are you doing?

• 40:54Speaker 01

  Oh, it was not very glamorous at all. They basically had me setting up the PeopleSoft instance, which is terrible. But I, you know, I sat next to this guy. We were in like, so Roloff, who's now like a star partner, Sequoia, was the CFO. And we were kind of in his domain at first. And I sat next to this guy who was managing all the money on Bloomberg, like a treasury thing. So I got to learn finance and treasury. And then, and then what was happening is, is the big challenge in the company is we're going bankrupt because the Chinese and Russian mafia were stealing all of our money at the time. And so I ended up like hanging out after work and with these, all these guys who were like working on how do you stop the bad guys?

• 41:23Shaan Puri?

  Because PayPal's like a honeypot. It's got all the money.

• 41:25Speaker 01

  So like you go to 7-Eleven and the clerk there is like maybe having a, maybe having a bad year and like, you know, angry at capitalism, who knows? And so they're writing down secretly the numbers on the credit cards. And they write down 500 of these numbers. They can sell them each online for five or 10 bucks. The Russian mafia is buying them up. And then all of a sudden you get a chargeback that says $200 on PayPal to something. And you're like, I didn't do that. So you, so you, so you charge it back and then PayPal's left with the bill.

• 41:48Shaan Puri?

  Right.

• 41:48Speaker 01

  And this was like costing PayPal several million dollars a month. And a lot of our competitors went bankrupt. And so we got to learn at the time how to basically stop the bad guys, which was a kind of a fun problem, so.

• 41:56Shaan Puri?

  And so I like what you did there, which is one of the pieces of advice I gave in, on the pod is you got to work on the A plus problem at any company. So regardless of what your role is, you should try to at least know what is the A plus problem of this company right now?

• 42:06Speaker 01

  Yeah, try to be helpful to the real problem.

• 42:08Shaan Puri?

  And then try to be helpful on that. That's like, because that's the needle mover and that's where you're going to get the most learning, the most action.

• 42:13Speaker 01

  And I didn't necessarily do this on purpose. I actually wanted to quit at first because the PeopleSoft thing was so dumb and so horrible. I couldn't figure it out. And my dad comes, if you don't quit, just like do what you can to be helpful. Otherwise there, so that was a good dad advice.

• 42:24Shaan Puri?

  Yeah, good dad advice.

• 42:24Speaker 01

  An 18 year old, yeah.

• 42:25Shaan Puri?

  You, uh, I almost quit college for the same reason. And my dad was like, cause I was like, you know, I'm pretty mediocre here. I was like, I'm used to being good. Then you go to a good, like you go to a top school.

• 42:35Speaker 01

  You didn't feel like you were one of the best.

• 42:36Shaan Puri?

  Now I'm just, these were all the best high school kids. Now I'm kind of in the middle. So I was like, you know, it's too expensive. Maybe I shouldn't be here. And he's like, that's exactly why you should be there.

• 42:44Speaker 01

  You want to be challenged.

• 42:44Shaan Puri?

  You want to be surrounded by people who are better than you.

• 42:47Speaker 01

  So one of the things Alex Karp had an insight on, my co-founder Palantir, who was really good, is you can't really appreciate a talent unless you're within two standard deviations of it. So you think of talent as being on a normal curve for any typical typical skill. It could be for math, could be for podcasts, whatever it is. And like, so you kind of have a natural level of talent. You could shift slightly. And so the very best people in the world at something might be fourth or fifth standard deviation. But if you yourself are second or third standard deviation, you could at least start to appreciate that. Whereas if, if, if, let's say you're not great at physics, I don't know. If you meet like Albert Einstein versus a top physics professor, you're gonna have no idea which one's Einstein. Right? So it's the same thing in any other area.

• 43:19Shaan Puri?

  You can't even differentiate.

• 43:21Speaker 01

  Exactly. But once you can recognize that talent, that lets you then harness it for things you're building and doing. So it, so it actually is very useful to be very good at something, even if you're not the best.

• 43:28Shaan Puri?

  Right. Okay. Cause you can notice what.

• 43:30Speaker 01

  Cause you can understand.

• 43:30Shaan Puri?

  This is actually the five standard deviation talent.

• 43:33Speaker 01

  I was good enough at computer science. Like I got able to get A pluses at Stanford. I had friends who were way smarter than me at computer science, but I was good enough to know who those kids were and how to harness them and how to hire them. Right? So there's things like that.

• 43:42Shaan Puri?

  That's interesting. So now you, the next thing you do, you go and you start Palantir, which.

• 43:47Speaker 01

  Yeah. Well, actually, I worked for Peter's family office for a while and he was the first investor in Facebook, which is his family office. There's tons of crazy shit going on. It was really fun. It was like, you know, a really expensive restaurant that went bankrupt. There was like a spam company. So I was starting, there is, there's all sorts of crazy shit. And I was there and like, Peter's a genius, but he's not really a manager. So I started like, I was like, oh, okay. I'll just, I'll take charge here. So I started hiring people with him and, and kind of helping him run things. And some of the older guys like, who the fuck is this 21 year old kid? So we ended up working on a project that summer to map out, like, what if we taken all this stuff we did at PayPal, front of fraud? And we, and we generalized it to like, for the intelligence community, what would that look like? And, and my roommate, Stefan and I from Stanford design, we're like sketching up all these cool products and we're building prototypes. And that was kind of the genesis of Palantir.

• 44:31Shaan Puri?

  Oh, interesting. Okay. So you guys, you basically had the PayPal showed you a bit of a bit of the problem.

• 44:37Speaker 01

  It's like, they showed us a solution to a problem. They're like, wait a second. Because basically what happened is they got to know all these guys at PayPal. They're in the Secret Service and FBI. Those are the two groups that are in charge to answer fraud of like arresting the mafia guys. And these guys would come to us and ask us for advice on other things because it was like, you know, it's kind of fun. It's cops and robbers. Like every, I don't know if every young man likes this, but you know, the intel world, of course, you want to help get the bad guys. So like, so like we were teaching them about cyber fraud or whatever you call internet fraud in 2000, 2001. And they start coming to us and then nine 11 happened. And then the government started spending billions of dollars on like supposed solutions to catching bad guys. Watch what's going on. And we knew these guys and we watched what they were spending money on. And we were like, oh my God, this is stupid. Like this is way behind Silicon Valley. Not that like I'm so smart. But Silicon Valley itself had gotten way ahead just because it brought talent from all over the world.

• 45:21Speaker 01

  So whatever was being done, what we call like the Beltway, basically in DC with the old integrators. They're still doing stuff from 20 years ago. And we're like, oh my gosh, this is like our nation's under attack. And we're wasting billions of dollars on stupid shit. So that's, that's when we said, okay, let's get together. Let's draw up like what we could actually be doing here if they did it better.

• 45:37Shaan Puri?

  What happens next? So like, walk us through. Cause okay, we see today. I think I looked this morning. It's a $50 billion market cap company. That's amazing, but it's also 20 years later. So if we rewind the clock to where most of the people who are going to listen to this are early stage. Trying to figure things out, unclear which pathway to go, unclear if this is even going to work. Take me back to that. What, what did you do to, what was it like? And how'd you figure out like the first few steps?

• 46:03Speaker 01

  Well, there's lots of different ways to build successful companies, right? So I don't, I don't ever want to be like, this is the path. But our path was, we were kind of watching all these companies come out of PayPal. So I was very lucky to be sitting there seeing like these guys, you know, doing iron port and LinkedIn and YouTube and Yelp and et cetera. So like watching these, and the ones that I could tell were more successful. That was obviously the time where the ones that are attracting the very best engineers is almost like engineers were lined up trying to get into these companies. Right? So you think like a lot of times people have a business idea and you're like, how do I hire an engineer? And like, and like, it's the opposite. It's like the ones that are crushing it. It's like a nightclub where the engineers wish they could follow those people in. And, and, and just those cultures, something about them, it's just the whole, it was just so dynamic. It was like, They're able to try 10 times as much really quickly. You can just kind of tell like, wow,

• 46:45Speaker 01

  like you can be really smart at business, but like if you could try like 10 times as many things, like you can be like slightly less smart business and still succeed, right? Cause you could iterate. So, so like, okay, we need to build somehow a really top engineering culture. Like that was like one of our core principles early on is how do we, we used to say the engineer is king. Like, how do you, how do you have a culture that attracts the very, very best and, and respects them and like makes them partially in charge of the company, you know, with, with you. And so we spent a lot of time on that. Um, it's a little bit chicken and egg. We obviously, I was lucky to have a bunch of my friends from growing up who are national math and chess champions and all these smart guys. And like, so we bring this really core culture together, convince some of these really top PhDs from MIT.

• 47:23Shaan Puri?

  What was your pitch to them? Like what's, what was the quick version that was getting them excited?

• 47:28Speaker 01

  Uh, it's.

• 47:30Shaan Puri?

  Cause you need a magnet, something to bring the talent in.

• 47:33Speaker 01

  The government's spending tens of billions of dollars in this area. They're way behind what we figured out how to do in Silicon Valley. It's clear there's going to be a multi-billion dollar company that solves this problem. And they described the problem to us. This is a very hard technical thing that if we have the best engineers, we're going to be able to do it. And we're iterating closely, you know, with the national intelligence, with defense agencies, and you get to go and solve this problem. And if we succeed, we're going to save thousands of lives and we're going to protect civil liberties. That was, that was, that was a high level. It's like, you know, it's a fun, big mission.

• 48:02Shaan Puri?

  One of those things you said is we're working closely with these agencies. Like, how easy was it to work with them? Cause you know, you're young. How do they even take you seriously? You're young and you're different. You have a different approach.

• 48:12Speaker 01

  Yeah. So, so maybe it wasn't entirely the case that they're iterating as closely as, as I'd like them to be with us for the first year or two. So Alex Karp was very good at this. Alex was, Alex was at first just an advisor to us, helping us. And then, and then Peter kept trying to like get us to hire a CEO. Cause Steph and I were 21 and you couldn't really have a 21 year old running something, working with like senators and the defense department. But like these guys, these generals or former admirals would come in and they just did not understand tech culture. And I'm sure they were great guys. They just wouldn't have fit at all with us. And so finally Alex Karp had been like helping Peter raise money for things. They're friends from law school. And you know, he was a, he was a PhD in philosophy in Germany and in Europe, a lot of the billionaires. Like to pretend they're philosophers is like the high status thing to do.

• 48:53Speaker 01

  Kind of like here. They like to pretend they're podcasters or something. I don't know. But so basically, basically like he knew all these wealthy people. And so he started advising us how to talk to them, how to meet them, how to think about how institutions worked. And he had always like casting things in terms of like how you had to approach people to take you seriously, which

• 49:09Shaan Puri?

  What do you mean by that? I don't understand.

• 49:10Speaker 01

  Like if we show up and we're like these like quirky 21 year olds in Silicon Valley. That's like, that's like, that's the wrong casting. Whereas if you show up and you walk in the door with you, the former head of the CIA. And, and Peter Thiel's made the intro after being a PayPal. And another one of his friends who's senior has like, has explained to them that this is a project that they're helping that's going to help in this way. Based on this big advancement made in Silicon Valley. And they've been, and that they've already been talking to a bunch of people at the FBI and et cetera. And they want your feedback. Like that's like, that's like a high status way to come in the room.

• 49:40Shaan Puri?

  Right.

• 49:41Speaker 01

  Whereas if I come in the room and be like, look how smart I am. Look how right this is. This is better than what you're doing. Like, look at how smart it is.

• 49:45Shaan Puri?

  While you're wearing a hoodie.

• 49:46Speaker 01

  Yeah, exactly. They're like, they're like, I guess, I guess a lot of young people maybe underestimate the substance is important, but it's you can't lead with substance because substance is not taken seriously. So you have to have the substance to win, but you have to have all the trappings of why they're taking it seriously and why they're comfortable doing it and why they're, you know, why it makes sense. So anyway, there's these things like this about how the world works and, and who to talk to in this institution, who to get your help. So Alex just had this wisdom about like people and institutions and how to navigate that like the rest of us, we have the best tech culture. We didn't have that. And so we actually convinced him to pretend to be CEO for a few years. So that, so that Peter would stop trying to hire like a really like senior, like military guy. But then he was such a good CEO, then he actually, he actually was, he's still CEO 20 years later.

• 50:26Shaan Puri?

  Right.

• 50:26Speaker 01

  So it worked out.

• 50:27Shaan Puri?

  And you've mentioned Peter. Peter was not active day to day necessarily.

• 50:30Speaker 01

  No, but he was critical for the company.

• 50:32Shaan Puri?

  What was he doing?

• 50:33Speaker 01

  Peter was like, first of all, he's the financial support. Then no one would give us crazy kids. Like I told you, there's always crazy projects going on. Like a lot of people around him are like, this is the craziest thing you're doing. Like it's one thing to waste money on a restaurant, but like you're sending these kids that pretend to be spies and build things. And tell like, what are you thinking? There's no such thing as a company that does this. So, so like you have to give them credit for like being willing to bet on a crazy idea.

• 50:51Shaan Puri?

  He put a lot of money into it, right?

• 50:52Speaker 01

  Like it was several million dollars early on, which to a point, which is like, and then, and then we had, then he was fun. Started putting things alongside others. But I mean, yeah, that's like, that's a huge amount of money. For like crazy kids is what are we doing? And and then like Peter was really good for strategy. He was really key on, I think one of the most important things is he stopped us from a couple of early partnerships. This is one thing that people screw up a lot with startups. A lot of startups, when you're getting going, you want to like, you get really excited about some partnership on the table and you think it's going to really help you. But but a lot of partnerships will cap your upside. A lot of partnerships will limit your ability to iterate and to try other things. And I think because he had the experience and he was going for multi billion dollar win. He was really able to like steer us away from a lot of big mistakes really.

• 51:31Shaan Puri?

  Like what would have been a partnership that would have been maybe.

• 51:34Speaker 01

  Like we would have like spent like all of our time selling our interface in Europe to give them all the rights to it. And we would have had to fly over there and support things they were doing. Or this is like random things that like sounded really good. Cause when you're getting going, you're desperate for that first 500,000 million revenue and stuff. And like, but you have to make sure you get it in a way that's going to actually scale them to something much bigger. That's not like a mess that's going to distract you.

• 51:52Shaan Puri?

  Right, right. And Peter is, he's an interesting guy for sure. He, you said restaurant, curious like.

• 52:00Speaker 01

  I mean, there's everything, I think. So this is, this is like not unique to Peter, by the way. This is a really common rule is that whenever someone becomes very successful for the first time, they usually become more expansive if they're an entrepreneur. I mean, all of us, we like to build things or we like to create things. And so it's once you have success, you're like, okay, I'm really good at that. I probably could be really good at these six things as well. And then I think we all forget, okay, the reason I was really good at this first thing is because I was like obsessively working on it for 80 or 90 hours a week. And I brought like 30 of my smartest friends into it and we all iterated like crazy. And we almost died multiple times and we barely made it work.

• 52:31Shaan Puri?

  You kind of forget that.

• 52:32Speaker 01

  You kind of forget that part and you're just like, oh yeah, I did this. And you're just, so you do all these things.

• 52:36Shaan Puri?

  It's not my fingers.

• 52:37Speaker 01

  Exactly. Like we're going to do this, this, this, this. It's like, it's like playing Risk, you know, where you're conquering. And like, it turns out that's not, that's not a good way. But this is what I've seen almost everyone go through this, like unless I'm lucky to have watched multiple of our friends go through it. So I still made the mistake in different ways, but you, but so, so there was very expansive and there were some things that maybe didn't make as much sense. And, and then, and then of course, but you know, he's so freaking smart that some of them did make a lot of sense. He wrote the first check into Facebook at that time. So I mean, give me a break, you know, you can, you can, I mean, everyone in venture is not going to have a hundred percent hit rate. And so, so you learn from your mistakes.

• 53:05Shaan Puri?

  Were you around when he wrote that check into Facebook?

• 53:07Speaker 01

  Yeah, I mean, I get no credit for it and like.

• 53:09Shaan Puri?

  At the time, did it seem like a big deal or was it just like one of many things he was doing? It was unclear that that was a. That that was

• 53:15Speaker 01

  It was one of it was one of many things. They seemed particularly smart and interesting. And I, you know, I was, I can't say I thought it was gonna be as big as it was. I don't think anyone realized that, but, but it was, it was clear they're really smart, really interesting guys who are very aggressive. And so it was, it was a fun thing to be exposed. So I think one of my good friends who actually helped Peter write the check is played in the movie by, by an African American guy, I think, which he jokes about, but it's like, it was a good, it was a good time to be there. It was fun.

• 53:36Shaan Puri?

  He's like a five, four white guy.

• 53:38Speaker 01

  Exactly. He's a little Jewish guy.

• 53:39Shaan Puri?

  That's the ultimate compliment.

• 53:42Speaker 01

  Sorry, James, no credit for you.

• 53:44Shaan Puri?

  If anyone out there wants to rewrite me as like a super handsome black guy, I would love that. That'd be amazing. Thank you for doing this.

• 53:49Speaker 01

  Awesome.

• 53:49Shaan Puri?

  Uh, thanks, Sean.

• 53:50Speaker 01

  The highest compliment, which is, I learned a lot today. Uh, that's my goal with all these is what are some of the things that, you know, a couple of golden nuggets that, that come out of this. So thank you so much for doing it.

• 53:59Shaan Puri?

  It's fun to get to know you.

• 54:00Speaker 01

  Yeah.