Is the U.S. Losing Its Edge ?— Here’s How We Win It Back | Joe Lonsdale PT 1

On today’s episode of Impact Theory, Tom Bilyeu sits down with Joe Lonsdale—the prolific tech founder and investor known for co-founding Palantir and for building solutions at the intersection of technology and national defense. As concerns mount about America’s readiness in the face of a rising China, Joe shares firsthand insights from decades at the forefront of defense innovation, higher education reform, and the struggle to revive meritocracy in our institutions. You’ll hear how Joe went from a “naive pro-China camp” to sounding the alarm about CCP crackdowns, corporate espionage, and why our bloated, slow-moving government and defense sectors are failing to keep pace with adversaries abroad. From empowering the next generation of courageous leaders to building autonomous ships and anti-drone tech, Joe reveals what it will take for the U. S. to reclaim its competitive edge. SHOWNOTES 00:00 China: Government vs. Tech Aspirations 03:02 Founding Palantir Amidst Early Challenges 09:33 Merit-Based Immigration Dynamics 11:32 Cultural Bias vs Merit Concerns 13:17 "Merit-Based Hiring Advocacy" 16:59 US-China Conflict in Biotech Innovation 22:34 Merit Ignored: SpaceX and Paler's Rise 24:49 Palantir's Unexpected Success 27:20 "China's Rising Manufacturing Dominance" 31:05 Efficient Engineering under Scarcity CHECK OUT OUR SPONSORS Vital Proteins: Get 20% off by going to https://www.vitalproteins.com and entering promo code IMPACT at check out Monarch Money: Use code THEORY at https://monarchmoney.com for 50% off your first year! Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact iTrust Capital: Use code IMPACTGO when you sign up and fund your account to get a $100 bonus at https://www.itrustcapital.com/tombilyeu Mint Mobile: If you like your money, Mint Mobile is for you. Shop plans at https://mintmobile.com/impact. https://mintmobile.com/impact DISCLAIMER: Upfront payment of $45 for 3-month 5 gigabyte plan required (equivalent to $15/mo.). New customer offer for first 3 months only, then full-price plan options available. Taxes & fees extra. See MINT MOBILE for details. Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

• 0:00Tom Bilyeu?

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  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Taylor Brands and get started on your business today. This is a paid advertisement. America is in danger because for decades merit was exchanged for fairness. It's a beautiful impulse, but a terrible strategy. Our institutions got bloated, dumb, and soft. And culturally, we lost the will to build right as China became a global powerhouse. While the West tore itself apart, China played the long game,

• 1:27Tom Bilyeu?

  assembling the factories, the energy, the refineries, and the weapons needed to win any kind of war. While most slept, today's guests saw it coming and reacted. Joe Lonsdale is one of the most prolific billionaire tech founders, and he's attempting to safeguard America's future. He's building defense technology to take down drone swarms, autonomous ships to control the seas, and a new elite university to train the next generation of courageous leaders. This isn't politics, it's preparation. To discuss the threats and the solutions, I bring you Joe Lonsdale.

• 2:00Tom Bilyeu?

  You've really been heads down on defense tech, founding a university, preparing for a world, quite frankly, where China may no longer just be a rival, but an open threat. What did you see that made you realize we're not ready?

• 2:14Speaker 01

  I was in the naive pro-China camp 15, 20 years ago. I love working with the talent in China. There's so many great people there. And none of us knew for sure when Xi Jinping came on, he was going to be this bad. But it quickly became clear that we weren't allowed to build things there and that this guy had no interest in free markets and no interest in being our friend. It became clear he was a real communist. And you know, a lot of our friends there were being forced to have their top engineers work for the military. People started disappearing and lost a lot of friends who had worked between the two countries. If you were wealthy and successful and Chinese and you didn't agree with CCP, sometimes you died in your sleep in your 40s.

• 2:53Tom Bilyeu?

  Were there any commonalities in terms of the people that died in their sleep? What they were working on?

• 2:59Speaker 01

  One of the biggest things with the crackdown that was maybe just a few years ago was it had become a lot cooler in China to go work in tech. And that sounds normal to us here, but that's not how it was there. For 20 years in China, the brightest kids wanted to be in the government because the government were the most powerful. They're the wealthiest. And so really like having the civil service exam and the top smart people work for government. But government was becoming less and less cool because tech was becoming a place to make more money, work on harder problems. And I think Xi Jinping got really jealous of these guys. Some of them would speak out against them. Some of them would say they're the powerful ones. And so I think he decided to take them down a notch and really eliminated dozens of them just for the fact if you're going public with a billion-dollar, multi-billion-dollar company you created and you didn't agree with the government on everything

• 3:44Speaker 01

  and you told them, no, we want to have some of our data outside of China, if the stuff is outside of China. Like those guys just disappeared and the companies got back into the control of the CCP.

• 3:53Tom Bilyeu?

  That's crazy. Now, You've been working in defense for a while. What was it that first made you go, hold on a second? Like, we've really got to start looking at US's ability to defend itself. Was it about China? Or was it just a general sentiment?

• 4:09Speaker 01

  Well, you know, my very first company I started in defense was Palantir, which was 22 years ago. And to be honest, that was at a time when I was still somewhat naive about China. We knew long term they could be a problem. I didn't think it'd be this quickly. The challenge then was really Islamism and was really the terror attacks of 9/11 and the fact that there were several thousand kind of people that wanted to do us harm and that were planning to do us harm again. And so that was such a major issue. And also that the US, after the Cold War, had basically started, you know, really, really to decay in terms of our defense sector, but also in terms of our software sector. So when I was at PayPal as a kid, you know, the bad guys were the Chinese and the Russian mafia. You had to stop them from stealing your money. And we had to build all these advanced new systems in Silicon Valley,

• 4:53Speaker 01

  right around 1999, 2000, 2001. And there were a lot of big breakthroughs for how you go after these guys, how you stop fraud, how you do investigations with tech. And after 9/11 happened, the US government spent tens of billions of dollars on its own software. But it was all done with these contractors that were basically from the 1980s. And so it was all stuff that was 20 years out of date. It was way behind Silicon Valley. And my friends and I said, wait a second. This is violating civil liberties. It's not actually even working to catch the bad guys. It's a joke compared to what we're doing in Silicon Valley. We got to go help these people and defend our country.

• 5:25Tom Bilyeu?

  Elon jokes a lot about, hey, really, I'm just tech support here in my Doge capacity. How real is that? That sounds like you guys put your finger on that a long time ago, that we had these decaying systems. Is that like a primary threat for us?

• 5:39Speaker 01

  It's a major problem for the US government in so many areas. You know, I'd separate it out a little bit. So America had the best and brightest, you know, people in the defense world for a long time. We had the top companies in the 20th century. We were completely dominant, right? At Operation Desert Storm in that first Iraq war in the early 90s. So much so that I think a lot of us, like our whole view of the US is like, yeah, we're number one and we're way ahead. And the problem was, is that after that, Of course, budgets had to be cut after the end of the Cold War. And so you had this massive consolidation where all these companies kind of emerged as what we call the primes. And so these like eight or nine big companies came from a merger of like 70 or 80, you know, smaller to medium sized defense companies. And then you had the tech bubbles.

• 6:22Speaker 01

  You had all this really cool opportunity for great engineers. And so a lot of the best engineers left the primes to go work in tech. And then these things just started to decay. They've really become like bureaucratic arms of the government. And so, so, so the defense part has just gotten more and more broken here. But the other really important point is that American government was really competent in the mid 20th century. It did some things that no one else could do. We didn't, you know, we fought the two world wars. We went to the moon. It turns out that we used to have really hard tests to run things to the US government. So if you go, let me go back a little bit. In the 19th century, the government grew a lot after the Civil War. Abraham Lincoln created a lot of new departments. Central government all of a sudden became like a much bigger thing in the 1860s and 70s. And by the time of 1883, it was like, it was a mess.

• 7:06Speaker 01

  Everyone agreed this is a mess because whoever wins the presidency just brings in all their friends, all their cronies, their stupid cousin Vinny, whoever else. They're all getting paid a ton of money just to hang out in DC and not get anything done. So they said, guys, we need to have tests. We need to have merit. We need to actually say that people running things need to be really smart. So we put in these tests with the Pendleton Act in 1883. And these tests were there all the way through the moon landing, through everything. And then come the late 1970s, our country has become very politicized around affirmative action. It turns out these tests have different results on average for different races. They weren't racist tests, by the way. Everyone agreed that the tests actually measured your performance. But they said, despite that, the activist courts on the left said, no more tests. So around 1980 or so, they threw out the tests.

• 7:50Tom Bilyeu?

  I didn't know that.

• 7:51Speaker 01

  And then, by the way, they didn't just throw out the test. They made it almost impossible to fire people. They put in like massive protections where it's really hard and slow to fire people. And so, starting in 1980, our government is not able to do tests anymore, not able to do merit. It just starts getting dumber slowly over time, dumber and dumber and dumber. So for 45 years, our government's been getting dumber.

• 8:09Tom Bilyeu?

  That is interesting. One of the great revelations of my adult life, and this actually bothers me, but is the, the degree to which intelligence matters.

• 8:21Tom Bilyeu?

  What role do you think intelligence plays? Full stop, whether you're trying to improve the government, whether you're trying to be the baddest kid on the international block, or you're trying to build a company?

• 8:30Speaker 01

  Yeah, no, this is a really important point because obviously intelligence isn't everything. I think integrity, I think faith, I think why you care about the world matters, I think your motives matter to help people. But if you actually want to be effective at whatever those motives are, intelligence is absolutely central. Merit is absolutely central. If you look at the very top companies versus an average company, you have the best and the brightest. I mean, Palantir started off with a bunch of these math champions and chess champions, just like the best people out of the PhD programs at Stanford and MIT and other places. And they brought their smartest friends, who brought their smartest friends. And that's just a huge advantage in the tech world with the very, very top companies. You don't see just like average people there.

• 9:11Speaker 01

  You see just extraordinarily bright minds and that, you know, that three, four, fifth standard deviation of skill. It's the same way, by the way, if you want to have the Oakland A's be a top baseball team, if you want to have a top basketball team, you can't just have an average guy on the team. You need the very, very best, you know, the top merit in that area. That's how you win. And in some cases, it's a skill and it's sports and other areas. In some cases, it's IQ and IQ matters a lot for what we're doing.

• 9:37Tom Bilyeu?

  So what went wrong? How did, as a country, we go from we're testing people, we want merit to not? And I think everybody will hear that question, knowing we're a little bit on the other side of this now. The pendulum is definitely swinging back. But to protect against that decades-long problem, define it for me.

• 9:56Speaker 01

  Problem is if you focus on these hard tests, if you focus on merit, then you get a very different demographic result. And this is just the nature of it, right? And this is where the country is. You're going to get more Asians, more Indians and Chinese and more Jews and then more white people. And you're going to get fewer of other groups. And that's just where we are right now. I'm not, this is not a value judgment. That's just the, that's just the data very, very clearly. And that's going to be the case.

• 10:22Tom Bilyeu?

  What are they doing right that we can replicate or learn from? Is it just there are so many Chinese and Indians that they're likely to have a ton of geniuses? Obviously, that's Doesn't work for Jews because there's so few of them.

• 10:35Tom Bilyeu?

  But there is something and is it replicatable?

• 10:38Speaker 01

  I think you have to realize how immigration works. It's not just the immigration is like this magical thing that just happened. Like the people who came to the United States from India, from China, tends to be a lot of the brightest people than the hardest working people. You have places with over a billion people and it's a very good selection effect. So how do you get out? How do you go to a place where you know you're going to have to work hard? And how do you be smart enough to get there? The classes of people who came and who brought their friends and family. Turns out we have very, very strong immigrant culture from those places. There's different ways, different people came to the United States. It's very politically incorrect, but, but, but you know, if you, if you're paying people in Haiti, who are desperately poor and you're giving them free plane tickets and you're giving them cash cards with $10,000, $20,000 on them.

• 11:22Speaker 01

  As the last administration was for hundreds of thousands of these people, who, you know, that those are not going to be the most excellent immigrants versus people who figure out how to come here themselves. Right? So I think, I think things like that are politically incorrect, but you use a logic to piece through it. You start to get a sense of, of why there's different results.

• 11:40Tom Bilyeu?

  After the break, Joe shares how China is stealing our biotech advantage. You don't want to go anywhere.

• 11:46Tom Bilyeu?

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• 14:02Tom Bilyeu?

  All right, we're back. Let's get into it. So there's a great quote that all it takes for evil to reign is for good men to remain silent. How much of where we got to is that? Do you think people saw like, hey, wait a second, getting rid of merit is really stupid? Or were we all under some mass delusion?

• 14:22Speaker 01

  This was a major legal, political battle at the court level. So what happened is that our country was set up by the founders to have Congress be the most powerful part. And the courts were supposed to be a check that interpreted the constitution. What happened is there was a group on the left that were what are called activists. They had a different view of the world. They said, we're going to use the courts to push our vision. And, and they got a lot of people in there and then they used the courts and it was a big argument at the time. A lot of people on the moderate side. The right side said, this is insane. It's not the role of the courts. They said, this is dangerous. You're not letting us do what we're doing to hire the best and brightest in these areas. But you know, it turns out that even then, the legacy media was more biased kind of to go along with the left and not really,

• 15:05Speaker 01

  not really call out this crisis and not really echo the worries of the right. And so the left won at that battle. And, and this is a consequence of what happened with our culture of the left winning at that battle and not letting us consider merit in government. And even today, it's like, obviously broken, but they don't talk about it that way because it's too offensive, I guess. But, and by the way, it's like, there's dumb white people, by the way, this is not a racist thing. Like, if you don't have tests, you get dumb everyone.

• 15:27Tom Bilyeu?

  I've met a few.

• 15:28Speaker 01

  It's like, yeah, yeah. There's, but I mean, the government especially, it's like, it's like, it's not that just like, it's not, this is not like a racist thing. It's just like, you need tests, otherwise the, all the wrong people will get in and, and, and all the wrong people become leaders. And it becomes very political. So here's what happens. If you don't have a merit based system, instead you have like a political virtue signaling based system. And so the people who get ahead are the ones that are the best politicians. They're the ones who signaled to their tribe. And so a lot of this like DEI, ESG, like virtue signaling stuff is like them signaling that I'm on your team. I'm safe to promote, like I'm part of your political group. And things become a lot more tribal. Humans are naturally tribal. So if you don't have these merit based systems, you get the tribal based systems instead. And so you have in our government, these massive tribal based things going on that are all around these virtue signaling.

• 16:14Speaker 01

  And so, yes, the pendulum in, in public has swung back away from that stuff. But those people are still running all these departments. So it's, so it's a mess.

• 16:21Tom Bilyeu?

  Okay. So if we've got some institutional problem where we've got activists that are finding their way into positions that are really going to influence policy, and we've got a national narrative problem. How do we begin to unwind this?

• 16:37Speaker 01

  Well, I think this is what you see, people like Elon and Doge and others, you're trying to do with President Trump. Is first of all, you have to fire a lot of people who should never been there in the first place because they've over hired. And then they have a lot of bloat. And there's a lot of just people who are not there based on merit, based on skill. So you have to replace a lot of people and then you have to ideally put back in tests. I mean, that would be the ideal thing to do. And, you know, I think. This Supreme Court, if they could take a proper case to it, would very clearly affirm, wait a second, we do need merit in this country. It's not against any kind of law to have basic tests and to have skills that are required to run our government. And you have seen the executive order on this already to stop using disparate impact, right? So, so to understand what happens here, there might be like a fire department in a small town

• 17:22Speaker 01

  and says, we want people who can understand how to like follow the rules and procedures for how to handle a fire. So there's going to be a written test just to, just to make sure our basic competence around these things. And, and, and that test happens to screen out more people of one race than another, even though it's not racial. And so the, so the last administration, the Biden administration was coming in and suing all these small towns and saying, no, you can't have these tests anymore, which I think is absolutely insane, right? It's crazy, right? And so it's called disparate impact. And so the Trump administration got rid of that, that theory. And, and, and now the question is, can we actually put in appropriate tests in these different areas? And can we put in accountability? Can we reward people for success? Can, can we, can we punish for failure? Just like the same thing you do in our companies, can we do some of that in the government? And this is a big battle.

• 18:05Speaker 01

  I mean, the, the, the government unions are major donors to the Democrats. They're very powerful base for the Democratic parties. People on the government side vote like 90% to the left. So it's a huge battle and it's being fought right now. And I, and I hope we stay bold because they scream really loud, they fight really hard. And a lot of people say, Joe, it's not worth a fight. We have other things to focus on. And for me, it is worth the fight. We have to make our government smart and competent again and neutral again. So we'll see what we can do.

• 18:30Tom Bilyeu?

  Man, I'll be very curious to know what people think that we should be focusing on. I have a theory that is people need to be chased by a lion. If you want to get people to not have stupid operating systems running in their brain, there needs to be a clear and present danger to which they are held accountable. So in a business, the clear and present danger is I can't make payroll. So I've got to make something that people actually want at a price that they're willing to pay, or I can't make payroll. And that is the world's worst feeling ever. And so you find yourself focusing, wanting the best and the brightest, doing things that you know work. And it's incredible when it works. I mean, the, what it yields is as close to magic as you're going to get. Longtime listeners of my show will have heard me say this before,

• 19:13Tom Bilyeu?

  but entrepreneurship is the ability to create a system where you've got inputs that yield outputs that are better than the inputs. Like, that's crazy. And to be able to do that is so difficult that thinking of it as bordering on magical is the right way. It's really, really difficult. So, all right. Then the question becomes, what is that lion in the public sphere? And for me, and I've come to this way later than you. So I held on to my naivete a lot longer in terms of this is great. China's amazing. Couldn't be happier. Really want to go bucket list like just was so enthralled watching their rise. It was really breathtaking.

• 19:55Tom Bilyeu?

  And then one day I realized, oh, whether I want a lion or not, I think we're going to get one in the shape of China. And we really aren't prepared for this. Do you think that the competition with China is going to sharpen us? Or is the competition with China dangerous?

• 20:17Speaker 01

  Yeah, Tom, that's a great way of putting it because I do agree with you on chasing you on these things. And I think there are definitely areas where it's a really great thing that actually forces the right and the left in the US together to embrace things like merit, to embrace things like making our defense functional, making our country functional. However, it's also extremely dangerous. And in a lot of ways, China's, you know, I think the right word is rapacious. I mean, let's just look at the bio sector for one. So, America has by far the most innovative biotech sector in the world. They have a lot of the very best research in the world. A lot of the best and brightest have come here over the last several decades. And we've created the vast majority of big pharma companies and big breakthroughs that positively impact billions of lives.

• 21:01Speaker 01

  And here's what's happening, though, is China is going after the entire innovation sector in bio. And they're not doing it in a way that's like, oh, it's fair competition. What they're doing is they say, oh, look, America has a slow FDA that takes, you know, eight years to get through to make a drug or 12 years to make a drug, depending on what it is. And they said, if we can make ours only take Three or four years and go faster. For example, as I say, I invest $100 million to my friends in a new really exciting, you know, therapy that's gonna, you know, save a bunch of kids from rare disease, whatever it is, and it's gonna be worth, you know, $5 billion if we succeed. China sees that and says, oh, you've been working on it for a year. It's starting to go really well. It's gonna take you a decade to get through. And we're gonna go after that same target now with our new company in China. And we're gonna go really fast through our regulator.

• 21:45Speaker 01

  Cause we're, cause we've super, you know, we've sped it up because FDA in the US is slow. And we're gonna get the result and we're gonna sell it to Pfizer or sell it to GSK or whoever for a couple billion dollars before you even get past your own FDA. And this is what they're doing, even just two days ago, another billion dollar plus sale. And they're going after our research and our companies. And they're taking advantage of it. And it's very clever of them in one way. But another way, this is terrible because if they're gonna do that, then people like me are not gonna keep putting lots of money from our funds into these bio things that they're just gonna steal anyway. And so this is, this is a huge crisis for our innovation sector in America. And it's, and we have to find ways to A, speed up our own FDA, sure. But B, we probably shouldn't be allowing them to operate asymmetrically and going after our stuff.

• 22:27Tom Bilyeu?

  Yeah, I was gonna ask about that because I have a rule in my life that I will never utter the words, slow down so I can lead. And if China is handing us our ass, then we've got to approach it from the perspective of, listen, these guys are killing it. They're handing us our ass, they're playing the game better than we are. We've got to adjust. If they're using corporate espionage to steal things, that becomes very different. So is this China is just out competing us and we better step up? Or is China sending literal corporate spies to steal the technology?

• 23:05Speaker 01

  It's literally both. I mean, it's literally both. They are stealing things left and right. They are spying on everything. They are copying everything they can. And after copying and after taking back what we figured out and after stealing our target that the US spent a lot of money on, they're also then iterating on it faster. So it's, it's actually the worst of both worlds. It's like, it's like there's a form of it that would be like a fair competition, but then it's a fair competition plus all the stealing, which, which is, which makes, which makes it very difficult to compete against when you combine those two.

• 23:32Tom Bilyeu?

  What makes them so good at high-tech manufacturing, at doing things at scale, at moving so fast? Like, I understand that part of my youth was a story. It was a lie. It wasn't actually true. But growing up, I Felt about America, the way when I look at China now, I'm like, yo, we now feel like this slow lumbering fat kid and they feel like super sharp, moving quickly, they understand the game, they are playing to win, they understand we are in a competition. Like there's, there's a level of ferocity from them that I respect that I don't see here.

• 24:14Tom Bilyeu?

  What, what are they getting so right that allows them to scale like that?

• 24:18Speaker 01

  You can't have more than one God in a culture and our culture used to embrace this sort of like fierce competition and building and common sense to get anything's done. And our culture now does not embrace that. Like when you go and try to get a permit and if it's taking way too long and you like complain in a blue city, they laugh at you, they don't care. Right. And this is just tolerated. Like in, in America 30 years ago or in China today, like, like that bureaucrat could lose their job. I mean, in China, they'd probably be shot or something. It's like, I'm sorry, but I'm not necessarily, you shouldn't do, shoot people, but like, I mean, come on. This is disgusting, right? And it's like, it's just fine. It's just no big deal. It's just like, if you want to tolerate mediocrity and you want to say, oh, well, what's more important here is you're a white cisgendered male who's like

• 25:04Speaker 01

  trying to already built a lot of other things and he's just so obsessed with his privilege. You should just like be quiet and like sit on the side. Like, like there's literally apparently a lot of voters who think that way. And so it's like, we've just had this like weird ideology that's crept in and it's getting in the way of merit and common sense and competition. And, and, and it drives me crazy. I mean, we, we were the faster ones. And now, and now it's like this, like this, like this retarded political class is just allowing it to be broken. So yeah, I'm very frustrated because I still think that a lot of us could compete and beat them, but we need to clear this like, that's just out of the way. And, and, and people aren't willing to do it. Like they just, they vote for the idiots. I don't, I don't get it, man.

• 25:39Tom Bilyeu?

  All right. Well, talk to me about Palantir, Androl. You founded Palantir. You were an early investor in Androl, both focused on defense. How have you been able to pull that off, given that you're still in a broken system?

• 25:52Speaker 01

  So basically after the primes consolidated, like we talked about, and you know, these like very dominant companies, they became bureaucratic arms of the government. It became very clear to us they were starting to embrace things that were not based on merit. I mean, you go like see all the tradings at places like Lockheed and they were like really focused on DEI, really focused on all the white men had to learn about their privilege and as opposed to like spending time on how to be the very best, right? So these places themselves got to be very corrupt. And there were really only two companies that broke through at first. Like a lot of people tried, but the really Palantir and SpaceX were the two companies. And they were so much better. They were so much better. They eventually kind of shamed their way through. In each case though, Tom, both Palantir and SpaceX separately had to sue the government for illegally trying to block them. Like we caught them doing things they were, isn't that crazy? And this is actually how

• 26:37Tom Bilyeu?

  Were they doing it because it was an ideological difference?

• 26:40Speaker 01

  You know, it was much more about just like it's how they've always done things is they work with their friends and they give contracts to places that their friends went and worked. And you literally had with Palantir, this deployment in Iraq that was like helping find all the IEDs for the special forces and saving their lives. And the army brigade said, oh, can you go with us too? You know, our bosses won't let us pay you, of course, because you know, they want to give all the money to their friends, but we said, of course, like we're patriots. Here's the system for free, just like report back, give us feedback. And they showed us how we were saving massive numbers of lives by automatically like, you know, bringing together, you know, communication from the British and the French and different parts of America deployments and really reduce a lot of the lives lost. And it was wonderful.

• 27:23Speaker 01

  And then of course, when it finally came up to like bid out the new defense ground control system, of course, they gave the $5 billion contract, like no contest, right away to their friends Raytheon.

• 27:32Tom Bilyeu?

  Oh, I thought for sure you were going to say, and that's how we got our beachhead.

• 27:35Speaker 01

  No, no, exactly. They give it, so of course they give it to the big company. And it turns out there actually were laws passed in Congress that they had to consider off the shelf software, they had to consider working with new entrants. But of course they're like, oh, we can't work with anyone. And we always just give it to one of the primes. And so that, so we actually won the lawsuit. You know what's crazy is the general in charge told them to destroy the records of Palantir saving lives. And it, but fortunately we and another person on the army side had kept a secret copy. And so they tried to assert that there was, that never happened. And then we showed it and the judge was horrified on our behalf. And so we just crushed them, obviously, because they were just liars. And then eventually Palate here, you know, wins the program. And it was fascinating to me is that once Palate finally got in and finally was running all this stuff, all these people said, wow, you guys actually are way better.

• 28:18Speaker 01

  We were told by everyone that you were schemers and not complete and broken and all bad in all these ways. And so they're very, very good at like, at like bad mouthing their opponents and try to keep you out. But here's what's happened, Tom, and this is optimistic. So Palate breaks through, starts to really win over the last, you know, eight, nine years. SpaceX, I mean, if you have to blind not to see it, right? They're doing things at one more hundredth the cost. Like, I think, you know, more things have been sent to space by SpaceX than anyone else at this point, obviously better. And these things are so much better, they kind of lay these train tracks and said, so a lot of generals, a lot of admirals, they're actually, a lot of them are really good guys that care about our country, they're patriots, you know, they're there for the right reasons and there's still some merit left in the military for sure. So these people say, wait a second, these new things are way better.

• 29:00Speaker 01

  And then Androl comes along and it's just like running circles around the primes is doing things for like, you know, eighth the costs that are clearly better in every way. And so Androl now is a big new prime. And then that's actually opened it up. We have like seven or eight new companies valued over a billion dollars. I've started a couple more of them that are, you know, one of them, for example, Eperus, I don't know if you've heard of this one yet, but we're able to turn off.

• 29:22Tom Bilyeu?

  Researching you, yeah.

• 29:23Speaker 01

  We're able to turn off enemy drones miles away. So swarms of drones, which is how warfare works right now. It's like magic. We did a contest against the primes. The guys didn't take us seriously like, oh, we're the primes. Why are you guys here? We shot down the hardened drones nine and a half times further away for the same power and size, just to wipe the floor with them.

• 29:40Tom Bilyeu?

  I will literally never understand what the worldview is that somebody at that kind of classic prime is running. You're going up against the best and the brightest coming out of Silicon Valley, which has shown over the last, God knows how many decades, that they out innovate everybody. And so I don't know if they're just thinking, oh, you guys can do Instagram, Facebook, but you can't translate that.

• 30:01Speaker 01

  That's what it is. That's what it is. I mean, they, you guys are software guys. We build the arsenal of democracy. I'll give you another one. Sironic is this company we started a few years ago and it's already delivering, you know, hundreds of boats now to the Navy and teaching them how to use AI. But this is a very new thing. No one's done that from Silicon Valley before. And, and to be honest, it's not just Silicon Valley. We need a talent that came from the advanced manufacturing world. We need a talent that came from the Navy, the guy running it's Navy SEAL. And we're doing things that the primes can't do. And this, by the way, China has 200 times our shipbuilding capacity. So this is, so that's why I'm as fast as I can. I want to prove we can build thousands of ships again. We're going to do it the next year or two.

• 30:39Tom Bilyeu?

  We'll be right back with more from Joe Lonsdale after this.

• 30:44Tom Bilyeu?

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• 32:17Tom Bilyeu?

  All right, let's pick up where we left off. Yeah, this is where I think the national mythology of what World War II was for us has lingered for so long that people don't realize that yes, when Japan attacked Pearl Harbor, we were able to shift this incredible manufacturing, you know, area of the economy over to wartime stuff. We don't have it anymore. And so all of that has atrophied, gone away, been shipped overseas. And so as I started watching the rise of China and it clicked over in my head that, well, hold Hold on a second. These guys, I would clock them as current rivals that could become adversaries. That's where I'm like, the fact that they can make 200x, the number of ships that we make, that sounds like us back in World War II.

• 33:02Speaker 01

  Exactly.

• 33:02Tom Bilyeu?

  But now it's not us. It is our adversary. What happened to our adversaries when we did it? They lost. And so it's like, yo, this is a little too predictable if we don't start building these capabilities back up. Whether it's Androl and what they're doing with shipbuilding. When you're spinning that up, are you guys thinking specifically about China and that being this inevitable threat on the horizon? Are you thinking, no, it doesn't matter who it is. We just need to be prepared for anything and everything that could come at us? How do you guys think through that?

• 33:34Speaker 01

  Well, listen, I think the Islamists around the world are a major threat. I think the communists are a major threat. I think those are the two biggest totalitarian philosophies. It's actually scariest to me when they work together. But you know, we're going to be facing, our grandkids will still be facing Islamists as a major problem. I think we don't take it seriously enough. And then our grandkids will probably still be facing some form of communism as well. It seems to be a recurring kind of like broken part of the human brain to want this if it's not educated properly, right? Thomas Jefferson thought the whole point of having public school is to teach against the ills of despotism, which is basically another form of like teaching against the ills of authoritarianism and communism, right? So it's like, ironically, our public schools teach the opposite now.

• 34:12Tom Bilyeu?

  I was gonna say, yeah, that didn't go as planned.

• 34:14Speaker 01

  We need to, we need to capture those. We're working on, that's a whole other issue we're working on. But you know, Serronic especially was created because Dino and I and a few people around us in touch with our friends who run the Navy said, wait a second, exactly, we're gonna lose if we don't actually be able to make thousands of ships. And by the way, a warship in 2025 should look completely different than a warship in 2000 because you don't need people on it. You don't. And so that means you could design it much cheaper. You'd have way more firepower. We have a new 150 foot boats we're working on. We bought a big shipyard in Louisiana. We're putting a few hundred million dollars into it. We're building this 150 footer autonomous ones. And it has all sorts of possible configurations for different types of weaponization. There's all sorts of different types of controls.

• 34:59Speaker 01

  Actually hired some people who came from like the gaming world, of course, because you want both people who know how actually Honeymoon battles work, but also for command and control. You know, you just, it's a whole different design for how you deploy and use AI and how you could control hundreds of these at once in any kind of battle scenario.

• 35:16Tom Bilyeu?

  That is so interesting, Joe.

• 35:17Speaker 01

  It's fun, right?

• 35:18Tom Bilyeu?

  I build video games. I know we talked very briefly before we started rolling. The thought that the things that we have to figure out in terms of how to get an enemy to act intelligently, that that would play out in real military, that is fascinating.

• 35:33Speaker 01

  So I was always a fan.

• 35:34Tom Bilyeu?

  That's very interesting.

• 35:35Speaker 01

  I was a big video game guy. I was a fan of Ender's Game, like from Morse and Scott Card and all these things. You actually have to, you actually have to simulate in the water, though, because there's things like rogue waves that just destroy your ships when they're sprinting and stuff. So you actually have to like, practice a lot in the water and then echo it and then practice again and echo. You don't just want to simulate. It's really dangerous. You can make a lot of mistakes. You know, this is, it's an engineering, engineering is about scarcity, right? If you want to build a bridge, this thing is an important point for people. If you want to build a bridge, it's very easy to build a bridge on anywhere that will stay up. No matter what, if you have infinite resources, right? You spend a billion dollars on your bridge, it's tons of metal. Fine, you have a bridge, it's gonna work. But, but, but engineering is about how can you build that bridge that's just as good for $20 million? And therefore you can make 50 bridges.

• 36:16Speaker 01

  And in a war, it's like, how can you make, you know, thousands of these things that can work together by doing them more elegantly and cheaply? And so there's some cases where you want something underwater, but for the same cost, you might be able to have 100 small things above the water. That's going to be more useful in some cases.

• 36:29Tom Bilyeu?

  All right, guys, that's it for part one. Coming up tomorrow in part two, Joe and I cover how China's stealing our biotech breakthroughs, why our defense systems are broken from the inside, and the very uncomfortable truth about what it's going to take to fix it. You're not going to want to miss it, so make sure you're following Impact Theory and leave us a review on Apple or Spotify. It really does help us grow. And until next time, my friends, be legendary. Take care.

• 36:58Tom Bilyeu?

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