Palmer Luckey on Hardware, Building, and the Next Frontiers of Innovation

Recorded live at our Founders Summit, a16z general partner Chris Dixon speaks with Palmer Luckey, founder of Anduril and Oculus VR. They talk about what it takes to build hardware at scale, where the biggest technological bottlenecks are today, and why optimism is still warranted despite geopolitical turmoil and regulatory constraints. They also cover crypto, stablecoins, modern warfare, the U. S.–China technology race, AI and manufacturing, and frontiers like fusion and quantum computing—plus lessons from Oculus, the founding of Anduril, and how to build mission-driven teams.

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

• 0:00Speaker 00

  The very big picture here is in 2017, a lot of people believed we lived at the end of history, that there was no more geopolitical movement of significance to happen, and that the United Nations could write mean letters to dissuade people from expansionist actions. The cynics were right. The cynics who said, no, war is still a thing of the present. You can't start working on bombs after the war has started and expect to have any deterrent impact. You're just going to be part of fighting wars instead of preventing them.

• 0:26Chris Dixon?

  All of this stuff that's been talked about my whole life is like suddenly happening. AI is clearly happening. We believe crypto will happen. Do you think we're entering into this maybe unprecedented 20, 30-year period of experience?

• 0:35Speaker 00

  Absolutely. I'll give you my thesis for optimism.

• 0:39Speaker 02

  In 2017, most people believed we are living at the end of history. Great power conflict was over. The United Nations could write strongly worded letters, and that would be enough. Then Russia invaded Ukraine. Palmer Lucky saw it coming. Before the invasion, he tried to sell Anduril surveillance towers to Zelensky, who had read about them in Wired and wanted them on Ukraine's border. The State Department killed the deal. They said Russia wasn't going to invade. Palmer started Anduril in 2017 with 25 people. Bloomberg called it the most controversial company in tech. Wired named him the worst person in Silicon Valley. Today, the company has over 7,000 employees and 25 products. That the program of record for drove defense across SOCOM and the Marine Corps. Before Anduril,

• 1:21Speaker 02

  Palmer founded Oculus as a teenager, sold it to Facebook for $3 billion, and watched Meta pour $60 billion into the vision he started. He was also an early Bitcoin holder. He bought a Samsung phone for 8,000 Bitcoin and almost became Coinbase's first merchant customer. This conversation was recorded live at A16Z's Founder Summit. It covers what it takes to build hardware at scale, why the US is spending too much and getting too little on defense, and why Palmer is still optimistic about the next 30 years. Chris Dixon speaks with Palmer Lucky, founder of Anduril and Oculus VR.

• 1:56Chris Dixon?

  Thanks for being here.

• 1:57Speaker 00

  Of course.

• 1:57Chris Dixon?

  I just watched your Joe Rogan interview, which everyone should watch. There's talking parrots, UFOs, China.

• 2:04Speaker 00

  UFOs again.

• 2:05Chris Dixon?

  China UFOs in China, just a lot of interesting stuff. A AR helmet that you built. It's like nerd Nirvana, they do this video, so you guys will have to watch.

• 2:13Speaker 00

  And then UFOs again.

• 2:15Chris Dixon?

  Yeah.

• 2:15Speaker 00

  It's three or four times.

• 2:16Chris Dixon?

  And there was like, did aliens see, this Joe Rogan has to always talk about, did aliens see human evolution or something, or the uplift theory, was that it?

• 2:23Speaker 00

  Talked about uplift theory, taking non-sentient species and bringing them up to or past the point of human consciousness.

• 2:29Chris Dixon?

  It's a much, it's like old style Joe Rogan of just like deep in every rabbit hole.

• 2:33Speaker 00

  We were going for it.

• 2:34Chris Dixon?

  It was incredible.

• 2:35Speaker 00

  I recommend going on Joe Rogan if you get the chance, but the one problem is that all of your messaging tools become completely unusable for a period of at least 48 hours. Cause a lot of things like inboxes, your SMS, email, it relies to some degree on there being a limited quantity.

• 2:50Chris Dixon?

  Yeah.

• 2:51Speaker 00

  And so if you have over a thousand messages coming from everyone you've ever known saying, "Bro, so cool on Joe Rogan," then everything else in between, and then there's like, "Palmer, you must finish your security training today, or you will lose your clearance." And they're like, "Palmer, did you get the message?" No, no, hang on.

• 3:10Chris Dixon?

  It's a DDoS.

• 3:11Speaker 00

  Bro, bro, bro, bro, bro.

• 3:12Chris Dixon?

  On your inbox.

• 3:13Speaker 00

  That's right.

• 3:14Chris Dixon?

  Joe Rogan, that's awesome. Anyway, so I was lucky enough to meet you back in your Oculus day.

• 3:18Speaker 00

  That's right.

• 3:18Chris Dixon?

  Which was, I think, I remember Marc Andreessen and I flew down and saw, I remember the demo with the QR codes on the wall. You want to turn a little bit, the QR codes on the wall.

• 3:27Speaker 00

  I can't cheat that well, I'm not like a Broadway actor. Yes, Chris, I remember.

• 3:33Chris Dixon?

  So the demo with the QR codes on the wall?

• 3:36Speaker 00

  Yep.

• 3:36Chris Dixon?

  Right, yeah, obviously. And like, for those who don't know, like at the time, like the first developer kit, you'd had tracking, but you had to have the boxes outside.

• 3:42Speaker 00

  Well, what it was, is the first development kit didn't have any spatial tracking. You couldn't track movement through space, it was just where you were looking.

• 3:49Chris Dixon?

  So it was three degrees, three DDoS or whatever.

• 3:51Speaker 00

  Exactly. And so then we were developing a six DDoS system, that was what became the Oculus Rift DK2.

• 3:56Chris Dixon?

  That's right.

• 3:56Speaker 00

  Like that was the real first modern.

• 3:58Chris Dixon?

  That was the outside tracking, is that right?

• 3:59Speaker 00

  So we were experimenting with different systems, actually, I mean, that was an inside-out system that you were. referring to, we ended up still using an outside in system for the DK two. And then even for the CV one, it took us years to get inside out tracking robust enough that we could take it out of a room that we would show investors and actually get into people's living rooms. Cause we were talking a little bit about this earlier, but the edge cases are what kills you. It's easy to make it work in a lab, very, very, very easy. Not maybe not really easy, but it's relatively easy. What's hard is when you put it into a real room, real rooms have glass in them. They have reflections in them. They have other people walk through now a large chunk of your scene is moving. You have to reject that. And that sounds easy for the bulk of it, but what about the things on the fringes?

• 4:40Speaker 00

  What about things like curtains that move a little bit or like you scan your scene and then you come back and next time it's moved just a little bit. Also fans, ceiling fans, the death of inside out tracking. It's just rejecting all of those things becomes a Herculean challenge. And we eventually got it working. That was Oculus Quest.

• 5:00Chris Dixon?

  And did you the optics, like the lenses?

• 5:02Speaker 00

  That's right.

• 5:03Chris Dixon?

  The screens were a big issue. You can talk about like, for those who don't know, like I believe only Samsung made, what was it?

• 5:08Speaker 00

  Oh, it was even worse. Samsung was the only company that was sort of able to make them. So we were using Samsung displays that were more advanced than was in their smartphones. We were trying to take things that really were engineering samples and prototypes. And we were trying to put them into full scale production. And so we had very low yield on those lines. We had to test every display and reject ones that had dead pixels. And in VR, you really can't get away with one dead pixel. Forget bright pixels, just even dead pixels. It's because it's so obviously apparent.

• 5:37Chris Dixon?

  Right in your face.

• 5:37Speaker 00

  It's right in your face. It's stretched out in a big way. And then also it's the mismatch between your eyes. One of the schemes we experimented with actually was if you had a dead pixel, killing an equivalent pixel in your other eye.

• 5:47Chris Dixon?

  So at least it's symmetric.

• 5:48Speaker 00

  It actually made it much better, but it was the asymmetry. You've ever seen those cross eye puzzles where you cross your eyes and you can see what's different? That's what it's like having a dead pixel. You're constantly seeing this asymmetric mismatched image. And so those dots stand out so much. Anyway, we ended up not doing that because it turns out customers still disliked dead pixels, but it was a tricky time.

• 6:07Chris Dixon?

  To me, it was a lesson of, I had not invested in hardware. And to me, it was a lesson of why hardware is so hard. There was literally one company, Samsung, and it like. It was like, you tell me, a couple hundred million dollar order, they weren't even gonna. In fact, isn't that why you did the Samsung deal?

• 6:20Speaker 00

  The Samsung Gear VR, correct.

• 6:21Chris Dixon?

  Gear VR was to get the screen.

• 6:23Speaker 00

  There was really no amount of money that would convince them to do what we need to make our display, but we needed to deal with them to basically be the software and hardware designers behind the Samsung Gear VR product. So if you bought Gear VR, or if you got it for free with your phone, it was Oculus that made that happen. And we sold over 10 million units, which was.

• 6:42Chris Dixon?

  But they were three Doff, they announced six Doff, right?

• 6:43Speaker 00

  Correct, they were three Doff.

• 6:45Chris Dixon?

  I always didn't like three Doff because I felt like it wasn't the real thing.

• 6:47Speaker 00

  I agree it was not the real thing. Look, people forget that I was a hobbyist who started building VR headsets as a 15-year-old.

• 6:54Chris Dixon?

  Yeah.

• 6:55Speaker 00

  And then I got all of you guys to give me a bunch of money to do it as a business. And so I knew that three Doff was not going to actually work to build this VR revolution, but it got you guys to give us money. And like, we got from DK1 to DK2 very quickly. And here's the good news. DK1, we sold about 55,000 units, which made it the best-selling VR headset in history at the time. By the way, the previous bestseller was the Philips Scuba in the US. It was the Takara Dyno Visor in Japan.

• 7:24Chris Dixon?

  Yeah.

• 7:24Speaker 00

  But combined, that same design sold exactly 50,000 units. So 55, we specifically sold that much so that the DK1 would be the best-selling one. And then we sold 250,000 DK2s.

• 7:34Chris Dixon?

  I'm not criticizing you, by the way. I'm just like.

• 7:35Speaker 00

  Oh, you should be criticizing.

• 7:36Chris Dixon?

  No, but once you, I just meant, once you experienced the six Doff, you're like, wow, that's the real thing. Because you can like walk around the room.

• 7:41Speaker 00

  That's right.

• 7:42Chris Dixon?

  And people see that.

• 7:43Speaker 00

  And it was critical to get to that as fast as possible. I mean, I would argue the DK1 days, we knew we were living on borrowed time. We were living in this world where people would see it and they'd do a five-minute demo and they'd say, oh, this is absolutely incredible. But without six Doff tracking, it will make them sick and it will make them nauseous. Cyber sickness is caused by a lot of things, but the primary mechanism is that when you have what your inner ear feels mismatch with what your eye sees, your body believes that mismatch must be due to a poison that is interfering with your peripheral nervous system. And so what do you need to do when you're poisoned? Expel the poison. And so we knew that we were on borrowed time. It was a great piece of demo hardware, but we knew we needed to get to really good six Doff tracking before two minutes. Many people figured out what was going on and we did.

• 8:26Chris Dixon?

  Yeah.

• 8:27Speaker 00

  And we did.

• 8:28Chris Dixon?

  Can I tell the selling story we just talked about?

• 8:30Speaker 00

  What did you do?

• 8:30Chris Dixon?

  I don't know if it's public. Alright, so here's my Palmer crypto story, which is so.

• 8:34Speaker 00

  I hadn't even thought about this for so many years.

• 8:36Chris Dixon?

  Well, one was we had a call once where in like 2013, he's like, I want to make the store all Bitcoin. Right? And I was like, I love you. This is awesome. And in fact, you were almost, you said the first customer of Coinbase.

• 8:44Speaker 00

  So I literally was with Brian Armstrong yesterday.

• 8:48Chris Dixon?

  Yeah.

• 8:48Speaker 00

  And we were going back through my emails to refresh our memory. And I have an email chain of me with Brian Armstrong.

• 8:53Chris Dixon?

  Yeah.

• 8:54Speaker 00

  In late 2012, talking about supporting that he's like Coinbase is going to be rolling out a payment system. You'll be able to take Bitcoin on your website. And we were going to be their very first customer. And I was grilling him. I said, why should I work with you instead of Bitpay? And, uh, but I did have a, I had a wallet at Coinbase. I was an early Bitcoin guy, like before there were any exchanges and the Bitcoin talked on forums. The guy told you I sold banner ads on my website for 400 Bitcoin. I bought a Samsung Galaxy S Vibrant, which was the T-Mobile's first Galaxy phone for 8,000 Bitcoin. Could you imagine if I wouldn't have bought that phone? I could have done so much more Bitcoin gambling at the time. But yeah, but then the lawyers came in. This is the worst part. We got approval and then we got a new COO and he brought in real lawyers and they stopped us.

• 9:38Speaker 00

  They stopped us. They said, how do you handle the taxes on this? Is it an asset? Is it a currency? It better not be or it's illegal.

• 9:45Chris Dixon?

  And then what happened, this is my story, but I just confirmed with you it was true that I'd heard it from Brendan. So Brendan was the CEO and I sort of would talk to him more about some of the stuff. So they got an offer, you got an offer from Zuck, went down to LA, saw the demo and was like, this is the greatest thing ever. And I think maybe on the, you tell me on the spot, offered you a billion dollars or something.

• 10:02Speaker 00

  He was more or less on the spot.

• 10:03Chris Dixon?

  Yeah, more or less on the spot, offers him a billion dollars. And then I remember Brendan called me and he's like, we're going to turn down the billion. I'm like, okay, like why? And he's like, well, Palmer has a lot of Bitcoin and doesn't really give a shit about money.

• 10:14Speaker 00

  And this was when Bitcoin was $200.

• 10:16Chris Dixon?

  Like literally that was, I never actually asked Palmer until just now. I was like, was that true before I say it on stage?

• 10:21Speaker 00

  It was true.

• 10:21Chris Dixon?

  Brendan told me was the reason.

• 10:22Speaker 00

  I was checking, I was checking, I was checking my wallet. Bitcoin at $208? I am set.

• 10:28Chris Dixon?

  Yeah. But then he came back and offered 3 billion, but, but, but the more important thing was not.

• 10:34Speaker 00

  When Forbes gave me the 30 under 30 award in 2014, they, they, they, they had, everybody had to give one sentence of advice to young entrepreneurs. And I was on the cover. It said Palmer Lucky, quote, buy more Bitcoin. So I was, I was the OG here.

• 10:50Chris Dixon?

  So, so then, then you eventually got to, it got to a higher price. But more importantly, just, just to give context, right? The real reason for selling was not just like personal money. It was the fact that we all saw the writing on the wall, which is going to be billions more. R and D.

• 11:04Speaker 00

  Well, you remember the other side of that. You are the other side of the table on this. So like for me, the founder position was, I wasn't interested in selling for money. And I also believed that Oculus is going to be worth a lot more than a billion. Why would you sell out for a billion dollars and give up control? The thing that convinced us is Mark came back and said, one, here's why we are aligned in ways that Microsoft and Google is not. Here's why we want VR and AR to be the next platform. Whereas they generally want the status quo to continue. So it convinced us they really did want what we wanted. Which was not to sell us for parts or use us to sell more Xbox.

• 11:40Chris Dixon?

  Yeah.

• 11:41Speaker 00

  No offense to Microsoft, love those guys. But uh,

• 11:43Chris Dixon?

  Yeah.

• 11:44Speaker 00

  The, the, the real thing that made the difference was that they were willing to put money behind that belief. They said, we will put a billion dollars in R and D behind you every year for the next 10 years guaranteed.

• 11:57Chris Dixon?

  Yeah, I think that was actually in the deal too, as I recall.

• 11:59Speaker 00

  It was, it was, it was, that was the thing that was most important to me. Because you start running the numbers. How am I going to get a billion dollars a year to do R and D? And you're launching a platform, takes a lot of money. Xbox spent like five billion launching the first Xbox. You, you, it just, it's a, the content is expensive, the people are expensive, the marketing's expensive. And so we had people like Chris coming and saying, we're going to raise more money than we've ever raised in any company in history. You remember, it was a $75 million round.

• 12:25Chris Dixon?

  Yeah, the round we did was 75 million.

• 12:26Speaker 00

  250 million dollar valuation. It was a big deal back then. And for us to raise billions, I'm not going to have any control of my company. It would have taken years if the market had downturned and you have a burn rate that relies on a billion a year in VC money. I mean, you're toast.

• 12:40Chris Dixon?

  I mean, there wasn't a, back then, there wasn't a billion a year in VC. We, we literally had a Wall Street Journal article that we had a billion dollar fund and it was like this bubble, bubble thing.

• 12:47Speaker 00

  That's right.

• 12:48Chris Dixon?

  So we put seven and a half percent of our fund, like we could, there's only like a limit to it.

• 12:51Speaker 00

  Yeah. And so this, this offer from Mark, they said, they would say they were committed. I actually remember exactly the words I said. It's, it's in a book called The History of the Future. The author got a bunch of Facebook internal, it's a good book, bunch of Facebook internal documents, but the email that I sent out to the founders, they're like, oh yeah, I think Zuck might be, might be BSing us. I said, if Zuck is playing us, he's Van Halen. And that was really the thing that convinced us in the end.

• 13:17Chris Dixon?

  And now they've spent, you said 80 billion?

• 13:19Speaker 00

  The official public number is 60 billion dollars. The way that I look at this and the way that I, the way that I convinced myself that it wasn't so bad that I got fired from my own company that I built as a youth and put my whole adult life into. Is that in the end, Facebook didn't really acquire Oculus. Oculus took over Facebook. We became the overwhelming and dominant component of their spend and their R and D and their product, product creation engine. That's, that's pretty good. That's pretty good.

• 13:47Chris Dixon?

  Yeah, no, it's amazing.

• 13:48Speaker 00

  Yeah. And it only cost them $3 billion for me to take over.

• 13:51Chris Dixon?

  And it's gotten good. It's gotten good. The Meta Quest is good and I think the, you know, it's like, I believe.

• 13:56Speaker 00

  Quest was the last thing that I worked on before they fired me.

• 13:59Chris Dixon?

  All right.

• 13:59Speaker 00

  Yeah.

• 13:59Chris Dixon?

  I mean, I still very much believe in VR. It's taken longer than I expected. I mean, as has.

• 14:04Speaker 00

  I'm a true believer.

• 14:04Chris Dixon?

  And a bunch of stuff can take longer, but I.

• 14:07Speaker 00

  It is going to work and there's, there's people who take a kind of glee and it's failing. You gotta actually look like, rationally, it is not failing. I think it's not living up to what certain people, myself included, believed that it would be. But when you see these articles from, like the modern tech press is not the tech press, they're the anti-tech press. But when you see modern anti-tech press articles, you know, why didn't VR succeed? They're not mentioning that the last version of Quest sold 20 million units. They're not.

• 14:37Chris Dixon?

  I think more than Xbox, at least one year.

• 14:38Speaker 00

  It sold way more than Xbox. It's like Quest 2 sold better for the first three years that it existed than the Nintendo 64. Like, and so it's like, huh, what a failure. It only sold better than every game console I owned as a child. It's, it's, it's this, it's, it's because they're comparing it to smartphones.

• 14:59Chris Dixon?

  Yeah, yeah.

• 14:59Speaker 00

  But smartphones are this unparalleled explosion in technological change. Yeah, we're not as good as the biggest change in the way we've used computers in history. But we're, we're, we're like the next, we're only one step down. So I, I'm like, by the way, that's just Quest 2. You also then had Quest 3 selling for the same time as a while. Like you had, of course, PlayStation VR, which sold about, about six. 6 million units. We don't have numbers for PlayStation VR 2 yet, but like they're definitely selling millions of units. You had HTC Vive, which sold at least 3 or 4 million units. It's like you're looking in a world where there are, by any measure, low tens of millions of users of this technology. That's, that's pretty good. There weren't that many people using iPhones until the iPhone 3GS.

• 15:43Speaker 00

  Like, like, it's like, like, you had to get to the third generation of iPhone.

• 15:46Chris Dixon?

  2012, the Facebook did their mobile pivot. People forget that. It was five years in that it actually was obvious to people that it was like the new platform.

• 15:53Speaker 00

  That's right. That's right.

• 15:54Chris Dixon?

  It was like, it's like people have this retrospect, like this retcon kind of of what happened.

• 15:58Speaker 00

  Well, I also, I like to compare it to iPods too. And it's been a while since I did this exercise, but we had some vanity metric where we pointed that the Oculus Rift in the first year outsold the first three years of the iPod. And like, it's true. iPod took off in an exponential way later. But by the time it was like, those first three years, I mean, it was on the cover of major magazines. It was winning gadget of the year. All the hottest, like, it was, it was an it thing to have. And we were, we were, we were outselling it. It used to be that success was enough. That's not enough anymore. It needs to be mega billion success or you're nobody.

• 16:34Chris Dixon?

  Well, the other thing is that there's

• 16:35Speaker 00

  You're a failure.

• 16:35Chris Dixon?

  They're obviously like the ergonomics, the visuals, like they're just obviously going to get better.

• 16:40Speaker 00

  Yep.

• 16:40Chris Dixon?

  And they're an issue right now. Like it's kind of, you get sweaty. It's kind of like, right? And so like, I feel like there's hard things to predict, like user behavior, like, but they're easy things. Like, of course they're going to get smaller, lighter,

• 16:49Speaker 00

  Right.

• 16:49Chris Dixon?

  Faster, more performant, better graphics, better games.

• 16:53Speaker 00

  There's a, there's a great article that's definitely worth reading, very well written on PalmerLucky.com called Free Isn't Cheap Enough. It's the number one Palmer Lucky blog on the internet.

• 17:03Chris Dixon?

  Free Isn't Cheap Enough?

• 17:04Speaker 00

  It's written by me.

• 17:06Speaker 00

  But it's this great piece where I laid out this hypothesis years ago called Free Isn't Cheap Enough. And I argue that the thing holding VR back is not the price per unit. Like it's, it's not the fact that it's $300 versus $200. It's the, it's what you're talking about. It's too heavy. It's too sweaty. The quality and content pipeline is just not there to make an average person, not a gamer, not an early adopter. Like your mom to use it. And so when people say, I'm not interested in VR, you can give them an easy hypothetical. Okay, well, wait, what if it was a pair of like sunglasses? And it was as good as The Matrix? And it were $99? Would you use it? And it doesn't even unimaginative people are like, yeah, like if I could do literally anything that I could imagine in a pair of glasses,

• 17:51Speaker 00

  of course I would do it, but that's not what VR is. And I say, well, then then we're just arguing about when VR is going to take off. It's not if it will. We know the physics allows us to get to something like what I've described. And so I argued that this relentless push on making it cheaper and cheaper is pointless. Because even if it was free, it wouldn't be good enough for people to keep using. I would posit, you could give a VR headset as they exist today to every person in America. And upwards of 90% of them would stop using them within a month. Because it's just the quality is not quite there yet. In other words, free isn't cheap enough to make VR succeed.

• 18:25Chris Dixon?

  Yeah, maybe even a higher price, better one would be even more successful.

• 18:28Speaker 00

  That was one of that was my argument. Unfortunately, people didn't listen to me and they kept going. And they launched the Oculus Go at $99, which went back to being threeed off. And that was a whole misadventure. And it ended up this is one of the things where me and John Carmack were actually at odds. He thought that John Carpenter is a very sharp guy.

• 18:45Chris Dixon?

  He always loved the gear. He is a he is a very sharp guy and he's a man of the people.

• 18:49Speaker 00

  He wanted everybody to have VR. But it turns out that Quest at $399 hugely outsold Go at 99. And I think that says something about the shape of it. Now you see Apple and Samsung attacking the high end of the market. I think that has a higher chance of success. I'm praying that it works this gen. Or we're going to have to go through another bit of a winter.

• 19:07Chris Dixon?

  Yeah. So you've done so moving on to Andro. You've done an amazing job with Andro. I think some of the things that stand out to me, I mean, first of all, it's just an iconic company. And congratulations.

• 19:15Speaker 00

  Thank you.

• 19:16Chris Dixon?

  Success. But also like you started off, you know, negative press, like this, this kind of sense, you know?

• 19:22Speaker 00

  We won the Wired Magazine Worst Person in Silicon Valley Award. Bloomberg called us the most controversial company in tech. So this was back when Andro was 25 people building drone defense systems. And and by the way, this is the same year that we work. Had been indicted by the feds. Uber had just ousted all of its senior.

• 19:44Chris Dixon?

  And you beat them.

• 19:45Speaker 00

  No, yeah, the most controversial tech company was Homer Lucky and his 24 drone drone people. Yeah, it was incredible.

• 19:52Chris Dixon?

  So you so you went from that to now 7,000 people employees.

• 19:57Speaker 00

  Depends on how you count it, but if you include contractors, yeah.

• 20:00Chris Dixon?

  And and sort of, I think, an iconic company that is, I assume, has gone from maybe having trouble recruiting. You tell me, trouble recruiting beginning to now being a talent magnet.

• 20:09Speaker 00

  The opposite. Did you see our latest recruiting campaign? It was called Don't Work at Andorol.

• 20:14Chris Dixon?

  Because you don't want the wrong people.

• 20:16Speaker 00

  It is. It has become. So when you're when you when you're doing something early and it's really crazy and it's new. This is true with Oculus, too. You only get the true believers, the people who are there because they want to and they believe in what you're doing. And they could be making more money elsewhere as long as they feel like what they're doing is like. Why would you go work at this startup that everyone's laughing about and thinks is a joke like Oculus was early on to a lot of people in tech? Why would you go there if if if it's not even going to pay you well? And the answer is because you really believe in what they're doing. And that's a natural filter for the lily pad jumpers, the think fluencers. You know, the people I'm talking about, you see them on the LinkedIn. You know, these are the people who they're they're AI experts right now. They were AR experts a year ago. They were VR experts a year before that.

• 21:02Speaker 00

  What I guess they yeah, they were like, you know, the social, local, mobile experts before that. Web 2.0, yeah, guarantee they all were web 2.0 people as well and web 3.0. Don't forget web 3.0 5G.

• 21:17Speaker 00

  People have been to enough of tech conferences know exactly what I'm talking about.

• 21:21Chris Dixon?

  That's hilarious.

• 21:21Speaker 00

  And so the problem is Andorol has now gotten to the point where there's no filter. We are now cool enough to get those people.

• 21:28Chris Dixon?

  You're too cool now.

• 21:28Speaker 00

  And so it's important to get the right people. It's even more important to repel the wrong people, no matter how well they dress themselves up and hide their true nature.

• 21:37Chris Dixon?

  How do you discover that?

• 21:38Speaker 00

  So we did a commercial where we showed people how you have to go out in the field and work in the dirt. And you in your hours are unpredictable and you might see your family, you also might not. And we kind of and the there's a guy in the ad and he complains throughout the ad about how awful it is. And then at the end, he says, yeah, don't work at Andorol. And the idea was that to a certain type of person who's looking for purpose and mission and adventure, like there's a point where he's like on a boat with a bunch of special forces guys, they're on a little rubber boat, he's bouncing around and going off to some forward deployed location. We actually do this. We have a team of hundreds of forward deployed engineers supporting a lot of these missions. And our customers love it for us.

• 22:22Speaker 00

  But the idea was to a certain person, they see that and say, oh my gosh, this looks like the coolest thing ever. And to the normal person who wants to play soccer and do yoga and be home by 5:15, they're going to be repelled by that. And so by the same thing with investors, it's important to get investors. At a certain point, you become so hot that everyone wants to invest. And then you have to figure out, how will I repel investors who are not mission aligned? You have to say crazy stuff. You have to, you have to really push the limit. You have to, you want to generate that conversation in the LP meeting where they're like, why are you investing in this company? And you need them to say, we are 100% behind them and here's why. And you can't, you can't have the, you can't have the fair weather friends when you're in controversial business.

• 23:07Chris Dixon?

  And do you think you managed to do that with 7,000 people? You also must do like, in your interviews and your process, you must, because they slip through the ads and they

• 23:15Speaker 00

  Look, you'll never be perfect, but everything you do makes the problem slide this way on the scale towards better. And so like, like, don't work at Andorl as an ad campaign. Tripled our recruitment on like in terms of incoming. And also we got a lot of more qualified applicants. Mostly it brought in people who are unqualified, but you're trying to move the needle and I think it all, it all, it all adds up. We of course hire people who are bad fits and then, and then we fire them.

• 23:43Chris Dixon?

  Yeah.

• 23:44Speaker 00

  Yeah.

• 23:48Speaker 00

  They quit themselves sometimes.

• 23:50Chris Dixon?

  Yeah. The other thing I'll say, and I'm not, I'm only on the app, I mean, the firm's an investor, but I'm not directly involved, but I'm a fan from the outside and I am just amazed like so many startups like they'll launch a product, especially hardware, like every two years. And I feel like every three weeks, like I just saw you, you had this new AR helmet and three weeks ago you had, I think, an autonomous submarine. Like you just launch a lot of stuff. It's kind of incredible.

• 24:11Speaker 00

  We've got about 25 products. The interesting thing about Andorl is what we're doing, where we're launching many, many, many products and where we are Having individual product teams on each of those that are relatively lean is actually easier for me to run as a company than the companies that have to invest in one or two products and grow them to serve everybody. Like, the ultimate example of this is these large enterprise software companies where you have thousands of people working on one thing and it has to serve everyone in your commercial and consumers and enterprise and government. And it like, that is a very hard problem to build a product with thousands of cooks in the kitchen. All I have to do is keep making new products. And then I keep a small number of cooks in each kitchen.

• 24:54Speaker 00

  And that, that, that, that, that ends up being a pretty self-regulating strategy. People are tribal. People work well with a certain number of people. Like, there's only so many people you can have very high trust in, where you trust they're truly doing things for the right reason, you, I mean, where you understand what everyone is doing around you. It's not that much bigger than the size of a home construction crew or a small game development team. Or that you kind of see these natural themes emerge over and over again across societies and across history, where it's, it's these groups of a certain size. I mean, the founding fathers. And I'm trying to keep every business unit as close to that size as I can. And they're all sort of engineers and product people, not like, I assume you try

• 25:37Speaker 00

  to eliminate middle management and layers? There, there was a very brief period, very early in Andorl's history, where we had more lawyers and lobbyists than engineers. It was very, very brief, but you had, we had to over-invest in that when you're starting a company in such a compliance-heavy, regulatory-heavy, government-interface-heavy side. We have never, ever had that problem since. I'd say we're about 85% engineering. That's correct. So, yeah, we have, we have quite little overhead. We don't have a ton of middle management. We have a lot, like, we basically have project and team leads that are typically engineers who came up out of other programs. Like, one of our program leads is a guy, we call him the king intern, because he started, he was Andorl's first intern. So, he started when he was 19 years old at Andorl.

• 26:22Speaker 00

  We were his summer internship. And then he quit school, came to Andorl, and within 12 months was leading a product. And now he's leading an entire business division. And like, we've done a pretty good job of making a meritocracy, where people see the people in leadership roles are themselves engineers who have cut their teeth and proven themselves inside of Andorl. Yeah. And when you're growing quickly, it's a lot easier. It's like, this is a harder strategy for a stable company, and I can't recommend it. But when you're introducing products at a sufficiently high rate, there's always a place for you to take these people, to pluck them out, say, you're going to be in charge of this new product, and you're going to make it work, using your experience of how to work inside of our organization, and the fact that people know you and trust you. Static organizations struggle with this, because there just aren't enough roles.

• 27:05Speaker 00

  It's the, it's the how many senior VPs are there problem. It's, it's nice to be growing fast.

• 27:12Chris Dixon?

  How do you come up, like, I guess a couple of questions on this. Like, one, how do you, you seem to follow like everything in hardware and software.

• 27:18Speaker 00

  I try.

• 27:19Chris Dixon?

  I watch your videos. And so like, I'm curious how you do that. And then also, how do you come up with all the ideas for the products? Like, is that, is that bottoms up? Is it you? Is it, like, how do you keep it like an active R and D?

• 27:27Speaker 00

  I used to come up with everything. I now come up with about half of our products. The other half come through a combination of customer demand and people in the teams coming up with solutions to problems. And that's good. Like, in the terminal, in the terminal stage, every idea I have should be worse than the ones my employees are generating.

• 27:45Speaker 00

  I mean, that could even be the case today. But I'm the guy in charge. I'm the one guy that can't be fired. So half the ideas are still mine. Hopefully that shrinks over time. Sorry, what was the other bit of that question that was in terms of?

• 27:57Chris Dixon?

  Well, just like, I'm just curious, like, how you kind of keep up with the stuff?

• 28:00Speaker 00

  How do I keep up with the weird stuff? I would never admit so in, in public. But I do actually keep up with the academic literature. I'm not, you.

• 28:10Chris Dixon?

  Like, which, like, of the, the computer science?

• 28:13Speaker 00

  In any space that I'm interested in. So like, I am, I am reading all the journals that mention synthetic long chain hydrocarbons. I'm a huge believer in that. It's going to change everything, and it's going to make this whole battery electric nonsense look like the multi-trillion dollar farce that it is, especially in aviation.

• 28:29Speaker 00

  This is a long topic, but like, I'm not saying, by the way, the best performers in that area are not necessarily academic. But by staying on top of the academic side, you'll never be too far behind. People, people in academia don't have to create or produce or sell necessarily. Their job is just to be on the front lines of what's new. And so they'll never be too far behind that most of the time. Same thing with VR, same thing with optics, same thing. There's like good academic stuff in VR on some of these areas? No, no, there's nothing good, but they talk about everything. It's what it's what. I think, yeah, I just don't think. Think of it this way, like suppose that you were going to try to like you want to keep up to date with new curved polarizer materials that are used for making pancake optics where you're folding optical paths on top of themselves.

• 29:13Speaker 00

  Like, I want to stay on top of this. What are you going to do? Are you going to read press releases that of all the companies that are, you know, touting this stuff? The company that the manufacturers don't tout this stuff. Like, how are you going to stay on top of the fact that there even are new advancements? And it turns out a pretty good way is to just follow the academic literature where you have people that are doing research on these things. And then they'll like their jobs say, you know, oh, and you know, such and such a group in China is doing this. And there's other company that has this approach. What we propose is a novel approach to X, Y, and Z. Now, they probably can't actually do it and they're never going to pull off anything of interest, but they've still done like the other work. I am basically using them as my outsourced research team on anything like if I need to find out what the state of the art on something is,

• 29:55Speaker 00

  I can trust the academics somewhat more than the press. Yeah. Because the press just hates everything. They hate everything. And so, and also they're lazy. They don't, they, they, they're not, they're not digging deep. They, they are, they're basically re, the press used to regurgitate what was given to them in press releases positively. Now they just regurgitate it and the, and the, the tenor has changed, but it's the same, it's the same activity. It's just repeating what's in the press release and the commentary around it is what's changed. So, yeah, actually I stay up to date a lot by reading academic, academic papers and journals that are focused on the things that I'm interested in. The academics, I also love when they complain about people in industry like nuclear. If you want to stay on top of what's, what's, what's going on in nuclear and you want kind of the contrarian view,

• 30:37Speaker 00

  follow what the academics are saying about modern small modular reactors. And you'll see them talking about new developments and then complaining about how they don't work. And sometimes their complaints are good and sometimes they make absolutely no sense, but like. It tells you what to look at. It tells you what to look at and like I, I don't have enough time to become a real expert on this stuff. Like I, just people didn't know. I used to be a journalism major till I dropped out. I was the online editor of the Daily 49er at Cal State Long Beach, which was the fourth largest student run paper in the country at the time. And it's not the Daily 49er anymore. It's now the Daily Breeze because 49er is a reference to the gold rush and the gold rush is racist now. That's, I'm not kidding. That's why they did it, which is crazy because the team is still the 49ers.

• 31:19Speaker 00

  So how could that be? Anyway, um, the, the, the, the, the, the, the, the, the paper decided its name was racist. And so they would rename it after a hundred plus years. Um, but you, I, what I realized as a journalist is you can only really follow so many things yourself directly from first sources. Like if you, you could choose a beat and you could stay on top of it, but you have to outsource at some point, the research to other people to consolidate and, and bring these things together. I'm very bullish on using AI at my direction to do this. I want to be able to send an AI and say, scrape literally everything, the press releases, the social media chatter, the academic stuff, and then give me, give me a summary that is not contaminated by some profit interest or ideological interest.

• 31:59Chris Dixon?

  Yeah. You don't have to convince this crowd that the press is anti-tech. Crypto has been the most, I guess it's unbelievable. Like for, we've tried for 12 years to have like one reasonable like article printed about like the actual stuff going on.

• 32:13Speaker 00

  Well, and the AI stuff is so hard.

• 32:14Chris Dixon?

  Well, they, they're starting to feel it now with all these like fake water articles and things. And it's going to just heat up more on the.

• 32:19Speaker 00

  It's so funny when people, they look at Andorl and say, oh, look at Andorl, trying to jump onto the AI grift, trying to pretend that all their stuff's AI.

• 32:27Chris Dixon?

  Been doing it for eight years.

• 32:28Speaker 00

  The name of my company is literally Andorl Industries. The acronym is literally AI. Like it's, it is so, we, we didn't talk about it in the early days because AI wasn't cool almost nine years ago. It was like cold fusion or VR nonsense for the future, never in the present. Uh, but yeah, it's so funny to be painted by the media as a, as a, as an AI, uh, you know, a coattail rider, when in fact I've, I've been, been there before LLMs were, were, were, were a glimmer in most people's eye.

• 32:57Chris Dixon?

  Yeah.

• 32:58Speaker 00

  Only because John Carmack told me. He told me AI was going to work and that was why I believed him.

• 33:02Chris Dixon?

  That's a good person to listen to.

• 33:03Speaker 00

  He's a good person to listen to.

• 33:04Chris Dixon?

  So a big like kind of premise, I think of Andorl, tell me if I'm wrong, is, is the growing rivalry between the US and China. And I've heard you talk about this on podcasts, but you don't think that on the current trajectory with the defense contractors and technology industry that we're well set up for that.

• 33:18Speaker 00

  Right.

• 33:18Chris Dixon?

  And so maybe you could talk a little bit. I would love to hear your thoughts on that rivalry and then specifically on, uh, how you see kind of handicap the technology race. So AI and, you know, defense, robotics.

• 33:29Speaker 00

  We're spending way too much. We're getting way too little and we're not progressing at the rate that our geopolitical adversaries are. And if they were a perfect, if we were peacetime and there was no inkling of conflict for us or our allies, that maybe wouldn't be a problem. Um, but that's not the world that we live in. And so the rivalry with China is a big one. It was a little broader than that. I mean, when we started Anderall, if you look back at the first pitch deck, you remember there's this page with a bear and a pair with a page with a dragon. And we lay out what the Chinese roadmap looks like and we laid out what the Russian roadmap looked like. And we literally lay out that Russia is going to invade Ukraine. They intended to get by force.

• 34:10Speaker 00

  There's a great quote by Putin where he says, "The country that wins in the sphere of AI will become the ruler of the entire world." I have a huge amount of respect for that quote. First of all, like what an incredible amount of of style there. I'm not saying that I like Putin. I super don't. I arguably started a company to fight Putin. I'm personally sanctioned in Russia and Belarus. I literally cannot go there without being arrested by Russia's security forces. So don't take this in like the, ah, I'm in a nail palmer to the wall. He said something good about Putin. But let's like, let's be honest, that's some really good like Bond villain level. Yes, they'll become the ruler of the entire world. You gotta respect that. And he said that along, like you said, it was. He said that speaking to a bunch of technical students at a technical high school.

• 34:55Speaker 00

  But a long time ago, you're saying? Yeah, back in 2007. Seven? This, this guy was, like Putin must read a lot of science fiction. He was. That's really early. Well, remember we were quoting it in an Anderall pitch deck in early 2017 before AI was cool at all. So like, man, I would kill for a US leader to be that far ahead. Could you imagine if you had, if you had somebody come out, I won't even name who, but if you had somebody come out in the White House and says, "We have to hold the Lagrange points. Someone has to have the high ground in orbit. The Cis lunar insertion and transfer pads must be protected if we're going to extract resources from the belt asteroids." So you know what I'm talking about.

• 35:40Speaker 00

  And imagine if that was also.

• 35:43Speaker 00

  Could you imagine if that was like from his own mind and not, not something that somebody wrote? That, that is Putin. He's a competent adversary in these ways. And so, um, I, I, yeah, like that was, that was very much part of the rivalry. The problem is of course, that now that rivalry has kind of reached its terminal stage, right? He's made his move on Ukraine. Everyone's seen that it's happening. And so the remaining one that we can influence is China.

• 36:05Chris Dixon?

  And you called out all the drone stuff. I mean, you, you knew that was all gonna, all the stuff.

• 36:08Speaker 00

  That's right.

• 36:09Chris Dixon?

  Like the Ukraine drones.

• 36:10Speaker 00

  We, we, we were talking about literally, I mean, our deck laid out exactly what was going to happen. And it said that warfare is going to be about a lot of these proliferated systems. A lot of like, it's going to move away from exquisite things that you build up capacity over decades. Putin said lower end systems that you can actually manufacture at a rate that is relevant to an ongoing conflict. And of course, that's exactly what's, what's, what's exactly what's happened in Russia. But you know, the, the very big picture here is we were living in a world in 2017 where a lot of people believed we lived at the end of history, that there was no more geopolitical movement of significance to happen, and that the United Nations could write mean letters to dissuade people from expansionist actions. And that what we're seeing playing out is, uh, kind of the more cynical version of, of,

• 36:56Speaker 00

  we're seeing the cynics, the cynics were right. The cynics who said, no, war is still a thing of the present, hopefully not the future. Uh, and it's a, it's a good thing that companies like Andorol, I think we're, we're getting started early on this. Because imagine if Andorol was started right as conflict kicked off in Europe, or worse, being started right as conflict kicks off over Taiwan with China. It's, it's too late. You, you can't start working on bombs after the war has started and expect to have any deterrent impact. You're just going to be part of fighting wars instead of preventing them.

• 37:31Chris Dixon?

  How do you like handicap? So I always like with AI, I always hear about China, US. Now, I don't hear Russia as much. Maybe they're good at it. I don't know. But but then like, how do you handicap it like?

• 37:40Speaker 00

  Well, see, that's that's that's true today.

• 37:42Chris Dixon?

  Yeah.

• 37:43Speaker 00

  It's Putin didn't say that thinking they he wasn't saying, I think AI is gonna accrue to the winner. And I bet the US is gonna beat me. They were investing a lot. It just they they didn't take the winning path. Right? Like they they didn't do some of these like the kind of attention based models. Focus based models like it just that wasn't the path they went on. They didn't get the winning path. And so you're right. It's mostly US and China now. Russia's trying to catch up. But he he's he said this at a time where he thought that was going to be their asymmetric advantage. He thought they were gonna figure out all the all the killer drone stuff way ahead of everybody else. And he would have put it to work before anyone else even knew how to respond. Imagine if Putin had made chat GPT as kind of the the the simplified version I use for members of Congress.

• 38:27Chris Dixon?

  Yeah, but like with the way I sort of like America has, we have this sort of decentralized capitalist system. China has the centralized, obviously, command and control. They have more people. They're very smart. The deep seek and all these other things show they caught up very quickly. Their head of manufacturing.

• 38:41Speaker 00

  Yep.

• 38:42Chris Dixon?

  Like, yeah, we, you know, on the flip side, like, I think this superpower of the United States, right? Is the very fact that everything everyone's complaining about in the press right now, which is we just like the hyperscalers just invested a trillion dollars in like, and is it a bubble? Maybe? Who knows? But it's a good thing because this is what we do. This is what we're good at.

• 38:57Speaker 00

  It's an advantage we have.

• 38:58Chris Dixon?

  It's the animals. It's the capitalist animal spirits, right? Like, it's like the, you know, it's the it's like the internet. It's like building out the fiber. Like, you need you need this excitement and capitalism.

• 39:06Speaker 00

  We need to choose advantages that the United States has. Like, this this is the one issue with the one issue with reindustrialization is that China has already done a really good job there. I'm not saying we shouldn't. We should. But we need advantages that take advantage of our better financial apparatus. Arguably, they take better advantage of our cultural apparatus. Certainly, they take advantage of a unique fact, which is the US has friends or at least partners all over the world. China doesn't have that. China has not convinced the world to host the Chinese military, to host Chinese culture. The United States needs to lean into the remaining advantages we do have. We should reindustrialize. I'm not saying we can win, you know, all on our all, you know, we we can't win without doing that. But there it's it's not enough on its own.

• 39:51Chris Dixon?

  And you recently started like a stablecoin related crypto like bank, right?

• 39:57Speaker 00

  It's a little more boring than that. Everyone's calling it Palmer Lucky's crypto bank. It's not so much a crypto bank as a bank that does support stablecoin deposits and transfers, because of course, any bank is going to need to support these things. If you want 24/7 liquidity, and you want 24/7 settlement, and you want it every day of the year with every country around the world, you're gonna have to do it via stablecoins. Like, and like, it's just obvious how that's gonna happen. So everyone's seized on Palmer Lucky is doing all this crypto stuff. It's actually way more boring.

• 40:25Chris Dixon?

  Okay, it's a bank that's a modern bank in a way.

• 40:28Speaker 00

  In many ways, it's the most boring bank there could be. We originally were thinking of calling it the real bank, but it turns out that the slogan, I think of Citibank is the real, it's the real something bank. I can't remember what it was. It's not a good slogan.

• 40:42Speaker 00

  Anyway, we were gonna call it the real bank, but it was a very simple thought. Okay, SVB's collapsing. Turns out that there's more risk in the system than people thought. It's potentially more widespread. And like, yes, SVB did some things that someone could avoid, but there's a lot of things that are inherent to the way that current banking is done. So our idea was, what would a bank look like if its job was to serve companies who more than every half percent of interest on their deposits actually just really needs their money to be there and not disappear?

• 41:13Chris Dixon?

  So it's narrow banking, not fractional reserve?

• 41:15Speaker 00

  So I think that there needs to be one-to-one banking in the United States. Not all banking. I'm not saying every bank should be like this, but the product should be available. I started going around talking to banks. I said, all right, I've got this thing. I want you to take my money, and then you have it when I come to get it. It's the only thing you're gonna do.

• 41:35Chris Dixon?

  It's called, by the way, it's called narrow banking. And like, there was a, there was actually a company that tried to do it recently, and under the Biden administration, and they got shot down.

• 41:41Speaker 00

  And the government doesn't want anyone to do this as part of the crazy scheme.

• 41:44Chris Dixon?

  I know, I know.

• 41:45Speaker 00

  Like, there's a reason the banks aren't doing this. And it's not just that nobody's smart. It's that the government doesn't really want it to happen.

• 41:52Chris Dixon?

  They claim it's because then you would hurt the credit system and all those other things. But it's, to your point, I think, shouldn't you be able to like, have at least some people opt out?

• 41:59Speaker 00

  It should at least be an option.

• 42:00Chris Dixon?

  That has your... Has your money there. Well, and by the way, you can, you know, you can do it if you have a T bill, for example, then you have a Q SIP or a custodial, it's bankruptcy remote. And so it's effectively available to wealthier people, but not to the retailers.

• 42:11Speaker 00

  And not available to rural or a lot of these tech companies and smaller tech companies. So that was the question. How do we make a bank that would give people the things they need from a bank without the parts that are going to destroy their entire business? I mean, if, like, let's be real, if the federal government would not have bailed out SVB customers far beyond what the law required, and if the Biden administration would not have more or less spuriousely declared that the signature bank deal was actually signs of systemic collapse, which is nonsense. Like, if they wouldn't have done that, it would have wiped out a lot of tech companies. And so that, what we're trying to do with Arabor is actually a lot more boring than many people think, but there is, there is a market for it.

• 42:50Chris Dixon?

  Imagine a bank that doesn't de-bank you.

• 42:52Speaker 00

  That's right.

• 42:53Chris Dixon?

  Has your money when you want it and actually maybe gives you interest would be another radical idea. Which, Jennifer, you know this, that's the big debate point in the stablecoin bill, is that they're trying to undo this now. Is this thing where you actually pay interest to customers?

• 43:06Speaker 00

  I'm very familiar. You can pay rewards to customers, but you can't pay.

• 43:10Chris Dixon?

  Even that, they're trying to ban rewards.

• 43:11Speaker 00

  They're trying, well, that was like, yeah, that was the negotiated, now they're trying to get, they're trying to undo the deal. The way that I look at, look at it is this, there is a lot more risk in the banking system than anyone is willing to admit. It only works if everyone stays in the matrix and doesn't, doesn't look at how it all works. And I probably cannot build a bank that survives a total financial collapse. But are you guys familiar with the theory of, of, of the bear? The bear is chasing you. He's chasing people around you. You don't have to outrun the bear. You have to outrun everyone else. And so I think you might, I mean, you might not be able to make it where every bank fails and you survive, but you can make it where you're one of the survivors

• 43:53Speaker 00

  in a world where something really bad happens, something that is beyond what is, what the government could feasibly bail out. And by the way, when I say feasibly bailout, I don't just mean financially, I mean politically. I am actually astounded that the Biden administration bailed out a bunch of billionaires like me. In the midst of this huge populist shift, right or left? And the fact that they did it for irrational reasons, but like, I'm surprised they didn't do the thing that would have been popular with their base. And it's not hard to imagine a world where a different White House would do something different. And this is not a right or a left thing. It's a populism argument. Will we live in a world where politicians can make rational risk management, systemic, you know, financial collapse risk management if it's going to make them look like they're in the pockets of the billionaires?

• 44:38Speaker 00

  I think maybe not. I think you could end up a war of the world where there's massive economic pain because it's not politically viable to do the right thing for the country. And so that's the world that I'm trying to prepare for. The billionaires, the millionaires where, you know, if Bernie has his way, if Bernie got in the White House and he's not that far away, you know, he's like, at one point, he was a few super delegates away from winning a general election. It's something to ponder. Bernie can still-

• 45:08Chris Dixon?

  If we have an economic collapse, I think that the, well, I don't know if we want to get to politics, but I mean, I, look, I think, I think that-

• 45:13Speaker 00

  We're not into politics?

• 45:14Chris Dixon?

  Yeah, so, so, I mean, you know, the Mumdami winning in New York, like, I think what we saw-

• 45:20Speaker 00

  That's a great example.

• 45:21Chris Dixon?

  Yeah, the Republican Party has shifted to this kind of nationalist populist movement with Trump and Vance-

• 45:26Speaker 00

  That's why I said it's not really right or left.

• 45:27Chris Dixon?

  And the Democrats may shift to that, and who knows? Like, we're into, I think we're an uncharted, I mean, it's a real realignment, I think, in the sense of maybe since FDR or something, we haven't had such a realignment of the parties.

• 45:36Speaker 00

  Yep.

• 45:37Chris Dixon?

  And it makes it very unpredictable, and you have a bad economy and, you know, we're only a few dominoes falling away from some really weird outcomes, in my opinion.

• 45:46Speaker 00

  Yep, yep. But like, in the case of Aribor, the most, the riskiest asset, like, the riskiest product we're offering is lending with a 50% loan to deposit ratio.

• 45:58Chris Dixon?

  Yeah.

• 45:58Speaker 00

  Which would make it one of, like, that's the riskiest product is one of the most conservative ratios in the entire country, so.

• 46:04Chris Dixon?

  It's smart. I mean, that-

• 46:06Speaker 00

  And luckily, this administration-

• 46:07Chris Dixon?

  Yeah, you'll get it.

• 46:08Speaker 00

  -was willing to sign off on it.

• 46:08Chris Dixon?

  Yeah, yeah, you'll get it.

• 46:09Speaker 00

  Which in the past, they've not been a fan of these things.

• 46:11Chris Dixon?

  Yeah, yeah. That's awesome. So maybe last question, and then we'll take questions from the audience. Just since you're like such a futuristic thinker, I'd love to hear, like, I- I feel like all these things, like sci fi things that I've, I've heard you talk about Robert Heinlein on the podcast.

• 46:27Speaker 00

  Love Robert Heinlein.

• 46:28Chris Dixon?

  I just read Stranger to Strange Land recently.

• 46:30Speaker 00

  It's so funny.

• 46:31Chris Dixon?

  I love Starship Troopers.

• 46:32Speaker 00

  It's so funny when people call him a fascist because of Starship Troopers.

• 46:35Chris Dixon?

  Yeah.

• 46:36Speaker 00

  And they've clearly never read other Heinlein. Like Heinlein also wrote basically like pro worker, pro communist.

• 46:42Chris Dixon?

  Yeah, he's not.

• 46:43Speaker 00

  Like there's works where literal communists who seize the means of production from the private companies are the heroes of it.

• 46:50Chris Dixon?

  Have you read Stranger to Strange Land?

• 46:51Speaker 00

  Yes. I've read every single Heinlein.

• 46:53Chris Dixon?

  It's crazy. It's like this hippie, it's like electric coolant acid. It's great. I mean, it's amazing.

• 46:56Speaker 00

  He's just, he's just a great sci fi author. It's so funny when people try to boil it down. He must be a fascist because the government has some fascist tendencies.

• 47:04Chris Dixon?

  In Starship Troopers. He's critiquing it, I think, yeah.

• 47:07Speaker 00

  He, he, he, he does it all. He makes fun of every, anyway, yeah, but love Heinlein.

• 47:12Chris Dixon?

  But I feel like, to my question, I feel like all of this stuff that's been talked about my whole life is like suddenly happening. Like, I don't know, I'm not, I know nothing about energy, but my friends tell me fusion may happen. Quantum computing, the experts, some of the experts here say, you know, it may be actually starting to happen. Obviously crypto, AI is clearly happening. We believe crypto will happen.

• 47:32Speaker 00

  Yep.

• 47:33Chris Dixon?

  It feels like there's all of these things that have just been talked about. I mean, there's stuff in biology, there's stuff, you know, you're doing in, you know, autonomous systems, humanoid robots, like.

• 47:43Speaker 00

  Interspecies communication.

• 47:44Chris Dixon?

  It feels like all this stuff is happening now. And I'm just curious, like, do you think that's true and what's gonna hap? Like the next 30, is it like, is like to your point about history starting again, it feels like, like we had, you know, Peter Thiel talks about, we had 50 years.

• 47:55Speaker 00

  Yep.

• 47:55Chris Dixon?

  Only digital innovation.

• 47:56Speaker 00

  Yep.

• 47:57Chris Dixon?

  You know, if you, if you were born in 1890, you saw the invention of the airplane and a person, a man on the moon. And then it, physical world stuff kind of stopped, but it really feels like both history in your sense of like wars restarting, land war in Europe, bat, obviously terrible things like that. But at the same time, on the tech side, like all this cool shit's happening all at once.

• 48:16Speaker 00

  Oh, it's huge.

• 48:16Chris Dixon?

  And it feels very real.

• 48:17Speaker 00

  Our understanding of the world is progressing so fast and there's a lot of things that don't require. Even technological breakthroughs, like the most exciting thing about what's going on right now, in my opinion, is that it's mostly not actually technological progress. It's psychological, or you could even call it quasi-religious progress, catching up with the science that was figured out decades ago. That's this whole nuclear thing. I have all this nuclear energy stuff. It is just everyone's willingness to do nuclear, catching up with the technology.

• 48:48Chris Dixon?

  Political, cultural will.

• 48:49Speaker 00

  A lot of this bioscience. There's a lot of things that have been proposed for decades that are only just now actually being tested. I mean, here's another example. We've understood oxytocin, which is one of the primary mammalian pair bonding chemicals. We've understood how it works for decades. We've been actively using it to help like postpartum depressed mothers bond with their kids. Oh, you hate your baby? Look at your baby and we're gonna give you this shot. Well, the fuck, you love your baby now. It's incredible. And there's people who are talking about using it in totally novel ways. For example, doing divorce counseling. And we've understood the mechanism of it for 50 years now, and it's literally just a willingness to just do things. That's why I'm excited about the new science. I'm excited about new fusion.

• 49:33Speaker 00

  There's a lot of just do things that's going on right now.

• 49:36Chris Dixon?

  And some of it's infrastructure, like AI is really about GPUs, right? Like, a lot of it's engineered, just like, isn't it too? Like, just the timing of like, all this stuff came into place.

• 49:43Speaker 00

  We got so lucky. What a crazy coincidence. You basically had all these GPUs for gaming. By the way, Oculus, when we acquired by Facebook, almost bought Nvidia back when they were worth about $7 billion, and we were looking at doing a 51% takeover. No, but here's the, and people say, oh, man, imagine if we would have gone through with that project. But they never would have done what they did, right? It was gaming, and then the gaming stuff happened to be useful for all the proof of work and staking stuff in crypto. And then that ended up also being very similar to what we needed for AI. Like, man, what an incredible coincidence we live in, in that world. There's, there's an interesting argument where, where. Oculus would have gone and got Nvidia and AMD and centralized them and then only focused on gaming and then we wouldn't have any of this stuff.

• 50:28Chris Dixon?

  Wouldn't have AI.

• 50:29Speaker 00

  It's a crazy world.

• 50:30Chris Dixon?

  And do you think, so do you think we're entering into this sort of like maybe unprecedented 20, 30 year period of acceleration?

• 50:36Speaker 00

  Absolutely. I'll, look, I'll give you my, my thesis for optimism. People know that I'm a pretty, I'm a pretty happy guy. It seems like I'm having a good time. It's because I remind myself the oats are like a dollar for some large number of pounds of oats. You can, you can, you can work for one, you can work for one hour of minimum wage at a federal level and earn enough calories to survive an entire week. It's the best it's ever been. Nobody's been able to do that. It's not just oats, it's agriculture in general, modern pesticides, controls, roundup, machinery. We've figured out how to make food really, really well. We throw away most of it. That's how good we are at making it. And the same has been true, I think, for clothing. How many outfits do you own?

• 51:17Chris Dixon?

  20 or something, I don't know.

• 51:19Speaker 00

  And how many would have you have owned as a rich guy, even, you know, even 50 years ago? How about 100 years ago? How about 200 years ago? We've just made clothes so cheap, people buy clothes and they throw them away after wearing them one time. And you don't even have to be rich to do that. There are people who are in college, working part-time, who do this. And I think that what you're going to see is that same level of automation that has dominated textiles and agriculture, start to apply to everything. I think AI is going to make it easier for the resource extraction, processing and manufacturing to like, I really do believe that in our lifetimes, you'll be able to go buy something that's like a Ford F-150 for a thousand dollars or the equivalent of a thousand.

• 51:58Chris Dixon?

  The cost of the, the raw minerals.

• 51:59Speaker 00

  The cost of extracting and transforming it will go to near zero and we're going to compete the margins way down. It's just not that crazy. And so if you can, and I bet you'll be able to recycle it with 90% efficiency at the end of the season. You'll say, what's, what's my summer car going to be? Let's go down to the mall and buy one and, and, and we'll try it out. Same thing, I think, for housing. Housing is going to come extremely cheap. The components are not expensive. It's the transformation and the regulation that have made it really hard.

• 52:25Chris Dixon?

  The policies is a bottleneck.

• 52:26Speaker 00

  Correct. And so I think that this is what I mean when I say, we don't need technological breakthrough so much, we just need to just. Do things and like the tech to do this is going to catch up. Like, you know why manufactured housing isn't big in the US? It's just anti-manufactured housing laws, literally prohibiting housing that is manufactured not on site. It's one of the most anti-American sets of laws that there's ever been. I confidently believe that the founding fathers, if they were around, would make this a federal issue. And they would say, we are not going to allow, we are not going to allow local governments to decide. Like, if you want to say a house of a certain appearance is one thing, that's fine. But you cannot, like, this is a real interstate commerce issue. You cannot effectively prohibit other states with competing with your housing industry by prohibiting any housing that was created majority outside of your state lines.

• 53:11Speaker 00

  That's crazy. And we've probably spent, I don't know, $100 trillion on housing that we didn't need to because of that. Anyway, all this stuff is going in a good direction. That's why I'm optimistic about the future. The future of, the current present of Oates is the future of everything.

• 53:28Chris Dixon?

  Amazing.

• 53:31Chris Dixon?

  The, this is great. So let's maybe take some questions from the, from the audience.

• 53:35Speaker 03

  Thank you, Pram. Super interesting conversation. I have a question about your structures. You were speaking about how you have a lot of small teams. And this feels like it's optimizing for the number of products you can iterate on and figure out what works, not for manufacturing very efficiently and making the cost of unit as low as possible. And I'm coming from Ukraine. I have spoken to some people in defense industry there. And their criticism for Andreel was exactly this, that your products are very expensive. And what they need right now on the front line is like something very, very cheap. Just like we had it in the Second World War, where like German engineering was way superior to the Soviet one. But the Soviets just had a massive quantities of the tanks,

• 54:18Speaker 03

  which were stupid, lame, easy to destroy. But the sheer quantities eventually won.

• 54:25Speaker 03

  How are you thinking about this?

• 54:28Speaker 00

  Sure.

• 54:28Speaker 03

  Are we in a situation where China has already won the race on cheap manufacturing? Are you like, are you like, generally, what are your thoughts on this? Very curious.

• 54:37Speaker 00

  So they've definitely kind of won by any rational definition. And so we're probably not going to approach Chinese cost. Luckily, the US has more money and we're more, you know, we make more money per person. And so we can probably afford a little bit of inefficiency. On the Ukraine side, that one's really interesting because we've had hardware and people in Ukraine since the second week of the war. I've been to Ukraine during the war myself and we've been a part of USAID packages, European aid packages. We even sold some things directly to Ukraine. But to your point, mostly higher end stuff, long range loitering munitions that can get through jamming bubbles. And what they really need is large amounts of industrial, industrial levels of firepower. I mean, like they need a lot of really small, cheap drones. They also just need a bunch of artillery shells. They need a bunch of mortar shells.

• 55:22Speaker 00

  The biggest problem for a company like Anduril, and it's a fair criticism that people have made. The thing is, I can't compete with, for example, Eastern European manufactured artillery or mortar rounds. I just can't do that in the US, no matter how smart I think about it. I make solid rocket motors. I've wanted to make energetics get into the artillery shell business. The problem is I just cannot compete with what is a quite powerful arms industry that exists in a lot of the Baltics and Eastern European countries that are supporting Ukraine. The problem is that you, to automate everything, you have to get to a sufficient scale. And so one thing I've done is I've approached multiple administrations, said, hey, we need to commit to, for example, supplying 155 artillery shells to not just Ukraine, but all of these allies.

• 56:05Speaker 00

  We need to build the, you know, the alien dreadnought where the metal goes in and the shells come out. So are you, are you familiar with how artillery shell manufacturing happens in the United States? Here's the actual problem. The facilities are literally owned by the government. And then they actually lease them out to operators who then use them to develop stuff. And so if you try to compete with them, the government explicitly says, but this will... It'll be like, it's a waste of investment because we've already made our investment in these facilities. So like, I want to solve these problems, but in general, Andrel's looked at these things kind of quasi-realistically. I'm waging this war of hearts and minds to explain why that is the dumbest thing ever. They need to open it up for competition. I think what they should do is say, "We're not going to give you welfare to make your artillery

• 56:48Speaker 00

  line. We're going to say that the first company to build something using private capital and get to sufficient scale, we're going to award them a contract for this much, and they have to hit a certain price point and a certain scale, and only then are we committed to buying." And they just don't want to do that because they have their own centrally-planned scheme. There's a lot of, there's a lot of secret communism going on in the United States, a lot of secret Soviet thinking that is just hidden behind a veneer of the flag. The other, so that's kind of like the artillery issue. When you get to the small drones, it actually gets to, I'm competing, like, my biggest competitor for building small drones, like, to be clear, I want to build small attack drones for Ukraine, and I want to be cost competitive there. But I'm competing with Ukraine using largely Chinese components,

• 57:32Speaker 00

  right? Most of these internally-assembled drones, they're built using Chinese flight controllers, Chinese sensors, Chinese stuff. I'm prohibited from using those. So Andrel is sanctioned by China, our entire C-suite is sanctioned by China, the government in the US prohibits us from making weapons using these Chinese components. And so I can come in and say, "Hey, I have this thing that is cheap, but you know, instead of it being a $900 drone, it is, it is a $2,000 drone." And people in Ukraine say, "Well, that's fucking expensive, and how am I ever going to do that?" And I say, "You're right. If you're willing to use Chinese stuff, I literally can't compete." And this has been a smart move by China, by the way. This is why China keeps, you know, they do this because it actually cripples my ability to compete. There's other stuff that I do that's just too expensive for Ukraine, and I'm trying to make it, I'm trying to make it cheaper.

• 58:15Speaker 00

  I want our learning munitions to be more, less expensive, but for example, I'm required to use a certain navigation system that the government has approved for munitions of this category, and they also require us to use it because they want us to sell anti-tamper stuff using approved parts, where Ukraine can't go in and say, "Ah, this was able to go, you know, four..." 100 kilometers, but if I just strap on a bigger battery and I can tweak it, I'm gonna go to Moscow. Another example of this, like I wanted, uh, I actually wanted to sell surveillance towers to Ukraine before this war even started. And that wasn't something that I came up with. It was something Zelensky came up with it. He read a Wired article about Anduril, talking about how we were securing the US southern border. And when he was in the US for his first UN meeting after winning his election,

• 58:59Speaker 00

  he wanted to meet with Anduril to talk about what it would look like to have our towers on his border. So they could know how Russia was building things up, how they would cross. And then we ran into this problem where the US State Department basically put the kibosh on the whole thing. They said, no, Russia's not going to invade Ukraine. Uh, Zelensky's basically just angling for welfare. He's trying to be a saber rattler. And so like the people who made those decisions, they're still in the State Department. They're still making these, these things. So I've, to a certain degree, I've got my hands tied behind my back. I'll say, I want to make a $2,000 attack drone. They say, well, you have to use this approved thing. You can only use this approved warhead. You have to make it anti-tamper so the Ukrainians can't make it do things that we don't want them to do. And the net of that is what you're talking about. People in Ukraine saying Anduril's stuff is expensive and it's locked down and it doesn't, and you can't modify it.

• 59:44Speaker 00

  And, and I say, yeah, that sucks. Look, I like, I've been to Kiev. I've been to Lviv and I've, I've trained people on how to use our systems. And I've heard this feedback face to face and it's really hard to tell a guy who's telling you that people are dying because of it. Like, oh, well, sorry, I'm, I, you know, I wish I could do better, but that's the, that's the true enemy. One more thing. You're right that we have a lot of these different things and that is good for figuring out what works, not necessarily for scale. Some of those things are getting to scale. Like our towers are very much at scale. We're on 35 bases around the world. We're covering about 30% of the US southern border now, a bunch of the northern border as well. It's like our towers have scaled really well. Same thing with our counter drone systems. Like we're the program of record for all of SOCOM's drone defense.

• 1:00:24Speaker 00

  We're the program of record for all of the Marine Corps drone defense. So some of these things are scaling. It's these newer things like. I guess if I have a critic who says Palmer, but you have all these things that haven't scaled. I'd say, well, guess what? Every single andro product that is more than five years old has scaled. It takes time to get the government to scale these things, but we don't have any examples of a product that we did that didn't scale once it had enough time. Every product in our, we've been around for almost nine years. Every product that was started more than five years ago is in major scaling mode. It's just, we have a lot of other things that are newer and there's, I'm sure there'll be some failures, but you know, it's flipping coins. You don't need to get a heads every time to, to beat the house.

• 1:01:04Chris Dixon?

  I think you see what I mean when I said the Joe Rogan thing is like the best thing to watch. He just gave us a preview of it. Um, that's amazing. Thank you.

• 1:01:11Speaker 00

  Thank you guys.

• 1:01:12Chris Dixon?

  You have like a million great stories. So thank you so much.

• 1:01:14Speaker 00

  Of course.

• 1:01:14Chris Dixon?

  Yeah.

• 1:01:19Speaker 02

  Thanks for listening to this episode of the A16Z podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts and Spotify. Follow us on X at A16Z and subscribe to our Substack at A16Z.substack.com. Thanks again for listening and I'll see you in the next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast.

• 1:02:04Speaker 02

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