Invest Like the Best with Patrick O'Shaughnessy
· Palmer Luckey, Patrick O'Shaughnessy
[00:00:00] S1: this is going to be a self-serving answer, right? Not often. Peter obviously is out of the box as it gets. I don't know if you know, Founder's Fund was the first institutional investor in Oculus. So there was a time when nobody believed Oculus could succeed because there had never been a successful VR company in history. And so that was pretty unconventional belief, not only that my company would succeed, but in doing so, it would become the first company to ever succeed in an industry littered with corpuses. That's pretty out of the box. I'd also say there's a lot of people who -- we just say who's the most out-of-the-box thinker? I mean there's Jaron Lanier. He basically invented the term virtual reality, and he is the epitome of out of the box. But I also think that he has a different perspective on the world that doesn't necessarily align with my own. Being outside of the box I meet outside of the box people quite frequently. Very rarely do I meet ones who are outside-of-the-box thinkers, who want to engage with very conventional systems like the U.S. Department of Defense or electronics retailers. There's a lot of outside-of-the-box people who they almost divorce themselves from the timeline of the boring corporations and the large government agencies. Where I've done well is being willing to interface with those things and leave my life on the terms of inside the box thinkers as an out-of-the-box person. [00:00:00] S0: What do you attribute that to? Why are you wired that way, do you think?
· Palmer Luckey
[00:00:00] S1: Probably practicality. It comes back to what I talked about earlier. I want to make a big impact on the world. There's not that many people who have made an impact, divorcing themselves from the establishment, just doing their own thing. And almost all the ones you can come up with are artists, and I am, unfortunately, no artist. I could do a lot of interesting things. I know a lot of people in the maker community they don't like this, the hacker community, and they go off and they follow their little passion or their interest. They're building cool wacky things. They're pursuing some novel technique for making a new programming language, but they're kind of a purity test that dictates who they're willing to work with and how they're willing to slow themselves down, I think actually limits their ability to impact the world. You can have a lot more impact as a person who says, I have out-of-the-box ideas. And I am going to force myself to engage in the unpleasant task of trying to push these ideas onto conventional people in conventional institutions. Then if you say, "I'm just going to go and I'm going to do this on my own in my garage, and I'm going to put it on the Internet as an open-source project. And we're all going to circle jerk about how novel and cool and high performance this technique is," because at the end of the day, that's not how you have a large impact. Having a large impact means engaging with the people who are going to be able to get that into schools, the large software and hardware systems, into policy. I think if you're driven more by wanting to make an impact than wanting to be outside of the box, you will naturally end up where I am. There's a lot of people like me. I don't think that's all that unique to me.
· Patrick O'Shaughnessy
[00:00:00] S0: You remind me, I can never pronounce his last name. His first thing is Mihaly, last same start with a C, the guy that wrote about creativity and flow. His study said that the great creatives, the thing that they did that no one talks about, Picasso is a good example. They cultivated the field that was going to be receiving the work, and they put a lot of work into the conventional critics, the field, and that's basically sounds what you're saying.
· Palmer Luckey
[00:00:00] S1: That's actually a really good analog for what we did with Oculus too. I mean we spent a ton of time engaging with the press, engaging with game developers, engaging with computing companies because we were trying to shape the way that this technology would be received. And we're trying to tell them, here's what we think the world should look like, and it wasn't always easy. Anduril has been doing a lot of the same things. I mean I hate to admit this, but Anduril, when we started in the first few months, we hired more lawyers and lobbyists than engineers. That's not the case anymore, obviously. That was, I think, because we were actually more concerned about the shaping of the institution's side and compliance of the institution's side than the building of technology side. We felt good on the engineering side. We're going to be fine. We knew we were going to build Lattice. We knew we were going to build these products on top of it. What we were most concerned about was getting people in DoD and on the political side to believe in what we were doing, to believe that cost-plus contracting was broken. I believe that a small player could be a large player in the space, if given the chance. Obviously, it's worked out pretty well. But I think Anduril probably has done just as much on the government relations and institutional engagement side as we have on the tech side in terms of what contributed to our success.
· Patrick O'Shaughnessy
[00:00:00] S0: Is it oversimplifying it to say that more inventors should work backward from existing systems rather than forward from like their ideas about how things should be?
· Palmer Luckey
[00:00:00] S1: I think you need to think about -- existing systems in terms of the institutions and the people and the traditions and the politics, yes. The technology, probably no. Obviously, you can learn from existing technology. But in my experience, it's good to trust people when they tell you what their problems are, but don't trust what they think the solution is. There's so many companies that look at the solution space that exists and then say, "Oh, I can do that somewhat better. I can do that somewhat cheaper." And the reality is, is that rarely our impactful business is built on doing something a little better or a little cheaper. If you're not that different from those guys, it means they're going to have an easy time adapting from you whatever you come up with because you're not competing with what they have today. You're competing with what they're going to have after they look at what you're doing and then cross-implement it or learn from what you're doing. That's a thing that a lot of start-ups miss. They say, "Oh, look at this, like Oracle division doing this thing, the small side of Oracle, I think I can do better than that service." And I have to remind them, first of all, guys, let's say it takes you 2 years to build that. You're not competing with what they have today. You're competing with what they have in 2 years. And then what you're really competing with is what they have in 3 years after they look at what you've built as you start to eat some of their customers and then they're going to build something in response. So you got to kind of think 2 or 3 steps ahead with these things. And if you build something that's totally different, they're going to have a very hard time adapting to it. Maybe one good way to look at it is a lot like bacterial infection. If you build something that is the same shape as existing things, it's going to be a lot easier to get infected. If you can build something that is a radically different structure, it's much harder for people to copy what you're doing or attack what you're doing.