Invest Like the Best with Patrick O'Shaughnessy
· Palmer Luckey
[00:00:00] S1: It's been a double-edged sword, I think. We've been working on AI for defense since literally day one. That was the whole pitch. The second page of our pitch deck was a quote from Vladimir Putin. He was talking about artificial intelligence, and he said, "The country that wins in this sphere will become the ruler of the entire world," which I love. It's a very James Bond villain quote. On the one hand, it sounded crazier at that time because AI wasn't hot seven years ago. There were people who were interested in it, but it's obviously not even a 0.01 of the attention that's being dedicated to it today. The flip side of that is now that everyone is saying they're AI, all of a sudden our message is getting diluted or, "Hey, we've actually been doing AI for defense for almost seven years now." And now everyone is changing to say, "Yes, our systems are all powered by AI. It's all AI-driven." Some of that's true, some of it's not. Now it actually is less differentiated than we were. You have to now get very clear about what the difference between a real usable, fieldable AI system looks like versus strapping together ChatGPT with whatever your quadcopter thing is and saying that it's going to change the world. I do think what's been helpful to us, though, with members of Congress, people in The Pentagon, even investors has been the explosion of firsthand understanding of how powerful AI can be that's been driven by these large language models. Obviously, the things that we are building that fuse data from thermal vision and radar and signals intelligence processors, that then calculate optimal weapons pairing against that target, very different use of AI than a thing that you tell to write a poem about your car. But the fact that every member of Congress has been able to use ChatGPT, the fact that all these people in The Pentagon have seen and used systems, doing things that they never believed a computer could do has, I think, expanded people's minds in general towards the possibility that maybe people can be replaced by AI in certain use cases, maybe there are areas where computers really can do a job as well or better than a person. A lot of skeptics, I think, have changed their minds because they type something into ChatGPT, it did something for them, and they said, "Wow, computers sure are amazing these days.
· Patrick O'Shaughnessy
[00:00:00] S0: What has AI most unlocked?
· Palmer Luckey
[00:00:00] S1: The most important thing that it has unlocked for us is ability to scale. People focus on use cases where AI can do better than a person or even better than a team of 100 or 1,000 people at some one specific task. I think a lot of the more interesting use cases are where you can do as good of a person but without a person having to do it. Let's use an example. Let's say that I'm going to deploy 1,000 autonomous cruise missiles. Those are going to be a lot more impactful than they would be if I had to have 1,000 people trying to remotely pilot 1,000 systems and tell them what to do, how to do it, have all those data links active. I guess it's using AI to do things that would be impossible to do otherwise, either for real technical reasons like bandwidth or just for practical reasons. We don't have thousands of pilots that we could dedicate to such a task. For me, I think that's the biggest thing AI enables. I'm less focused on the superhuman, super intelligent side of things and more, "Hey, this AI that's running my autonomous helicopter, is it about as good as a pretty good helicopter pilot? Okay, that means that I can have one soldier managing a fleet of 25 airframes himself and just telling them, "Hey, I need you to clear this area. I need you to find this target I'm looking for. I need you to fly ahead of my convoy and watch for anything." Now he doesn't need 25 pilots and 25 helicopters to do that. That's what I'm most excited about. And it's really important in a world where I think quantity is going to have a quality all of its own in these types of weapon systems. The best way to defeat a lot of our adversaries' defenses is not through building a small number of exquisite systems. But quantities that are so large, they can't possibly stop them. And it's especially important in a world where militaries are struggling to recruit. They're trying to be more cost effective. They're trying to put less money into salaries and disability payments and more into systems that are going to be fighting the adversary directly, robotic systems. For example, the United Kingdom has said that they want to, over the next few years, reduce the size of their Navy by 30%, 30% personnel reduction. And because of that, they are doing things like dedicating one of their two aircraft carriers to being an autonomous aircraft launch system.
· Palmer Luckey, Patrick O'Shaughnessy
In other words, they want one of their carriers to only launch autonomous systems. You don't have to have huge numbers of people to run and maintain these traditional manned systems. If that's the world we're going to live in where we need to ramp up the number of systems but also ramp down the number of people, the only thing that can fill the gap is automation. [00:00:00] S0: What do you want Anduril to become? I mean you've come a long way. This answer would have been interesting seven years ago, but…
· Palmer Luckey
[00:00:00] S1: I can tell you what the answer is. It's the same one. Our pitch deck page one says that Anduril will save western civilization by saving taxpayers hundreds of billions of dollars a year as we make tens of billions of dollars a year. The reason that's important is our goal is not just to make money, and it's not just to beat the incumbents. It is to be much more efficient than them, so that when people buy our systems, it allows them to get rid of systems and programs that are much more expensive, that are very wasteful. I want to be doing that 10:1 ratio. If I am making $1 billion, I hope that it is by saving taxpayers $10 billion or $50 billion killing a legacy program that didn't need to be around anymore. And I don't think we've gotten close to that tens of billions of dollars yet. We're going to be hitting $1 billion in revenue pretty fast. We're not there yet. But I do think that we are already saving taxpayers billions of dollars. We're making hundreds of millions of dollars a year. We're saving taxpayers billions of dollars. That's only two orders of magnitude. Just got to jump to saving them tens of millions and then jump to saving them hundreds of billions. Two orders of magnitude isn't all that much in an industry where the U.S. defense budget alone is over $800 billion. One of those areas where it is truly a multitrillion dollar a year opportunity, and there are not that many credible players to compete with the big primes. Anduril is positioned to be the company that does this. I don't see anybody else who's across all the domains and all the arenas that we're competing in, even close to having the impact that we are. Maybe I'm wrong and maybe I'm being too arrogant, but if there's going to be a new defense prime -- and I don't know how to define it exactly. But let's say, if there's going to be a new company in that top five that get 80% of the spending, I think Anduril is by far the most reasonable bet. I don't know if we're going to get to number one in my lifetime, but I am certain that we are going to get to the top five in the next decade.
· Patrick O'Shaughnessy
[00:00:00] S0: What do you think of Apple's vision and the state of VR, back to your original love?