Invest Like the Best with Patrick O'Shaughnessy
· 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?
· Palmer Luckey
[00:00:00] S1: I love it. I'm a big fan of what Apple is doing. It's not going to lead to mainstream adoption of VR, but that's not the point. That's not what they're trying to do. I'm so pissed off by all the analysts who are talking about how few headsets they're going to sell with the Vision Pro. But you got to look at the name. It's the Vision Pro. They are not trying to make a mass market product. What they are doing is trying to make a VR headset that everybody wants even if it's not one that they can afford. They want to make VR something that everyone understands that they want in their lives. They see people using it and say, "Wow, I want that for myself, but I'm too poor." If that is what Apple can accomplish, they will have no problem down the road when they make its lower cost version of the headset. It's $3,500. They have a very clear path to making that headset for hundreds of dollars. There is nothing in there that is not going to be very commodity in just a few years. The displays in it are extraordinarily expensive because they're practically engineering samples from the display provider, but those displays are going to come down in cost to under $100. That will only take a few years. I'm a big fan of this approach. I think it makes more sense than running at the wall over and over and saying, "Oh, we just need to make it cheaper, and then people will buy it." No, no, that's not the case. You have to make VR something people want before you can make it something that they will buy. I wrote a blog post about this on my blog palmerlucky.com, titled "Free isn't cheap enough." And I wrote this years ago. I think I wrote it four years ago, five years ago. I laid out this thesis. You need to make VR something people care about before you can make them buy it. And the cost actually is not the dominant factor in making people want to buy a VR system. In other words, if you took existing VR technology as it exists today or at least back then and you literally gave it away for free to every person in America, the vast majority would not continue using it, even if it was literally free, because the quality is not there. It's just not at that bar that makes a person want to engage with it every day. The content was not at a level where people can engage with it every day across a wide range of different audiences.
· Palmer Luckey
And so if people wouldn't use it at large scale, even if it was free, why even bother trying to lower the cost and achieve scale that way. That's clearly not the problem. You might get them to buy it, but they're not going to keep using it, which means that you don't actually have an ecosystem. So I'm a huge fan of what Apple is doing there. I'm also a big fan of the fact that they are doing mixed reality or augmented reality or whatever you want to call it, using full reprojection. Meaning they're using sensors to take in a view of the real world, merging that with a digital model of what you want to put in it, and then projecting all new photons into the eye from displays. This is contrasted with, let's say, the HoloLens approach of having an optically transparent system, where you have real photons from real things mixed with new real photons, but representing virtual aspects of the space blended together. The problem is that all the systems that are good at adding photons to the view of the real world also totally screw up your view of the real world, and they're very, very limited in what they can do. They can only add light. They can't subtract this. You can't match dynamic range, you can't match brightness, you can't draw black, you can't erase things. You can just add glowy things in the environment, but that's not what people actually want. Apple started trying to do optical transparency. And the Vision Pro was supposed to be basically a development kit for the tool set for developers to use that system. It's now become the product they're actually going to ship. There are people in Apple who think they're someday going to get back to optical transparency. There's another camp that thinks that the long-term win is full reprojection. Every photon that hits your eyes is coming from a mediated system that's making them synthetically. That's where I fall on this. That's where the really cool applications come. That's how we're going to fuse many spectrums of imaging. That's how we're going to fuse the real world and the virtual world seamlessly in useful ways, in compelling ways. It's actually also going to be good for your eyesight too. It's going to keep all those UV rays out of your eye holes. So I'm a big fan of it technologically, marketing-wise, the way that they're doing everything.