Invest Like the Best with Patrick O'Shaughnessy
· 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.
· Palmer Luckey, Patrick O'Shaughnessy
They're not going to sell that many of them, but that's not the point. The Vision Pro is the thing that is trying to prime the audience to be ready for a VR revolution, not the VR revolution itself. [00:00:00] S0: A few quick hits for you before we wrap up. The first is, if you had to hire everyone based only on you knowing how good they are at a certain video game, what video game would you pick?
· Palmer Luckey
[00:00:00] S1: I'm immediately actually jumping to -- wanting to rig the competition. I would want it to be something that John Carmack has made, like Quake III. So that then John Carmack would come work for me again. He left id Software to be our CTO at Oculus, a year after we started Oculus. And that was the strongest hire I've ever made. I wasn't able to get John to come over to Anduril. He loves what we're doing. We're still buddies, but he's working on AGI. That's been his push. The immediate thought is, I want to just rig your competition. It's actually just about hiring John and nothing else matters. If I couldn't do that, I think I would pick Kerbal Space Program. The people who are really good at Kerbal Space Program are displaying a really useful skill. Yes, Kerbal Space Program doesn't have real physics. But to do really powerful things, you have to understand what the limits of that world are, how they've set up the physics and the gravity and the mechanics and the things that exist. And you have to be very, very good at doing systems-level trades of which direction you're going to pursue, how are you best going to put together these components, how are you then best going to come up with a plan that uses them in the optimal way. People who are very good at Kerbal Space Program have to be good at a lot of systems level and strategic thinking that I think is not that common. I think if someone is really, really good at Kerbal Space Program, if they're the people who are building a low part count, cheap system in that game that is able to go to the farthest reaches of the solar system, pick up samples, and come back and do so with margin to spare, that is a person who even if they have no engineering capability, if they were to become an engineer and were able to develop the engineering skills, which I think is totally doable. I think you can learn to be an engineer. But if you're the type of person who can do that systems level thinking, you're probably going to be unstoppable once you're also a good engineer. I will say I'm not very good at Kerbal Space Program. I like it. I like Kerbal Space Program, but the things that I build are certainly not optimized.