Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy
[00:00:00] S0: When you think about, I'll call it, the soil of, let's just use the United States to keep it local, the soil and the quality of the soil for potential innovation and you had to rank that today 1 through 10, what score would you give our soil today?
· Palmer Luckey
[00:00:00] S1: Probably give it a solid 6. It's one of those things when it comes to the talent. We've got really, really good talent. On the volume of talent, we have a lot fewer engineers graduating than our strategic adversaries like China. That's definitely counting against us. I've heard this idea pushed forward that we'll still stay ahead because there's something great about American engineers and American ingenuity we're going to stay ahead no matter how many people we have in these areas because we're just so much better. Which I feel like -- I don't say this lightly. It feels like a soft form of racism to say, "Hey, we're going to just be way better than them to the point where an American engineer is going to have to generate 10x the value on average of this other highly developed advanced nation that graduates people from advanced schools. I don't really buy into it in the long run. This is another reason I think the United States needs at least 1 billion people. The idea that we're going to compete with China geopolitically, that we're going to remain relevant when we only have a few hundred million people and they're climbing to billions of people. You have to believe that every American is going to be so much more relevant on a global basis. Is it really true? Is an American 10x more influential and impactful than an average Chinese person? I think that that's true right now today because of our head start and how we positioned ourselves over the last 100 years. But I don't think that continues to be the case. So…
· Patrick O'Shaughnessy
[00:00:00] S0: What's the additional list of things it would take to get us from a 6 to a 10?
· Palmer Luckey
[00:00:00] S1: A lot of it, unfortunately, is on the government policy side, I say unfortunately because free markets can often move faster than governments can adjust. But one example of something I think would make a difference is to stop incentivizing people to do things that are not good for the country on a larger basis. So one example of this, and there's people who are going to light me on fire for this, but I don't think the United States should be subsidizing all educational pursuits equally with no regard for whether or not they are of national interest. The United States should not be saying we will give you equal student loans and allow you to put yourself equally in debt on the tax paradigm to get a degree in studying ancient French theater versus being a mechanical engineer. The need is so obviously disparate the position seems crazy. And there are other countries that have been doing this. Japan has been saying, hey, in our government runs schools, we are going to provide for free education in certain areas of national interest. And if you want to pursue that ancient French theater degree, by all means do so, but we're not going to rob taxpayers to pay for it. We're not going to subsidize the decisions of teenagers who don't understand what it means to serve your country and really don't even understand how to serve themselves. I think that's a really big thing. We can say, you know what, if we're going to make this a nation that rewards innovation and that promotes innovation, we need to be steering people in that direction, and we need to be conscious about the fact that not every degree is equal. Not every pursuit is equal when it comes to accomplishing those aims.
· Patrick O'Shaughnessy
[00:00:00] S0: Why aren't there 2 orders of magnitude more Thiel Fellowships?
· Palmer Luckey
[00:00:00] S1: I mean part of it is it would be great if we had 2 orders of magnitude more Peter Thiel. People have tried to weaponize it against them. Maybe this is just totally the wrong way to look at it. This is a very low conviction approach at it, but it's the first thing that pops into my mind. When you do something like a Thiel Fellowship, you create a lot of surface area for people to come after you. You have all these people who are now affiliated with you, tied to you, trading on your name, and that's true whether it goes well or goes poorly. And there's an asymmetry of value in that, probably if it goes poorly, it is going to blow back a lot more than the benefit of it going well. I'll give you a hypothetical, what if SBF was a Thiel fellow? Do we even need to talk about what the media coverage would look like? The idea speaks for itself. Imagine if not even at that level where it's going to federal court. By the way, I've been to federal court to a jury verdict twice in my short career already. I won both times at the end, but it's not that being in court is the end of a career, but it could be -- people would just be saying, how did Peter Thiel's ideals influence the criminal mind of Sam. And isn't this really a reflection of modern conservatism, blah, blah, blah. And that's probably why a lot of people who are in a position to sponsor something like a Thiel Fellowship are not necessarily incentivized to do so. They are more likely to, let's say, give an endowment or make some kind of scholarship at a school where the school is the one taking the heat. People don't give schools shit when they subsidize students that then go south. I don't think Stanford got that much heat for Elizabeth Holmes. People are okay with that idea. If you could imagine, though, whatever scholarships may have helped her had come directly from some individual of wealth. I think that you probably would have had it covered very differently. So that's my initial idea. Rich people say, the juice is worth the squeeze.