Invest Like the Best with Patrick O'Shaughnessy
· 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.
· Patrick O'Shaughnessy, Palmer Luckey
[00:00:00] S0: You said higher for your rig or this is… [00:00:00] S1: And I think that, that's probably for example -- I'm thinking what's the counter example, what's the game I would least want people to be playing. And it would be like other games that I do like but probably are not useful is probably Quake III or Unreal Tournament or maybe Call of Duty, ones where it's primarily based on repetition of twitch muscle reflexes. And I'm all about that. I think it's really fun. But someone having really good hand-eye coordination probably not going to be the thing you need to succeed at Anduril, probably. Maybe I'm missing something. [00:00:00] S0: Final two. What have you learned about marketing?
· Palmer Luckey
[00:00:00] S1: If you want to take a really cynical view of my career, it's that I have primarily accomplished marketing better than anything else. With Oculus, I know we did a lot of great technical stuff, but I think that the biggest thing we did differently was just figured out how to make VR seem appealing to people. That was the real win. And that was enabled by technology, being able to make a thing that was good enough. It was small and lightweight and low cost enough that it seemed reasonable. But we did so much work making it cool and making it desirable and making it something that people wanted to be involved with, both on the customer side and also the game developer side. Marketing is not just about your end user. It's about all the people you need to work with. When we market at Anduril, we're doing something very different. At Oculus, we were marketing primarily to game developers we needed to partner with and then to end users. And the thing about end users is you have to convince them one by one individually by the millions that they need this thing in their lives. In the defense space, you really are marketing to a very small group of people. You're marketing to people that you need to recruit, and that's the number one audience, people that you need to convince that Anduril is the place to be. Your other audience is politicians who pay for your stuff, and the third is your actual customers that're going to be buying your things. But with the DoD, I don't have to convince the end user. I'm not convincing the guy who is setting up the system in the field that this should be bought necessarily. I'm convincing the people who are more at the strategic level. Put it another way, every person in the U.S. who gets to decide what rocket motors get purchased, you could fit them in a conference room. There's not millions of people that I need to reach. It's actually a very small group of people. And so it's a very different kind of marketing that we have to do. I think that's probably the toughest lesson for me to learn coming into this from Oculus, where it was like one-to-all marketing as opposed to what we've done at Anduril, which is one to few and being hyper-targeted. It's really fun to make TV ads and do big trade show presences and to do a press tour where you meet with 50 press outlets over the course of four days.