Invest Like the Best with Patrick O'Shaughnessy
· Shyam Sankar
[00:00:00] S1: We think that the value is going to accrue at the chips layer and at the ontology layer. If you squint at the stack, I'll skip over some parts of this, but you have chips, you have the model providers, you have AI infrastructure, which is where we think the ontology sits, and then you have AI applications. And what you observe out there is the model companies have to run up the stack away from just providing a pure model, because the model is commoditized. It's really everything they build around the model, that is a solution that they're going to try to build value off of. When you look at the AI pure play applications, they're running down. As they start to scale their businesses, have to deal with more customers, more of their customers' data, they're reinventing the AI infrastructure, essentially AIP, from first principles, recognizing why they need it. Now, of course, through divine intervention. We've built this platform over the last 20 years, and you can say arguably the meat of it since 2015 with Foundry leading to AIP. That gives us a huge head start on these things. And even if these models help you code faster, there's the code and there's the secrets that actually is behind why we built the code. So where are we going to be in two years? We're going to be two years after that. We feel like we're in a very great position there. And it's expressed by like the way we measure this is how quickly can I deliver value for my customers? How quickly can I deliver enterprise autonomy or fundamentally change my customers' businesses? And not only has that number been awesome – I'd say two years ago, we could do that inside of eight weeks. Now it feels like a week. That rate is compounding dramatically.
· Patrick O'Shaughnessy, Shyam Sankar
[00:00:00] S0: One thing I'm really fascinated about you is, for so long, you were sort of like an if you know, you know guy. Very much behind the scenes. If you asked around, the person, or one of the key people making this business work, the forward deployed thing, you know, lots of examples. And it seems like you've chosen to be a everybody knows guy. What is behind that choice? Why make that shift? [00:00:00] S1: I'd say I'm a bit reluctant about the shift, but I can't look my kids in the eye and not say that I'm ringing the bell that we're in an undeclared state of emergency. Really the first major public thing I put out there was the 18 theses, which is to say like, we're in emergency, we've lost deterrence. I've been doing this for roughly 19 years at that point. Here's my diagnostic of what's wrong. The shot clock is ticking. We've got to coalesce around this problem. Now, a note of profound optimism, I've seen more change in the Department of War in the last year than the prior 19 years. To the point of Americans do the right thing, having exhausted all the other options. We are definitely in the place where we are starting to do the right things. And the first derivative and even the second derivative is positive. Going faster and faster here. [00:00:00] S0: How would you sum up the 18 theses? I know we've talked about lots of component parts of it already. Is there anything from that – that was your first big public thing – that we haven't talked about, that you think is important?
· Shyam Sankar
[00:00:00] S1: If I was to synthesize it, it's we've lost deterrence. The reason this is not going to go the way World War II did, is we don't have the industrial base we had in World War II. We have to recognize what are our unique American strengths. The person is the program. Don't forget that Edward Hall built the Minuteman and Schriever was the Air Force General that oversaw our ICBMs. And that we call it the Apollo program, but it was actually Gene Kranz's program. And the primacy of those people and getting the right people in those roles is determinative to the success. It would be like thinking you could found a company by recipe, as opposed to like, the company's future is determined by the founders. That's almost the congenital limiter on what is actually possible. And of all cultures, we should understand that. And then downstream of that, we should recognize there is no process out of this. The reason we're screwed right now is we prayed at the altar of process. We thought if we follow this requirements process, if we do this thing. If we just let the bureaucracy work, it will lead to a good result. And the only thing that leads to is decline. And if you look at all the great military innovations through history – Churchill built the tank as the head of the Royal Navy, because the British Army wasn't smart enough to realize that horses were not going to win the next war. So he called it a landship because he could only build ships, so it was a landship. But that's not a one-off. Literally every major military innovation, including the Sidewinder missile, which was a rogue project that some guy built with lighters, with a new sort of seeker. That totally humiliated the Air Force's missile in Vietnam and became – now we think of it as the standard. When Bill Perry became the Assistant Secretary of Defense, he was staring down this thing. It's like hey, I can either try to fix the system and lose – implied. Or I can take the two things I really care about and make sure they work – GPS and stealth. At every crossroad, it's the person who just wants to engage with the system, we lose. And the person who's willing to just put it all on the line to make it work. And it was kind of a call to – if you're a latent heretic in the department, if you're a latent heretic in defense tech, this is the moment to express your heresy.
· Patrick O'Shaughnessy
[00:00:00] S0: Is there anything about your worldview, Palantir et cetera, that you think would be surprising to an outsider that we haven't talked about?
· Shyam Sankar
[00:00:00] S1: First of all, we don't really think of ourselves as a defense company. We're a software company. I think the fact that like half of our business is in government, two thirds of that half is in defense, is actually more normal to a historical pattern that we've talked about here than the present. But the part that I think a lot of outsiders misunderstand is they somehow think we're either in the business of collecting data or doing surveillance. And that is probably the part that's least well understood about what we're doing. We're engaging with the problems as they exist. So you can say, what is the problem that exists? The core problem that we're set up to solve is the legitimacy of our institutions. Why do doors fall off planes? Why does it seem like our basic government services don't work? If you don't address those problems, if you don't build that state capacity, private sector, public sector, if you don't help these institutions get better, it breeds nihilism. It breeds this sense that we should just burn it all to the ground, there's nothing worth investing in. And that doesn't actually work. It's strictly a worse world, but that energy is what you're fighting against. Our diagnosis of this problem, if you thought about these institutions, let's give the C-suite, government or private sector the benefit of the doubt, they have the steering wheel and they're diligently trying to steer the steering wheel. What they don't understand is it's a Jungle Cruise prop from Disneyland. It's not connected to anything. And then you have the people down below who are looking up and saying, how could my leaders be so dumb? That is where that nihilism starts. What is the point of this operating system? Why are we trying to make these decisions better? We're trying to create something that's more responsive for the people who are leading these institutions and the people who do the work. And so much of the 20th century has been this wild managerial revolution that has concentrated power away from both these ends to an amorphous middle blob. That’s where all the disconnection happens in the steering wheel. So, reasserting that in a way that our institutions work for the people that they're designed to serve, and that our companies are actually the best in the world and functioning and competitive. That's how you underwrite freedom and prosperity.
· Patrick O'Shaughnessy, Shyam Sankar
[00:00:00] S0: This idea of, you have all this data, you're doing surveillance, you’re this panopticon in America or something. Does that weigh on you? Does it weigh on you that you are cast as an easy enemy or villain in certain people's stories? [00:00:00] S1: It used to weigh on me. Part of it is like, okay, you've been doing it for 20 years. How long can this stuff keep weighing on you? But I think it would be fair to say it weighs on every new employee when they come in. There's some journey of dealing with this. I think it's also the lot of the man in the arena. You can end with John Boyd – to do or to be. Are you trying to be someone or are you trying to do something? We're trying to do something. [00:00:00] S0: That was one of my favorite lines from that book. Expand on that one bit more. [00:00:00] S1: So John Boyd's advice to other officers, other uniformed service members, was "You can either be somebody or you can do something, but you can't really have both. And if you're gonna be somebody, you gotta play this game and it's all theater, but you're gonna get promoted and you're gonna get the accolades and you're gonna get the rewards of doing that and you're gonna feel good about yourself. Or you can actually do something, and it's gonna feel really shitty and no one's gonna appreciate it, but you're gonna have the intrinsic reward of knowing that you did something."