00:48:31 · John Collison, Scott Nolan
[00:48:31] S1: Which one? Boeing. Okay. [00:48:34] S0: And I worked on a military program it was cost plus. You know there was a big project. There was a goal of getting online and so you know at some point while I was there it felt like more and more people were working on the project and it just didn't feel like we were going faster and you realize like that is one tool. Put more people on the project and if there's not strong downward pressure on cost your incentives are just not aligned with like moving fast and doing it in a lean way. And so I think these industries that end up getting stagnant often have that same characteristic. Now people assume once a company gets to a certain size that it becomes that way. I think it doesn't have to at all. I think the best companies that get large even like tens of thousands of people always have that new project, that new thing that's like borderline existential where if they mess it up they're gonna be in a much worse place than if they never tried it. And it almost risks the business and I think that's almost the thing to stay to like stay young as a company you just have to keep doing that next project and not just say, well I have this nice business, I'm just going to earn my economic rents and do nothing else ever again. You have to actually have a vision for the future of what you want this industry to be. [00:49:45] S1: What were your other takeaways from Boeing?
00:49:45 · John Collison, Scott Nolan
[00:49:45] S1: What were your other takeaways from Boeing? [00:49:47] S0: Really, the main takeaway, I think, that I walked away with was that the cost cost plus structure was not the right structure to motivate moving fast. That was just empirically evident by working at both. [00:49:58] S1: I mean, sounds like you more broadly think it's a completely broken incentive system. [00:50:01] S0: I think the whole point of cost plus is to make sure people can work on projects whose costs are very uncertain. Mhmm. And, okay, we have a very urgent project, the government needs you to do x y z, we need some of the suppliers to come forward and actually say that they'll try and do this, and it's for everyone's good. [00:50:21] S1: It's a wartime and not a peace time incentive system.
00:50:21 · John Collison, Scott Nolan
[00:50:21] S1: It's a wartime and not a peace time incentive system. [00:50:23] S0: I think so, or it's something where it's very urgent, never been done before, and it's very uncertain what the cost will be. Yeah. Once you get to equilibrium I don't think that structure makes sense at least not to motivate the right behaviors. But I think the bigger thing I walked away with after Boeing even in just being an intern at SpaceX when it was sub 50 people was at the end of the first week or month I felt pretty high certainty that SpaceX would eventually win even though it was at most at oneone thousandth the size. And it was just because of the speed of execution. And so the thing I walked away with that I actually, especially in the early years with that as a more recent memory while I was at Founders Fund, was these small teams, even though they seemed completely outmatched, by moving quickly with a good group of people you can still beat incumbents. [00:51:15] S1: So it gave you this ability to be optimistic about the odds of a five person startup. [00:51:22] S0: Bet on the small guy. Yeah. Yeah. If they have a vision, if they have some insights about how they wanna do it differently, especially if they're motivated by something more than just Yes. Let's stand up a a small business here. Now let's actually change things long term.
00:51:22 · Scott Nolan, John Collison
[00:51:22] S0: Bet on the small guy. Yeah. Yeah. If they have a vision, if they have some insights about how they wanna do it differently, especially if they're motivated by something more than just Yes. Let's stand up a a small business here. Now let's actually change things long term. [00:51:37] S1: You know, the the three examples I I used were SpaceX, Anduril, and and General Matter. I hadn't realized until you said it in formulating those examples that all three are deeply tied to to Founders Fund. What what is it about Founders Fund and the culture that makes it a good breeding ground for these sorts of companies? [00:52:01] S0: May... Maybe the one thing... You know, SpaceX was started before Founders Fund. I don't think Founders Fund can take [00:52:07] S1: No. Founders Fund was an early high conviction backer. [00:52:09] S0: Yeah. First outside investor Yeah. At a time when very few others wanted to do it. I think the... [00:52:14] S1: Trying to go deeply tied.
00:52:14 · John Collison, Scott Nolan
[00:52:14] S1: Trying to go deeply tied. [00:52:15] S0: Yeah? Yeah. Yeah. But I think, you know, SpaceX gets, you know, they get Elon the Elon gets the credit. You know, you could say that it's something coming out of the whole zero to one mindset and these frameworks of work on something that's important that other people don't realize so what important truth do you believe that most of your peers would disagree with you on. Don't go after a trillion dollar market on day one. Focus on a small market that really needs a new solution and satisfy those customers. Make them love your product like own that market and go from there. Those I think are common to those companies but probably even more than that is Founders Fund does not programmatically start companies and it doesn't want to either. Everyone there you know is selected for wanting to be an investor. Mhmm. Not hoping that they can someday be an entrepreneur. So I think this leads to a mindset of don't start companies, don't do it programmatically. It's almost like that airplane with all the, you know, war wounds on it and... [00:53:20] S1: Yeah, yeah, yeah.
00:53:20 · John Collison, Scott Nolan
[00:53:20] S1: Yeah, yeah, yeah. [00:53:21] S0: Which, you know, you would think, okay, there's, what about all the companies that didn't get started out of Founders Fund? Mhmm. And I think the bar for starting something, at least for me, was always, you know, being an investor is a great job. It's a great, you know, great career. It's awesome in so many ways. So to actually go start something it had better be extremely important. You have to believe no one else is doing it which is why you know in both Anduril and our case there is a long search for someone doing it because if there was it wouldn't be worth starting a new company. And then finally the one that's seemingly the most difficult is you know in my case it should be something where my skill set actually contributes to making it more likely. And so it's extremely important no one doing it and actually lines up with the skills is such a small Venn diagram that it's almost like that activation energy is so high to go do it that it has to be extremely compelling and then most of the risk I think ends up being on execution. And so you end up with these sort of forgotten opportunities that were overlooked for a long time but that are actually really central to an industry taking off. And it just so happens like no one did them for a long time because there wasn't the convergence of market opportunity, and often it was just Yes. Extremely hard. [00:54:44] S1: How much conviction did you get to on the idea before you took the jump and went and started the company? [00:54:55] S0: I would say, yeah, extreme conviction.