Shyam Sankar - Celebrating Heretics - [Invest Like the Best, EP.462]

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Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc. My guest today is Shem Sankar, the CTO of Palantir Technologies. I think you'll find by listening to Shem that the business itself, their mission and how they built it and indeed him in his life are completely fascinating. We talk about his entire worldview, which I find personally the most interesting. This need to re-industrialize the United States after decades of moving so much of our production and as he would argue therefore our learning of how to innovate and make things off of our own shores. We talk about the history of heretics, people who have against the odds, design solutions that have driven so much of our success around the world. Please enjoy my conversation with Shem Sankar. Shem, I think the most fun place for me to begin because it's an area that you're interested in that I'm fascinated by is a history of people in American military law who you call heretics. You refer to them as heretics, people like Hyman Rickover and Andrew Higgins who designed 90% of the boats that landed that Normandy, John Boyd who invented the Udalupe, which is one of the great biographies of a military figure that I've ever read. Talk to us a little bit about how you would define a heretic in your use of that term and why you're so interested in that group of people in US history. Well, I think they're really founders. They're founder figures. They get obsessed with delivering something that it makes no sense because they're fighting, in particular in the military context, you're like fighting the bureaucracy. You're going to end your career. You pay extreme prices for it. So there's almost like a pathological obsession with winning, which I really relate to both personally, but also that's what I see in great founders. In the present moment, it's really important to encourage the hidden heretics who are in the military today to recognize your ericine matters. And frankly, if you look back at history, the only shit that ever worked, the things that helped us win all the wars were the things that the heretics actually did. Nothing that went through the machine delivered anything. I think all change comes from these heretics and they only later become heroes. If you think about Billy Mitchell who invented the Air Force, he was court-martialed and died penilless and depressed. Not only after his death, did we invent the Air Force based on his original heresy? I'm just fascinated with what motivates these folks to keep doing this. I guess I relish a little bit in their rebellion and the victory that the rebellion brings about. If you could have people study any one heretic story to understand this general idea, is it his story? Is it someone else's? Which one would you pick? I'd probably pick Rick Overs. So I'm in Rick Overs born in a shuttle in Poland, came to the US when he was six, had one of these near-miss moments where in those days when you landed at Ellis Island, you had 10 days for someone to come pick you up. His mother gave someone money to go send a telegram to the father who'd already been here and that guy just pocketed the money. On the 10th day, there was another guy who arrived at Ellis Island who bought them one more day who knew them and then he ran out, got the father. So it's like this near-miss where this guy almost didn't even end up here who would have been sent back to Poland. But he was a feisty character. I think it was five foot two very short. He went to the Naval Academy. He was so unlikable that in the yearbook in the Naval Academy, they torn out his picture. He's just one of these difficult people. In World War II, he drove a coal ship. He was not some exceptionally high-performing senior military officer commanding a destroyer or carry or anything like that. But after the war, he went to Oak Ridge and he observed the vestiges of the Manhattan Project and he had this idea we could build nuclear power submarines and he'd had this experience on diesel-powered submarines, which suck. They're basically surface ships that happened to go underwater for like an hour. This became the thing I was obsessed with. Talk about Hootsbowl. Oppenheimer himself thought this idea was going to fail. So you have Opie telling you you're stupid and this isn't going to work and you're just going to go for it. So he started on this project and he built the first nuclear submarine in seven years, start to finish. The Navy aided him so much that his first office for this project was literally the women's restaurant. They're like, what can we do to humiliate this guy in quitting? But he just kept going. And if you actually look at his personal memoirs, you can see that the humiliation got to him, but in a way that he could channel it to be like motivating. It wasn't like he was somehow a neuro to the pain of it all, but he could push through it. And I think recognizing every major project you do is going to push you in these sorts of ways. How do you dig deep? How do you grind through the pain? And he created a really unique culture in naval reactors, which is alive today. So I think part of what's really cool is that our nuclear submarine force is one of our last remaining asymmetric advantages against the Chinese and we built in the 50s. What a legacy for this guy to have built. And then the engineering culture that he created, he was in this unique role of both being a human who would invent the technology and therefore was qualified to think about how to regulate it. So whereas the Russians of mariners, it was been roughly six months at sea. And then six months in Sochi recovering. So their white blood cells could regenerate because the reagents she'll in sucked. We've had no deaths due to nuclear incidents in our submarine force. And he designed it to a standard. He's like, I'm designing this thing, so my son could be in it. It's a hundred times safer than what we believe the minimum standard to be. And that obsession, it's not a manager's view of the world. It is a founder's view of the world. But one of his legacies, he was an admiral for 30 years. And even as an admiral, it was very difficult. Zumwalt who is to chief of naval operations for a while. He said the Navy has three enemies, the Soviet Union, the Air Force, and Hyman Rickover. I remember reading the book about John Boyd who three times, he was the best fighter pilot, then he helped develop the F-16 and then he came up with the military strategy concept that was instrumental in some of the US wars in the 90s. And he was sort of a bastard as well. Highly disliked, really bad father, highly disagreeable, but incredibly important in US military history. You don't seem to have that kind of personality. You seem by all accounts, very likable within Palantir and outside of Palantir. Say a bit about your own disagreeableness. Where does its surface? It seems like this is a field in which you have to have a very clear view of how things should be, which we'll talk a lot about in a few minutes. And then this disagreeableness and resilience and persistence to make it happen. And that seems a little bit at odds with your personality from what I can tell. Curious how you think about that. It surfaces in certain ways. As Karp would say, I'm not everyone's cup of tea. Or you can very clearly see it as again the early days of Palantir. You'd be dealing with the government and it's easy to think that as a monolith, but you have operators who want to use your software but are not in the charge of buying it. And you have the IT people or the program who's in charge of building what you would be building. So your structural threat to them. The advice is to go along and get along. Those guys are the people paying you. Why don't you just do what they want? The problem is if I did what they want, it wouldn't work. And so that's where the disagreeableness comes in. It's being ordinary about, no, I'm going to deliver the thing that actually works for the operator. I'm going to piss off literally everyone along the way. They are knives out going to try to kill you. We have to sue the army to compete at some point. And I think in that vein of being truly committed to is the product excellent. What else could it be doing? You can think about the whole Udalupe for deploy engineering is that it's this continuously solving through back propagation of what should the product be. That's like the motor of innovation. If I think about Palantir's story and success in your part of that story, your product is going to be a real product. personal worldview seems really important. And you having a strongly held worldview seems like a key component of being all that, do what you've done over the last 10 plus years. I would love to hear the formative experiences that contributed to that worldview. I'm curious to just like get a high level what your worldview is. Maybe even more interested in how you came to it because you've got a very unique personal backstory. - I think there's no singular event. I think there's a combination of family history, the environment that I grew up in. Starting with the family history part, we fled violence in Nigeria where my father, we've frankly almost died to settle in the US. And that happened pretty young in my father's life and his early mid 30s. It's a pretty jargained experience where it gives you a whole new lease on life. After that point where you think about, you have a deep amount of gratitude and perspective on the trials and tribulations that may come ahead. But it also grounds you in a profound understanding of the counterfactual, what makes this country so special. Sometimes it'd be unworing, not to have those experiences actually because it's easy to take from granted, it's easy to become cynical. But that's a really powerful rooting. And pretty good because my father didn't have the classic immigrant story where he came here and became successful, which I think is the great thing if it happens to you, but it's also a facile journey. It's easy to appreciate. Dad started businesses that went bankrupt. It was very hard, but having that rooting experience that created a graciousness and perspective in him, he was always so thankful for the opportunity. I took a lot away from that over time, especially as I grew up and understand and that awareness that was happening. The second thing I think is really important is growing up in Orlando in the 80s and 90s. It was this profoundly optimistic period. I mean, you can say it was probably pretty optimistic everywhere, but in the shadow of the space coast, you were bombarded with this idea that technology was gonna make the world better, that there was a structural positive some view of everything and it was so motivating. People had ambition around these things. So I think that set a frame for me for how I thought about things and how I wanna spend my life and energy, I think that's really it is this commitment to building. Part of what's interesting about the heretics that I'm drawn to is that they're all builders of some sort. The conversion from heresy to herism is a result of an empirical thing they built. John Boyd was alive to see the success of his innovations for Gulf War I, where the US destroyed the fourth largest army in the world. It's hard to think about now, 'cause we think about it as almost a foregone conclusion, but leading up to it, there was a lot of uncertainty that worldview is centered in an understanding. Look, I think the US is the greatest force of good that exists in the world that as a country, we understand that there's something special about founders. There's a reason we call them the Founding Fathers. If you think about just empirically, Europe has created zero companies worth more than 100 billion euro from scratch in the last 50 years. Almost an astonishingly bad track record. We've created all of our trillion dollar companies from scratch in the last 50 years. The primacy of people and being in a culture and environment that allows that to happen that doesn't subjugate the human, doesn't snuff out human flourishing that allows you to pursue these things. And that may seem trivial, but the heretics are all a version of that. It's not like Polyannish where there's no resistance to these creatives. It's like despite the resistance, you can succeed. Here, which is really not true, I think basically anywhere else. - What was your dad like, personally? - The pieces of his personality that I said always stuck with me. Every spare moment this man had, even though he was so busy and he was just grinding, who'd be on the phone trying to help someone. I had this weird memory of someone who, almost like I had this sort of engineering autism that I think a lot of us have, but he met someone who had totally disfigured teeth. And he just had the actually profound kindness to tell him like, you should get cosmetic surgery. And that guy is so profoundly thankful that no one else had the balls to say that. This actually changed his job prospects. It changed his life. And so he's just one of these people, you clearly can see the positive sum this in him. Like, hey, I'm just gonna keep paying it forward. (upbeat music) As your business scales up, everything gets more complex, especially your compliance and security needs. With so many tools offering band aids and patches, it's unfortunately far too easy for something to slip through the cracks. Fortunately, Vanta is a powerful tool designed to simplify and automate your security work and deliver a single source of truth for compliance and risk. There's a reason that ramp, cursor, and snowflake all use Vanta. It frees them to focus on building amazing differentiated products. Knowing that compliance and security are under control. Learn more at vanta.com/invest. I know firsthand how complex the tech stack is for asset management firms. And seemingly every new tool and data source makes the problem even worse, adding more complexity, more head count, and more risk. Ridgeline offers a better way forward. One unified platform that automates away the complexity across portfolio accounting, reconciliation, reporting, trading, compliance, and more all at scale. Ridgeline is revolutionizing investment management, helping ambitious firm scale faster, operates smarter, and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule demo at ridgeline.ai. - If you had to identify the component parts that make America the thing that you think is the greatest country in the world, what are the key components? Obviously, maybe democracy is one, but I don't wanna take for granted the things giving your life experience and your unique perspective that you think most add up to this being a place worth your life's work to extend their interest to protect their interests, et cetera. - A belief in exceptionalism and greatness. No army that lost its morale ever won the war. And so believing in yourself, believing that greatness is possible is a precondition to being able to express it and realize it and a lot of cultures don't have that. The other thing, which I know sounds really simple, but is a complete plasticity of thought. Culturally America is a place where people do change their minds, okay, this isn't working, let's do something different. Or I observe that thing working, even though it goes against the orthodoxy of everything I've learned, we're moving, we're pivoting. And you're people still arguing about shit that happened 300 years ago. And some of these cultures are so rooted in the past that they can't update their priors. And so a culture that's capable of learning, you can call a plasticity, first derivative of learning, but how can you make progress without that? - What does greatness mean to you in general? And also I'm curious how you think about it personally, if you are personally in pursuit of greatness, what has that meant? What does that require? - An aspiration that's substantially bigger than oneself, the focus of American greatness is on American prosperity, the American worker. How can we go do things that are actually enriching our civilization, our people, raising their own aspirations, inspiring them to go on and do great things? There's this unstable equilibrium in civilization that pulls you towards nealism. And greatness is the antidote. It's the countervailing force to saying, no, actually it's worth investing in our institutions. It's worth going through this painful journey because what we're gonna get on the other end is something better, something that we all aspire for, something that you will be proud to pass down to your children. - Is there an example of greatness that you've witnessed in someone else firsthand that most stands out? - The obvious one to me is Alchskarp, is ability to really manage and unlock talent. It's something like I've never seen before. Those are some of the most profound lessons I've really learned about talent. From the very early days, he modeled our entire company as an artist colony. We have more in common with the Hollywood talent agency than we do with a typical software company in terms of our approach to looking at humans. And this first principle approach to the individual and how do you grow this deep resistance to a cargo cult like process and every manner or fashion that corrods all the things that actually create value. And I think that's important because if you drive that to the extreme, you actually get something that looks more like the Soviet Union. On the other end of this, it's how do you maximize the potential of the people on front of you and you're advocating for their growth and their ability? Which also involves a lot of, you have to have a structural personality where you're not threatened by other people's successes. You actually relish and the other people's successes. And that's the parallel between Alex and my father. - If I was running an organization where my key goal was to unlock talent in the way you just described, how do you and he do this? What's the practice of unlocking talent? - Maybe we could just start with the preceptive. How do you think about the talent to begin with? So really talented people are highly uneven. They're very good at some things. They're okay at another set of things and they're really bad at some other set of things. And usually the trick is where are they in their own journey of understanding what those things are? And particularly for high achieving people when they're young, they miss the tribute what their superpower is. They think there's this thing they do that requires a fair amount of effort and therefore they get a dopamine hit when they succeed. It's probably something they're not even bad at, but just okay at. Superpowers are effortless. In some sense it's almost like not even rewarding to exercise your superpower. My analogy for this is Superman could fly, he could see through walls, but that wasn't some sort of arduous thing for him to do. It's just something he could do. That's usually something you learn comparatively. You're like, oh, this thing that's the lizard brain effortless, almost thoughtless for me. Other people who are really smart can't seem to do or I do just way better. And embracing that is the first step. Helping them understand like, hey, all of your contributions to the world are gonna come from your superpower. Everything else is basically a waste of time. So how do you figure out how to get into that configuration? So there's some releasing of ego around that as well as understanding that okay, this is what I need to focus on. The other part of this is kryptonite. There are some set of weaknesses you have that aren't just I'm kind of average or maybe a standard deep below average. It's like you're like six deeps below average. It's not like something you can work on. The only strategy for Superman around kryptonite was to avoid it. Yeah. And so can you be okay with that? As the artist, what is your process of accepting them? How do we help you? Except how do we help you understand actually at the point of acceptance you become more valuable? And we're going to be able to unleash you further to be able to do things. And then you have to create an environment that supports them through that because the discovery of kryptonite usually involves you being exposed to it. You're going to make some sort of really bad mistake that probably will have real consequences. Hopefully you learn from that mistake. May take more than one time to get there, but you don't create culture, which is like, you fuck this up. I got to fire you. Oh, I'm so glad you learned that this is not what you do for this. Right. You fucked this up. Yeah, exactly. I remember doing something that I really screwed up once that had consequences for the company and I sheepishly went into Alex and just completely honest. And I didn't realize at the time there was no grant strategy behind this, though, than my commitment to just always being honest. He was very appreciative. He was also in pain as he internalized what this was going to mean. But he valued the fact that I wouldn't try to hide it. And I took away from that how important that environment was going to be and how do I scale that to the organization? What do you think your superpower is? I think there's actually a narrow sliver. If you thought about it in the Poundter context, the intersection of forward deployed engineering and product, there's an interface there. One inch on both sides of that interface, owning that almost as a dictator. That's my secret power. I'm going to come back to forward deployed engineering, but I want to ask one or two more questions about the creation of an environment for the discovery of superpower and kryptonite and doing one's best work and unlocking the talent. I heard a story once and maybe I wasn't supposed to hear. So I won't say what the exact story was or who the person was at Poundter, but this person joined Poundter and was very quickly given an extraordinarily difficult project around which this person had no relevant experience and was given relatively limited resources to solve a problem which was truly global in scale. Meaning the impact if this person didn't solve the problem would have been bad. And they described it as the most formative and important and most stressful professional experience that they had had. But on the one hand, I loved hearing this story because wow, you can learn so much when there's high stakes in lots of autonomy, but it also struck me as quite scary that someone with this person's experience was given this high stakes opportunity/ responsibility. And I'm sure that happens all the time in Poundter. So some of it seems like going straight into the deep end is key part of this in such a high stakes business with militaries and governments and people's lives and things. How do you balance how much leash to give someone like that? Let me start with an analogy. How did Bruce Banner become the incredible Hulk? It wasn't progressive overload. It's not like he lifted a little bit more weight every week. It was a near fatal dose of gamma rays. 50% chance he died. 50% chance he turns in the big green monster. And there's absolutely an element where we're taking people and just irradiating them. Prespectively, you're not sure if they're going to come out the other end. But you have some belief that they have the raw talent and potential. And then you want to create an environment that has enough transparency and flow of information and exhaust that if you see that this thing is really going off the rails without them having to seek you out, you're able to push in and help them. Then a lot of environments don't have that by default actually. You would have to like manage them. You have them do reports or check ins or whatever. You got to create an environment where it's okay to ask for help. The reason this model is really valuable is that I think the alternative model, you've judged by the counterfactual, the alternative model doesn't actually work. So this structured career ladder with progressions, it's perfectly designed to make you feel comfortable that you are growing. It gives you some belief that there's a linear path to follow and you'll learn these things. But actually, it's all fake. On the other hand, if you're willing to just suspend this belief, throw yourself off the deep end. The maximal rate of learning will be coincident with your maximum ability to tolerate pain. So now you're in over your head, you're working on a problem, you don't even know. This is the environment that you're going to learn at the fastest possible rate. You're only limited by your motivation and ability to endure through the discomfort of getting there. Then you will find that if you look back retrospectively, you're like, "Oh, shit, I grew in all these ways. I learned all these things. None of what you could have predicted specifically X-ante. And then if you just are willing to do that, seriously, just keep jumping off the deep end, go after problems. You're frankly not qualified to go after, but there is some belief you have the raw potential to do. You turn into a superhero." I think that's actually why Pounder's a Founder Factory. Did you have your own gamma ray moment? Was there an original moment like that for you where you discovered your own potential? The article talks about the deployment at the Koik. I think that was a seminal one where it was leading the deployment. It was all on me. It was never obvious until basically the last second whether it was going to work or not. It allowed me to learn a lot of the lessons along the way, which is really where I internalize "Oh, success looks like a lot of pain." That instinct to figure out how to reduce the pain, like how do I do this the next time with less pain is exactly the wrong instinct. If you were giving a commencement speech to a group of people that heard this conversation, how would you urge people to seek that out? Like if someone is pre-gamma exposure and they're interested in that test for themselves, how can people expose themselves to that test? I think this is the conspiracy of the people around you who give you that chance. I don't know why Kevin Hart sired me as some Stanford grad student coming to talk to him, but the fact that he took the bet and just threw me out there. That was the first time I got to jump off the deep end in many ways. So I really think how can you find it? You're assessing the people who are hiring you. It's much as they're assessing you. Is this an environment that I think is going to bet on me? Or is this an environment that wants me to be a Ville cow? Are they going to be able to tolerate my eccentricities or are they going to try to squash that? How do you know someone's worth betting on? The other side of that equation. New, unproven talent. How do you know? At some point it becomes a lizard brain. You get enough reps and doing it. But early on, I think the early indicators would be first derivative, proof of some sort of zooie generous. Do they create anything from zero to one? And then expression of agency and initiative. Just the simplest way I'd say it. If I give this person an inch, can they turn it into a mile? And the worst sort of bet to make is I gave this person a mile and somehow they turned into an inch. Yeah, it's an incredibly powerful idea. And it seems like the culture, Palantir. Obviously, there's tons of founders that have come out of this, that have mega agency or something like this. If you think about Palantir's future for the next 10 years, now 19 years in, what do you hope changes most in the next 10? Obviously, it's now a huge company. It's one of the bigger companies by market cap in the country and in the world doing lots of really interesting work with lots of interesting customers. But generally speaking, what are your hopes for it over the next five to 10 years? All valuations downstream of the culture, continuing to be an environment where a new person can come in and just have huge responsibility being charged with people who've been here 10 years or not. It's like that org structure. I call it a quantum org structure. I don't think a flat org structure is optimal. That doesn't actually work. I think what you want is an org structure that can crystallize is the right structure to solve the problem as it exists today and is able to reform as the problem manipulates tomorrow. You can see the pathology of big companies as they go through some sort of big reward every five years, even if you just steal man it probably most of them are wrong even that inception. But if you just steal man and say, hey, they just reord this is the right org structure for this company today. Every day, the entropy is against them and every day it's slightly more wrong than it was before. If you're so ossified and committed to your structure that you have to wait until it's totally broken before you reorganize it again, that's a fundamental weakness. So that plasticity and how your commitment to working backwards from the problems, that is how we generate value and that has to be consistent. And I think if we can protect that and promote that promulgate, that culture in the future generations, we're going to keep winning. What critique of Palantir do you take the most seriously? When you have a structure like this, you don't get to spend nearly as much time with people as you'd want. The rate of irradiation is very heterogeneous. There's some sort of like bimodal distribution for how long do people say a Palantir? The probability that you'll stay for a decade plus if you've stayed three years is incredibly high. But roughly around the three year mark, everyone faces this crucible where they look around and they say, this place is so fucked up and crazy and they have to understand, oh, but that's the feature of it. And then they'll stay sign up for it or not, right? Or they'll say, this is the bug of it and I got to get out of here and it's not going to work. The critique I take most seriously because I think with a little bit of help a lot more people can make that hump and that's the future of the business. So those people. We have you to blame for how many freaking pitches we have to take that involve some forward deployed something or other in a company these days. You were the one that really pioneered the success of this model at Palantir. Everyone is saying now that every company has to have forward deployed engineers or forward deployed so and so to be successful. Obviously, I think that's not true for every company. It's true in Palantir's case for sure. Can you tell us the story of what this term means where it came from and why it's powerful? We could start by maybe thinking about my critique of the conventional software industrial complex, which is that you're sitting, let's just say in Palantir and you're building this piece of software and your essential feedback loop on is this software valuable is can I sell it? And if someone's willing to pay for it, it must be valuable. That's an okay feedback loop. There's a stronger feedback loop, which is is this offer valuable did it deliver the outcome? The only way you can assess that is actually in the field with the end user on the factory floor in the fox hole. So in our case, it wasn't going to be enough. You have this weird division between the IT buyer and the operator. The validation is going to come from the operator. The idea was really almost like build software through backpropagation. Hey, how do you go to the person who has the problem? You're showing up with your best thesis of what you've built in the metaphorical Palo Alto. But then you are not just sending a sales engineer out there whose job is to try to like ring up the sale. You're sending someone out there who is obsessed with whether it's going to generate an impact in the world or not and is willing to continuously solve backwards and is technically up to understand the full stack. How would we take the specific and learn how to generalize it over time? in terms of the product. One way of thinking about this is there really are two types of engineers. There are people who know how to build the right thing and there are people who know how to build it the right way. And their dopamine hits comes out of different things. The people who know how to build the right thing, they're more like Magyver. Their high in life is, I solved the problem. In their mind, solving the right problem is 80% of the work. On the other hand, you have engineers who are more like artists in the traditional sense. Don't you see how beautiful the thing I built is? The architectural elegance, the scalability of it, that's what gives them the high. Never mind that it doesn't solve the problem anyone cares about. It's arc on its own. It should be appreciated. And I think about this like vector math. So the forward-employed engineers skew towards this hacker mentality, the product engineers skew towards this artist mentality, and you have an unstable equilibrium where you're trying to align these vectors in a way that you're going to go upwind. If either side dominates, you don't really have a business. And that's why that scene between them, you actually need a dictator-like figure to manage and decide. And many of the outcomes, particularly, I think this model is super valuable when you think about your customers existing of some sort of power law in terms of how useful the next market thing they're going to be asking for is in terms of the overall development of the product. If it's a Gaussian, you should just survey all your customers and average it out and figure out what to build. That's like a traditional product development process. If on the other hand, you think some percentage of my customers are living in the future. Yes, only they are only a handful of people have this problem today. But I can assess that this is actually a really valuable thing to solve that no one else has solved. We should solve it now and effectively have a monopoly on the capability to do that. We'll be five years ahead of everyone else if we lean into this problem. You can only surface that in this sort of forward-to-forward engineering way. The only thing about forward-to-forward engineers that's worth saying in the tealian sense is the importance of secrets. Peter talks about the importance of secrets. If you're going to do something really impactful, there has to be something true about the world that you believe that other people disagree with you on. Warp Speed is born out of one of those secrets. For that part of 15 years, our software has been used to make things in the world. The one thing you could not tell anyone before COVID is that their manufacturing software doesn't work. People would point out their ERP system and be like, "Look how great it is. I spent $5 billion, $10 billion doing it." But as a forward-to-point engineer, when I would go to the final assembly line on the factory floor, everyone's using Excel. There's a contradiction here that no one is somehow forced to reconcile with, which is really what they're saying is this software is so ill-fit for what I'm trying to do. I hit the eject button. I pulled it out to Excel and I'm handling my own solution. That should be an obvious sign that something's not working. What are the limitations of it in the sense if you have x-was, you shouldn't try this model, or you need this to try this model. One thought would be the product needs to be expensive, because it sounds like an expensive process to deploy people on site, highly trained, expensive people, and so on. So you need to be selling a very expensive product. But if you were giving advice about users or don't use this concept of forward-to-point engineering in your software business, how would you frame it up to other entrepreneurs? I would say that you have to believe that you're going to be able to capture meaningful value for the problems you're solving. So your problems you're solving are really big, and therefore imply there's a lot of value behind them. And if you can solve them in a deep way, you'll be able to capture that. A lot of the problems we're solving, like to get at that, you're not going to get paid a lot upfront. You're actually going to invest a huge amount into the customer to go do that, but you would do that because you believe that actually in the end, we'll be able to capture the value, a portion of the value we're creating. Our economics will be downstream of our customers' economics. The other part is that your ambition extends beyond a linear box. We always struggled when we came into the commercial world where you had the gardeners of the world and they have this sort of box. This is my enterprise architecture. I've broken up in all these boxes. What box do you fit in? The answer for us is, well, we don't fit in any box. We fit in all the boxes. It's some sort of heterox thing. You're solving for all the problems in the seams. Like you're basically solving for the fact that architecture diagram was made by some mid-level product marketing manager. It's never been used or validated in anger. It's never actually solved the problem in the real world, but the cargo cult of the IT buyer just keeps believing they should buy it. I think if you fit into that, doing forward to putting it in your way would be crazy. Why would you do that? But if you're like us and you don't fit into it, you need some way of just scraping and clawing to deliver enough value that the institution has to confront. But even though it's heterodox, even though it's heresy to my enterprise architecture, it works. It probably took until I read Jeremy's profile of you and a Palantir that I really understood how Gotham and Foundry and the product and the business worked. It's interesting how Palantir is somewhat inaccessible from the outside unless you read a fairly detailed description of what is literally going on in the product. And I think the early years of Palantir were especially exploratory trying to figure all this out with all your efforts with Alex and the team. Could you just explain what Palantir is? It's such a basic stupid question, but again, until I read a detailed account, I actually probably couldn't have done so. And so I'd really be curious how you like to frame it or explain it. This is actually like the hardest question for me. We have built an enterprise operating system where our core thesis is what makes this stuff really valuable is decisions not data. Ghosted John Boyd's Udalupe, what we're really providing is an operating system that allows you to bring all of your enterprise data together. It solves for the impedance mismatch between like, yeah, look, all this data I've collected, it was collected and stored in a way that makes sense to the underlying transactional system or makes sense to some part of my institution, but doesn't actually represent how the humans of my institution think about the problems that we're facing. So that we represent what we call the ontology, which is not just a model of the data. It's also a model of the actions we call that the kinetics. If you're going to make a decision, you might be allocating inventory. How do you do that? So this ontology layer almost becomes like an API layer for the business. It makes the business programmable. And that changes the rate at which you can compile them on top of it. So now you have this abstraction layer that you can use to build applications that manage your value chain from the hand of your supplier to the hand of your customer. You can call it a value chain. You can also call that a decision chain. Your whole business almost if you just squint at it, it's just a series of decisions you're making. Everyone of those decisions you want to have an ulu, I want to make the best possible decision I can have today. More importantly, I want the first derivative to be good. I want to learn tomorrow how to make a better decision than the one I had today. Could you give an example of a customer where you showed up and maybe describe the circumstance of their data or their systems or something? Then what you did, what the process is of establishing and building the ontology, which is I think very good appropriate, but fancy word for mapping reality onto a system versus jamming reality into a preexisting system. And then what sort of transformation that enabled at that customer that would have been impossible with the former system, just bringing it to life like a simple example. Two things I just want to put down that would make this make more sense. The first is that we want to make software that makes you more different, not more similar. We think about it as alpha, not beta. The second thing is that we are a wildly inductive company. We would never show up to a customer with some preconceived notion of this is the aerospace ontology. I'm going to pick an aerospace example on a second here. It's rather all the values and understanding what makes your aerospace company different than all the others. How do I make you more different there? That's the differentiation you're competing on. When we first came to Airbus, Airbus was in the midst of ramping the A350. The A380 was a wonderful plane structurally unprofitable program. So the A350 was this bet that the whole company was effectively riding on in 2015. The first time you make an airplane, you're always going to have issues. There's a learning curve to the production. And one of the most important things to figure out as quickly as possible is what is an issue that is just a non-conformity that like, "Hey, I'll give this guy some training and he'll learn how to figure it out. It's teething pain. He'll go away." And what is a recurring issue that is actually a design defect that I need to go work with my suppliers or upstream? How quickly you can solve that becomes fundamental to the shape of the ramp and the cost of the ramp. The first thing we did is we just started sitting with users on the final assembly line into loose. These are wrench turners effectively and understanding, "Hey, what makes your life suck? What's hard about this? What's the challenge in working on these non-conformities? Basically, they're going through Excel. They're looking at reports and SAP trying to figure out how do I bucket all of these issues that are coming in. So we just helped them automate all of that. And the ontology at that point was really related to parts, sequencing of work, defect rates, everything related to quality. Once you had this immense quality asset, though, you were able actually to pivot it to realize, "Okay, now I'm up the learning curve. It naturally leads to the next problem, which is production planning." So quality to production planning to then in service. Now you have the greatest data asset possible for this tail. As this plane enters service, how do I help maximize the uptime of this asset from my customers? How am I going to compete against the other aerospace manufacturer? That's the natural evolution that we see with most customers. You start with one problem. But of course, they exist in the context of this connect decision chain. What's the difference between dealing with military customers and government customers, which you did for a long time and commercial customers? There's a lot more non-market forces in the military. The military is the only institution in the world that profoundly divides up supply and demand. The beating heart of most companies is that integration that sails an operation planning process. You have the combatant commands, we call them, that deal with real world events. You're fighting Russia. This is the European command. You come. Then you have the services like the Army, Navy, Air Force, Space Force, etc. Their job is to demand train equipment. That's the supply side. You have a group that has no responsibility for demand, essentially deciding what to build, how much to build, how am I going to demand train and equip this? Then they present these forces to the combatant commands and say, this is what you have to solve this problem. That adds an additional level complexity. If the demand side says, "Hey, I really want this." This is the capability we need. They can't buy it. So how do you kind of square this? So I think you have all these other non-market forces to deal with. But I think one of the things that is really advantageous to being both a commercial and government-oriented company is that the intrinsic rewards on the government side are so high, so motivating, it enables you to get through and solve really hard problems in a way that is kind of like a rising tide for the whole business. How would you define the state of our military today? That's a big question, but it's an important question. You've gotten to see so many sides of it and serve many aspects of it. How would you describe the state of the US military? We are the best military in the world. Our uniform service members are better than we deserve. I actually had someone tell me, hey, when are you going to stop being shocked at how good this E4 is at building this app or doing this thing? It's like the amount of talent is eye-watering. I think we encumber them in a lot of process. We deprive them of a lot of agency and I certainly have a lot of critiques of the bureaucracy. But I think the structural challenge we have is actually something that we just need to observe from a distance from the military we have today, per se, which is the whole point of the military is to deter our adversaries from conflict. If you look back over the last 10 years, we've not been able to deter a lot of conflict. We had the annexation of Crimea in 2014, the militarization of the Spratly Islands, after they told President Obama, we will not militarize it. They militarized Spratly Islands. We've had a pogrom in Israel. We've had the invasion of Ukraine. We have unprecedented gray zone phase zero operations by the Chinese and this out trying to see. I would say arguably, in the last year, we started to restore deterrence. Whatever you think about it, midnight hammer was massively deterring operation. Maduro is massively deterring. You have it on multiple levels. With midnight hammer, it's obviously the overwhelming strength, the precision of what we're able to do, the incredible complexity of the operations. No other military in the work had done that. But we need to view that as a single strike and the deterrence capability against a peer adversary is, can you generate that strike every single day until the enemy submits to your will? You think about Maduro? It also shows our capability. Literally, the raid happened the day the Chinese were in town. Maduro has all these Chinese and Russian weapons, then as well. And they don't seem to work at all. And that sends a very strong message to everyone who else who thinks that their security is coming from buying Chinese and Russian weapons. Now, I think we trace back, and this is what I really wrote about in the 18th thesis. So if we start, we say we've lost deterrence. Let's be clearied about that. In the last year, we started regaining it. What happened? Because we had it for a long time. We were the sole superpower in the 90s. And we spend a fair amount every year on defense. People want to talk about narrow things like acquisition reform or the mix of weapons. I think it comes back to people. It comes back to the heretics. At the dawn of World War II, we were the best at mass production. Effectively, our country invented it. And in order to create an industrial base, we took the number two at GM, who was previously the number two at Ford Bill Knutson, who was a Danish emigree, who was really the perfector of mass production. And we direct commissioned him at three star general and we put him in charge of war mobilization. And Knutson was a world-class engineer. And what do we do? We gave him the authority to go meet other world-class engineers, all around America. We had one key advantage in World War II in terms of timing, which is that we had Len Lys. There's a period of time that we actually mobilized production when we were not fighting. We were building stuff that we gave to our allies to the Brits in particular. And the Soviets. But that allowed us to build factories and retool existing factories and hit a production ramp so that after Pearl Harbor happened, we were basically at full rate production and we're able to go after these things. And put this in context of our adversary, the Germans, they were actually better engineers than we were. They just made a very small number of very exquisite things. Now, if you come to the present moment, we sound like the Germans. We make a very small number of truly exquisite, eye-wateringly exquisite things. And our adversary is the world's best at mass production. So this should give us all a little bit of discomfort here. The second part of this is the nature of the industrial base. Today, we call it the defense industrial base. I think it used to be the American industrial base until the fall of the Berlin Wall. Only 6% of spending on major weapon systems went to defense specialists. IE companies that only did business with the defense department. Most of that spending, 94%, went to what I call as dual purpose companies. A missile is single use. There's no dual use missile. But the idea that Chrysler would build missiles and minivans meant that all the R&D that they were doing on production material equipment, machine tooling could be leveraged and was subsidizing our national security. That we recognized that freedom and prosperity were two sides of the same coin. We're so far away from that world today. General Mills, the serial company, used to build torpedoes and inertial guidance systems. Codec, the film company also was a key supplier to Corono, which is our first spy satellite. But this is the industrial base that one world war two, one the early Cold War, and really deterred our adversaries. And it's only a consequence of becoming the sole superpower that everything changed. And it changed in two ways. One that 6% number today is 86%. So 86% of major weapon systems come from defense specialists only. The other part of it is the nature of the industrial base. We think about it as North of Grumman. Much more accurately, it was Jack Northrop. It was Lee Roy Grumman. It was William Lear. It was Henry Ford. It was Henry Kaiser. You had founder figures. They were their own sort of heretics. What we would recognize in the valley today, that's where this talent was. It was in the industrial companies of America. And we were betting on these people, not just their institutions, deliver this sort of capability. In 1993, there was a very famous dinner at the Pentagon called the Last Supper. We had won the Cold War. I think in a democracy very reasonable for the people to say we want to spend less on defense. So what exactly is our threat? So we slash the defense budget. And in this dinner, the secretary of defense told a subset. I think it was 15 of the 51 primes. We had 51 primes today. We have five. They told him, you're all not going to survive the budget's getting cut. We give you permission to consolidate. Maybe some of you should exit the defense business altogether and know that some of you may go out of business and we're not going to save you. And this just set off a merger frenzy that led from the consolidation from 51 down to five. Now, most people look at this and I think they take away the wrong conclusion, which is like, oh, this is when we lost competition. When we had competition, it was much more dynamic. I think the much more profound consequences. This is the moment of profound financialization and conformity in the industrial base. You lost the crazy people. They went to tech. They went to other parts of our economy where there was enough positive some energy and growth. And it wasn't just about dividends and buyback ratios and financial engineering. It was about real engineering. The world-class engineers, why should we celebrate a hymenic over? Where Kelly Johnson, Kelly Johnson was the founder of Skunk Works at Lockheed. In his lifetime, he built 41 airframes. That is insane. Many of which we still fly today. He built the U2 in 13 months. But the timelines we're talking about are just incredible. You can't look at that and think anything other than this is an artist. This is like divine what he's able to do. And so much of what I think we've gotten wrong is those things were messy and chaotic and hard and frictionful. And over time, we try to install lots of process to make these things less messy, less chaotic. As the consequence, though, they end up not working. We need a little more crazy back to get these things to work. How do we undo this? I'm reminded that the Churchill quote won't get it exactly right. Something like the US always does the right thing after trying everything else first. And a lot of what's happened is that we have shipped the capability to produce physical things off our shores to optimize for a variety of things, but it's much cheaper and more scalable and easier. And we've become primarily a country with all the market cap that rests on technology and IP and extreme talent. The small number of exquisite things, exquisite people, exquisite researchers. We've done an amazing job there, but we don't make much here anymore. A lot of it happens in China and overseas. How can we reverse that? It seems so imbalanced and so daunting as to seem impossible. But of course, I know you think it's critical. So what is even the first step in being able to do this? What you said is exactly right. It is daunting, but critical. So we have no choice but to lean into that and start. The best time to start would have been yesterday. The next best time is today. Let me also give the case for why it's critical because I think we're screwed if we don't do this. The biggest lie that we bought from globalization is this concept of we will do the innovation and they will do the production. What you have to recognize is that innovation is itself a consequence of productivity to put it in terms that I think our audience here would understand most directly what motivated Google to do the research behind the attention is all you need paper in 2017. If you ask them, they'll say, well, the team was working on an incremental 3% improvement to Google translate. You cannot think of something more been out leading to something more revolutionary than that. So if you don't have the input stimulus on improving production, you're actually not going to be able to capture the innovation. And that's literally what we're seeing play out in the marketplace today, which is, okay, they went from making a battery to making the whole car. Wushie went from being basically a cheap pair of hands for pipetting contract research in the farm industry to actually now 50% wall clinical trials are drugs that are created in China. So we have seeded the innovation. It's not how it's taken away from us. We just seeded it because we had completely incorrect reset. So now we have to re-attack that. We should do this with some asymmetric advantage. I think we have a couple of them. I don't think it's true that we're not great at building things in this country. Look at Elon and the progeny of Elon. We do know how to manufacture things here. And we're going to have to think about manufacturing things in new and novel ways. In addition, it doesn't all have to be new. It's like for general motors, these are world-class manufacturers too. We have that capability. But we also have new ways of thinking about this with much deeper vertically integrated production. thinking about the production process itself is something that's more iterative and software-like that you're going to keep upgrading, co-locating R&D with production itself. So I think these sorts of trade crafts are the things that we can lean on. And probably the last piece I'd say is AI is David's sling shot here. If we can give the American worker superpowers, if you can make the American worker 50 times more productive than a worker anywhere else, you're going to change the efficient frontier of what can be made here. I think as a consequence, we should be re-industrialization maximus. The free traders out there like say like maybe we can French or whatever, I think that stuff can let us off the hook too easily. It fails to solve the problem. The other example I'll give you from Patrick McGee's book Apple and China is that great book. People love to say something like well, we don't have the machine tools engineers in America. You could hardly get two people in a room to talk about it. You could feel a whole stadium in China. But then you look, Apple has spent the equivalent on an inflation-injusted basis in the last five years of two and a half martial plans, building talent and capacity in China. How about we try to spend one martial plan here? I think the problem is we're not even trying. Part because we're daunted, part because parts of our economy don't recognize that actually this isn't going to keep working. You're going to lose everything, not just something. That's why I feel an urgent call to action to say like we are in an undeclared state of emergency. It's not just manufacturing the physical things we think about. I even think about this in terms of drugs. 80% of our generic drugs come from China in one way or another, whether it's the APIs or the finished product themselves. That is a huge problem. Today, your child has an ear infection. That's pretty trivial. You think I'll have some generic antibiotics and it'll go away. If you have great power competition with China and the will of the American people to fight when they have to really contemplate, "Hey, my fibral might die of an ear infection," so we need to take these things much more seriously and further down the supply chain. I'm glad we're starting with rare earths, but there you could say we had to get punched in the face to mobilize around it. Maybe one of the galling things we should all think about is we've been staring at this rare earths problem for the better part of 15 years. We more or less have solved it for like 2 billion bucks. It's roughly a rounding error relative to everything that we're doing and now we're on a trajectory to do it. I think part of it is just starting. I would love to bring everything back. I think making a marginal improvement of even 10% dramatically reduces the adversaries leverage. I just was reviewing my notes ahead of our conversation today from Graham Allison's book on China, "Destined for War with China." Can you give your perspective on how you think about China as an adversary, as a country. I highly recommend the book Apple and China. It really gives you the steep sense of how tightly integrated arguably our most important company is with manufacturing there. It's this very strange circumstance. I have to admit where I've been to China. It's another place filled with human beings and interesting things and amazing interesting culture and all sorts of positives. It's a hard thing to wrestle with that they're an adversary in the traditional sense. But I think there are components of that and the nuance is important. I'd love to just hear you describe how you think about China as a political entity, as an adversary, as a country. It just feels like an especially important thing to understand your view on. When we won World War II, we spent our own money to rebuild Germany and Japan. Microelectronics moved to Southeast Asia as Apple, China documents and chip wars documents, because we helped move it there. Yes, we got cheaper goods in return, but the economic development of these countries, they're flourishing in order to create global stability, was part of the calculus. Same thing with admitting China to the World Trade Organization. The problem is they cheated the whole way through. Even if you go back to a pre-Dang Xiaoping era, they call us the big enemy. I think part of it is our own naivety, our own belief that capitalism and human flourishing is a natural consequence of prosperity. They're saying these things, but as they get richer, they're going to change their perspective on these things. We're all going to find some way of having a positive some view on the world. That's essentially what didn't happen. I think the challenge for us with the CCP is that it's not enough for China to be prosperous. America must fail. Just see this through simple acts. If you look at agriculture, it is totally their prerogative. It's a business decision whether you want to buy American soybeans or not, or you want to buy Brazilian soybeans. I do not begrudge them one bit. It's totally different thing when you're trying to smuggle in agricultural funguses so we can't grow soybeans. Now, if you start going down to the laundry list of what's actually happening, that's the shape of what's happening. There are formidable adversaries in the sense that our conception of war is kinetic. It's the lone heroic cowboy against the odds, winning through heroism. Their conception of war is deception. It's the general who tricked the adversary to get into the valley and then flooded it. It's a cultural thing. You want to win without firing a shot. So a lot of the things that are happening are below what we would consider the threshold of conflict, but it absolutely is conflict. It is in their system, system destruction warfare. It's waging war through all the means because they're going to wage it or they have asymmetric strength. The American Calvinist sensibility is structurally positive. We're going to turn the other cheek time and time again over and over again. But there will be some line, there will be some point at which we just react. And when we react, the best quote I have from the Admiral that I like is, "It's no longer John Boy's Udalupe Observe, Oriya Decide Act. It's the American Udalupe Observe, Overreact, Destroy, Apologize." What we want to do is prevent this from happening. By having enough deterrence that we're not provoked to being in a position where we even need to react. You mentioned the idea of asymmetries a few times, nuclear subs being an example of one of our last huge asymmetries versus others. What are the most important asymmetries in your mind for the US and for China? Where do they have an asymmetric advantage against us? Where do we have it against them? And what do you hope shifts? This is a great question. Their principle asymmetric advantage is long term planning. They actually can't pivot on a dime. So let's go back to Gulf War I, which we're talking about with John Boyd. They saw the devastating violence we were able to do in basically four days to the fourth larger stormy in the world. They said, "Okay, we have to systematically map all the critical dependencies of America's military technology and invest against it." And they have been doing that since '91. The frog is kind of boiled in some sense. And it's a little bit of an easier game because they're playing a home game. But that's the map they've been on. And it's been a steady journey. If you look back, they broadcast their intent the whole time. There's no surprises that were there ever. Our asymmetric advantages that were crazy. The AI phenomenon was not in their long-range plan. It wasn't in our long-range plan. But when it happened, our whole economy pivoted on a dime. And even the Chinese models, those are a result of distillation. And so our ability then to be unpredictable because we ourselves do not know what we're going to do. That's our key strength. That comes back to the heretics. Where does that unpredictability come from? Because it's not our bureaucracy. Our bureaucracy is incredibly predictable. It's not the steady-eddy managed decline. It's the crazies. How do we get more heretics in this part of the American story? Because there's obviously a massive profit. And I would argue status motivator in the private sector. All these companies that are popping up with amazing founders. The potential rewards are extremely obvious. The heretics that you described at the start of the conversation. That's definitely not true. You mentioned dying penniless or whatever. How do we create the right set of incentives for more of our most talented people to go be heretics in this part of the American story right now? There's two incentives. One is recognition that we need the heretics. I think I'm in recover and joy to celebrity for a big period of time. And just being known as the guy who did this is itself a sort of reward. Then the second part of this is definitely financial. Like one of the arguments I've been making is the cynical view of defense industrial complex in particular. Something like these are greedy warmongers. Well, they picked the wrong industry then. Because on the greedy side, you should be in tech. You should be in some other business. These are crappy businesses. They have 9% operating margins or something. They're valued at like less than two times revenue. So we actually need to make our primes more valuable. That would help us continue to attract the heretics. How do you make the primes more valuable? The fastal critique of the primes is somehow there the problem. The systems the problem. The primes are just downstream of the consequence of the incentives the government gives. And I think the worst incentive is cost plus contracting. Your upside is capitated. You're not supposed to take any risk. The government basically pays for your R&D. So you have no skin in the game. And yeah, you're still able to make a small number of exquisite things. But that system is anti-heresy. You can only do the conventional thing that the government's agreeing that you should do. You think about the Higgins boat. Andrew Higgins built that boat on his own. There was no space. In fact, that's why the Navy kept projecting it. It wasn't the Navy's idea. But then 92% of all boats in World War II or the Higgins boat. The heresy is the boat that won the war. How do you create an economic incentive where that's the case? And I think companies like Andral or Pioneering that on the hardware side where it's like, hey, I'm building a product. These are my specs. These are my opinions. I'm absorbing the risk. You should buy it if you like it or not. Part of the reason for profound optimism right now is I would not have started all this advocacy if I thought I was just screaming into the wind. It's like having done this for 20 years for the first solid 10 years we were alone in the darkness. There's like SpaceX on the launch side and us. And then if you look at the present moment, there are now hundreds of founders who are building in the national interests with a US capital stack, one of our other advantages of over $100 billion invested in the projects that they're doing that are actually changing other department things about the future. This is the window in the moment for this stuff to happen. Increasingly in conversations that I have in the Pentagon, I hear some of these new entrants are talked about as plan A. It's not plan B. It's not, hey, we'll see. Maybe this will work in the future. It's like, no, this is the plan and we'll have to have backups if that doesn't work. That is unrecognizable from the world I started in 2006. Your finance team isn't losing money on big mistakes. It's leaking through a thousand tiny decisions nobody's watching. Ramp puts guard rails on spending before it happens. Real-time limits, automatic rules, zero firefighting. Try it at ramp.com/invest. 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What would be the things that you think could carry the most freight to create some of the change that you want to see? I have narrow ideas. Like, this is a narrow idea, but I would try to blow it up. OK, you want to bring pharmaceutical production back to the US? If you try to do that for generics, the business case will never work. It's too hard. It's too much of a subsidy. But what you really want is you want to redevelop a skilled workforce that understands how to make drugs again. And you want the production capacity that in a time of crisis, you could go from, say, making branded drugs to generics. So why don't we manipulate patent length and say, look, drug companies, if you make your worldwide supply of your branded drugs here in the US, I will extend your patent length such that you recover 2X your CapEx investment to go do that. That's a simple business case that every pharma company would underwrite in a heartbeat. And it provides the catalyst to go generate that capacity. I think there are a lot of things in the American economy that look like that. We go back to the story I was saying between prosperity and freedom that Chrysler built many vans and missiles and four built satellites until 1990, General Mills, Kodak, like you just go down the list, the entire economy looked like that. I think it's a consequence of being really the sole superpower and the Pentagon, the old Pentagon in particular, being the last bastion of communism except for Cuba. Every country gave up on communism, including Russia and China, except for Cuba and Department of Defense that made it both a bad business and then seemingly no threat. So you could just be a prosperity company. You'd be a single purpose company that just cared about being a company. I'm not sure that's actually a stable or healthy society or civilization that we have to recognize that we have obligations across freedom and prosperity. You mentioned the notion that we are crazy and can pivot and attack opportunity is an amazing part of the US culture. What do you think, what's the other side of that coin? What are the negative aspects of US culture in your view? And I'm going to ask the same questions and zoomed in on Palantir specifically of how to cultivate the culture that you want. Palantir seems to have an incredibly distinctive culture. I'm going to ask about Sean Bombs and things like this inside the company. But first at the US level, what are things that you wish were different here about our culture? Some problems required sustained effort. So if you can pivot really quickly, maybe you pivot it to solving the problem, but that means you can pivot away from solving the problem, get distracted and lose sight of what you're trying to accomplish here. It's like a feature bug. It's not an unequivocal feature. But if you're in a competition, you want to play to your strengths. And that usually involves things that the adversary is unable to do. It helps that with the nature of populating the US was that all the heretics from the old world came here. So we have an unfair advantage on that. In terms of maintaining a culture, the critical lesson I've learned over and over again is the entropy of the universe is against you. If you don't invest in your culture every single day, you will lose it. There's nothing about culture that is self-sustaining that says true for America, the country, as it is for your company. And then the best cultures are really almost cult-like. Your culture is highly differentiated. It should actually kind of be hard for someone to inorganically insert into your culture. Otherwise, it's not a very differentiated culture whatsoever. That requires flag bears. It requires people who are true believers. So it starts with recruiting. Now that every human has a disposition that they want to be part of a cult, essentially, some of them are just structurally mercenaries. And they're evaluating everything in life really through the lens of what's my next job. You want to try to deal with your company with people who really think of the present job as the calling. That engenders the primacy of winning. They're always thinking about how to win today, because that's the whole game. If you win today, you have the right to win tomorrow. Rather than the other side of that is getting lost. And I wish the world could be this. I wish the company could be this way or that way or something, which is unmoored. It's an aesthetic of how you wish the world to work rather than both how the world does work and what is required to win today. In a company like Palantir, what do you personally wrestle with the most? What are the trade-offs that I'm always fascinated by trade-offs? It just seems like so much that what happens hinges on a couple key choices. Can't do everything for everyone. What do you personally wrestle with the most? The most important decisions from my seat is really what projects are worth outsized investment that we think are going to define the future of what our customers need and therefore the future of the business over the next five years. So then how do you get the right talent on those projects? How do you discover what those projects are? I like to think about it. It's like my backlog is something I reprioritized dynamically relative to reality. Here's my roadmap. Here's all the things I want. It's like a approximation and a point in time. But I think there are the most valuable things to build. The second some new data comes in, I'm going to rip that up and reprioritize it. Having a culture that lets you do that, that is really fucking painful. People don't like it. The world is shaken up. It generates a lot of chaos, but it's the right thing to do. So then managing that so that your culture enables you to do that, the cost of doing it is worth it because the return of so outsized, that's the whole business. I'm extremely sympathetic to that point of view of changing plans very quickly. I've also experienced the whiplash that it creates in a business. How would you coach someone that believes this, but understands it's really hard on a business if you're constantly changing your mind and pivoting your resources around? What have you learned about the ways to talk about that with your team of implementing it, of communicating around it? I'm curious how you do it. - There are always degrees of these things, but the first order issue I'd say, is it hard because you want to exist in a business that isn't painful? There's a great Greg Le Mancuot, World Championship cyclist, and someone was asking about a championship performance and he almost looked incredulous and he was like, "You know, it doesn't get easier, you just go faster." And so what do you think a championship performance feels like? It feels shitty. It's really painful, it's really hard, and your ability to win is basically, "Can you survive more pain than your competitors can?" So then there's this weird phenomenon where if you're doing something world-class, it's really painful. Also, if you're totally failing, it's really painful. So then having some discrimination to know which of these two worlds am I in, and the worst world to be in is where you have no signal, it's like you're just plotting along, but it's managed to climb is really what's happening. So then is the pain we're experiencing generating results or not, and orienting people to that? The other part I'd say is, you can't move the whole company at once. Even a company as small as ours, it's only 4,500 people, every change is itself a mini insurgency inside the company. Now, we think about it like you're campaigning. Who are the people who already believe what you're saying? How do you add incremental weight behind what they're doing? How do you help them succeed more? Are you trying to generate momentum or are you trying to deal with the drag of bringing everyone along? My experience has been momentum is the thing that aligns the whole company. And so you should be waking up every day in the midst of these pivots just working on momentum. People will catch up. - What are your favorite ways to do that? This is a good communication question. Palantra gets so much attention now from public markets and everywhere, it's one of these exciting places. So there's more scrutiny on the company. It's choices what it does. You don't get to operate an obscurity like you did in the first batch of time. What are your favorite methods for that internally? Very tactically. - Celebrating the heretics, celebrating the successes, creating venues where everyone has some ability to revolt. Every employee's first AMA with me, I ended by telling them to tell me to fuck off to my face. It's very uncomfortable for them actually. They're almost not sure if this is like I'm entraping them into something that's gonna get them in trouble. But how can you say you have a flat culture if you can't tell the boss to fuck off? It's a small gesture, but it's trying to set the conditions understand like, "Hey, we are a company that's committed "to taking the very best idea regardless of where it comes from "and then putting all of our wood behind those arrows." And most of those ideas are usually some variance from what we're currently doing. Otherwise, it'd already be the current best idea. You gotta be careful how much you institutionalize. But we've institutionalized, minimally two times a year. We have these weeks of revolt where people are allowed to go build whatever they want. Where almost I like want the people to have a chip on their shoulder. The whole point is to prove that we've been fucking up and doing it wrong and inspire us with the thing that you built. And then if you have a culture that is just profoundly truth-seeking and the truth is still charismatic that now that I've seen it, I can't unsee it. This is obviously the right answer. Let's go. It's not as hard as it may sound to move and pivot on these things. - The AI time is so remarkable. We all have to deal with this new thing at the same time. - How do we like any crisis? There's both opportunity and danger bundled in the coming of AI for Palantir 2. How do you receive this new technology and make sure that you get better because of it and don't get disrupted because of it? You were a disruptor with this enterprise ontology concept, killing the old rigid database systems. You had an innovation now. If I wanted to create a Palantir competitor, it would be much easier just by virtue of the technology that's available. - The only way you can do that by disrupting your. So the point of institutionalizing rebellion and holding that up, it is the perpetual motor of self-destruction. I think about it as the most valuable thing is not to defend the modes or something, but as to go charge after the new opportunity. One of the things I think is unique about AI is how much it plays to the beginner's mind. Obviously the first adopters of AI for us were the youngest hires. To the point of generate momentum, I didn't really bother with the people who work cynical or and dismissive of it. I let the young people generate just overwhelming productivity that almost in some sense humiliated or inspired other people to get on board. And there's a similar phenomenon. There was like a weird, almost like out of body experience, as someone who's been there 20 years or someone who had been impaled to three years is like, you know what? The best people are doing this are really the young people by which he meant people who'd been there three months. And that recognition of, so here we have someone who's not a gatekeeper. He's actually trying to find the insurgents and empower them and place them in places where they can go forth and do that. That's it. And we can all learn together by doing that. It's been actually really fun with the rate of transformation for AI and what it's really enabled to be possible. Everyone's trying to answer this question of, okay, we have AI. Where's the value to get captured in the whole stack or chain or have everyone think about it? What's your answer to that question? We think that the value is going to crew 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've observed 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 what they need it. Now, of course, there's some divine intervention. We built this platform over the last 20 years and you can say arguably the need 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 in 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 from 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. 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 everybody knows guy. What is behind that choice? Why make that shift? 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 18th DCs, which is to say like we're an emergency. We've lost to turns. 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, I know to 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. How would you sum up the 18th season? 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? Do you think it's important? If I was to synthesize it as we've lost to turns, the reason this is not going to go the way World War II did is we don't have the industrial base. We hadn't World War II. We have to recognize what are unique American strengths. The person is the program. Don't forget that Edward Hall built the Minute Man and Shrever was the Air Force general that oversaw our ICBMs and that we call it the Apollo program. It was actually Gene Cranc'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 futures determined by the founders. It's like almost like 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 ultra process. We thought if we followed this requirements process that 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 that 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 land ship because he can only build ships. So it was a land ship, 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 forces missile and 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. It every crossroad is the person who just wants to engage with the system we lose and the person who's willing to just put it all in the line to make it work and it was kind of a call till 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. Is there anything about your worldview, Palantir, etc. that you think would be surprising to an outsider that we haven't talked about? First of all, we don't really think of ourselves as a defense company. I think the fact that half of our businesses 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 that they somehow think we're either in the business of collecting data or doing surveillance. And that is probably the part that's at 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 neilism. 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 neilism 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 constated 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 like 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. This idea of you have all this data you're doing surveillance through this panopticon and the 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? It used to weigh on me. Part of it is like, okay, you've been doing it for 20 years. How long can this 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. Can I end with John Boyd to do or to be? Are you trying to be someone or trying to do something? We're trying to do something. That was one of my favorite lines from that book. Expand on that one bit more. So John Boyd's advice to other officers, other uniform service members always, you can either be somebody or you can do something. But you can't really have both. And if you're going to be somebody, you've got to play this game. And it's all theater, but you're going to get promoted. And you're going to get the accolades. And you're going to get the rewards of doing that. And you're going to feel good about yourself. Well, you actually do something. And it's going to feel really shitty. And no one's going to appreciate it. But you're going to have the intrinsic reward of knowing that you did something. You mentioned your dad earlier in the conversation. There's this visual story where I think he's held up at gunpoint or something really in his life. Went through a lot. I'm curious for you to reflect on the nature of fatherhood in this whole story. You realize you should be your dad seems like such a key part of your story from the outside. And your dad yourself. Would you be willing to just reflect on that a little bit? It would be hard to overstate the impact that dad and his example had on me. You had such a selfless man who just gave everything to his family. Could weather any emiliation in service of his children and his wife. And I think when you're a kid, you learn this stuff subconsciously. Any normal kid, this thing dad did's annoying. You don't fully appreciate it. But it's like the culmination of all these events over time. Actually profoundly shape who you are. And I hope I can set an example that inspires my kids to do the same sort of thing. And I think a lot of fatherhood is being a man that inspires your family to be better. Great place to close. When I do this, my closing question is the same for everybody. What is the kindest thing that anyone's ever done for you? The greatest thing which is covered in the story is Miss Ethel Danhoff was the head of admissions for this private school in Orlando. My dad took me for a tour of the school having learned that it's the best school and that was the other fixation my dad has. That education was how you were going to achieve some prosperity. I'm going to give my son every opportunity I possibly can. Turns out we'd missed the admission window by a mile and everything was done. I was actually very reluctant to go even on this trip and see the school. I was very happy with the school I was at. When I saw the science facilities there, I need to go here. I need to learn this stuff. This is inspiring. So now I was all spun up and excited. And of course, I'm learning, hey, you totally screwed this up and you'll have to wait a year. And Miss Danhoff, no data. It's not like I had some standardized test scores or something. She's like, give this kid the admission test. Just do it. And maybe she had a modicum of data after that test, but we were a family I needed financial eight. So it's like, here it is. Let's admit a kid that we're going to have to subsidize to come here. And that opened the entire future. And I think if you look later in life, okay, maybe people have cynical reasons to help you. Further along, they think there might be something like there's nothing in it for her. It's just a profound act of kindness that fundamentally changed my life. Great place to close, Sean. Thanks for your time. Thank you. If you enjoyed this episode, visit Colossus.com. You'll find every episode of this podcast complete with hand out of the transcripts. You can also subscribe to Colossus, our quarterly print digital and private audio publication, featuring in-depth profiles of the founders, investors and companies that we admire most. Learn more at Colossus.com/subscribe. You know how small advantage is compound over time that's true in investing and just as true in how you run your company. Your spending system is your capital allocation strategy. Ramp makes it smarter by default, better data, better decisions, better economics over time. See how at ramp.com/invest. Rigline is redefining asset management technology as a true partner, not just to solve for vendor. Hope firms 5x in scale, enabling faster growth, smarter operations and a competitive edge. Visit RiglineApps.com to see what they can unlock for your firm. Every investment firm is unique and generic AI doesn't understand your process. Rogo does. Check them out at rogo.ai/invest.