The Exchanges

Q that about kind of the entry into defense and the different kind of entry that different entrepreneurs are taking and how kind of billionaire versus not in the success that comes with that. I guess my point is that like, they're seemingly very at odds defense and then AR in your experience with Oculus. How do you look for inherent similarities and differences between the two seemingly quite opposed markets?

A I get asked this all the time and you're right. They are very, very different. I mean, you sell things in a different way. You develop things in a very different way. A lot of people expect me to have some kind of philosophical explanation of how they're two sides of the same coin, and I'm really applying my skills, blah, blah, blah. The reality is they have almost nothing in common. I had to build pretty much a new base of expertise to work in this space. We ended up working primarily on autonomous systems for DoD applications, and artificial intelligence is not a natural outcropping of virtual reality or augmented reality. But when I did a first principles analysis of where America was falling behind, where our allies were falling behind in the military, it was clear that that was the area where I could have the biggest impact. I wasn't going to have the biggest impact building manned fighter jets or building reconnaissance satellites or building aircraft carriers. It was going to be these kind of much smaller, much harder to make tightly integrated hardware and software systems that the Department of Defense is traditionally pretty bad at procuring.

AI assessment note: “The reality is they have almost nothing in common.”

Q Can I ask, is that the vision then? Like, given how broken and outdated it is, I guess there is the opportunity to own vertical end to end. Is that not the most obvious opportunity to be the A two hundred billion dollar company.

A That is the end goal. Like in the end, I want to build products that make all of my other products more valuable. So the reason we started with building lattice is because that was something that we could build hardware products on top of that feed data in the lattice, and then also act on data from lattice. So like our century towers feed data in the lattice, our ghost helicopter drones feed data in the lattice. Some of our unannounced sensor systems that we've deployed are feeding data in the lattice. And then we have things like Anvil, which is our counter drone system, which is basically an interceptor that knocks drones out of the sky. And that's acting on data from Lattice. But what's really cool is that all of these products make the other products more valuable. Like Anvil makes our sentry towers more valuable because now it's a way to not just detect what's going on in the sky, but to control what's going on in the sky. And I think this is an approach that's been taken in consumer technology and enterprise technology for decades. Tech companies understand That it's better to build products that make your past products more valuable and your future products more valuable. In the defense space, because of the way the incentives work, where most contractors are paid kind of on a time and materials basis, they're incentivized to do the same work over and over again. They'r…

AI assessment note: “That is the end goal. Like in the end, I want to build products”

Q Well, that was going to be my next question. It was, I spoke to Joe Lonsdale before this, and he said to asking What are the core mistakes that legacy defense players have made that have allowed you to move so fast and bluntly execute as well as you have done?

A I don't know if I'd call it a mistake on their part. I mean, they're making a lot of money. The system really works for them for the things that they're making. I think that in a few years though, it'll be easy to look back and see the mistake that they're making. And the biggest mistake they're making is not investing nearly enough in what the industry calls IRA, internal research and development. Most Of what defense contractors build in the United States is paid for by taxpayers. The R and D is paid for by taxpayers. The production is paid for by taxpayers. The deployment is paid for by taxpayers. They don't take on very much risk compared to modern technology companies. Like a typical defense contractor will spend between one and three percent of their revenue on IRAD. Whereas a modern tech company is going to be spending 20 to 50 to even 80% of their revenue on IRAD. The problem with that is that it means that as a company, If you're reliant on the government paying you to do work, it means you're only ever going to build things that the government and that politicians already believe are possible. And if you do that, you're never going to be able to build the things that are truly on the cutting edge. That's kind of been our sweet spot and where the defense crimes have failed is we use our own money to decide what to build, how to build it, when it's done. And that means …

AI assessment note: “the biggest mistake they're making is not investing nearly enough in what the industry calls IRA”

Q Not at all. I've wanted to see this for a long time, but talk to me. How did you make your way into the world of startups? There's a little bit of context and come to found today, one of the fastest growing startups in our ecosystem in the unicorn that is Andrew Hill.

A So I'm used to moving fast. Oculus was one of the fastest multi-billion dollar exits of all time. When I started Oculus, I was 19 years old living in a 19 foot camper trailer. I had just dropped out of college. My parents weren't super stoked about that. And we went from just being a trailer to a multi-billion dollar acquisition by Facebook in less than two years. So that was an incredible experience. I learned a lot about how you run a company, how you grow a company. Even after we were acquired, I stayed around for a few years. We're trying to do the same thing here, not necessarily cash out quite so quickly. I'd say in the case of Oculus, we went for that acquisition because we felt like it can turbocharge what we were doing and allow us to do things we would never be able to do on our own. I think that the defense base is a little different. You kind of have to do things on your own because the system isn't set up to allow you to succeed when you're working through other partners and letting them kind of be in the driver's seat. Like you can't just be a subcontractor to a prime and expect to build A multi-billion dollar company. I'm not doing this because I want to build a fifty million dollar company. I'm not doing this because I want to build a five billion dollar company. I'm doing this because I want to build a fifty billion dollar company that will fundamentally change…

AI assessment note: “When I started Oculus, I was 19 years old living in a 19 foot camper trailer.”

Q Well, that was going to be my next question. It was, I spoke to Joe Lonsdale before this, and he said to asking What are the core mistakes that legacy defense players have made that have allowed you to move so fast and bluntly execute as well as you have done?

A I don't know if I'd call it a mistake on their part. I mean, they're making a lot of money. The system really works for them for the things that they're making. I think that in a few years though, it'll be easy to look back and see the mistake that they're making. And the biggest mistake they're making is not investing nearly enough in what the industry calls IRA, internal research and development. Most Of what defense contractors build in the United States is paid for by taxpayers. The R and D is paid for by taxpayers. The production is paid for by taxpayers. The deployment is paid for by taxpayers. They don't take on very much risk compared to modern technology companies. Like a typical defense contractor will spend between one and three percent of their revenue on IRAD. Whereas a modern tech company is going to be spending 20 to 50 to even 80% of their revenue on IRAD. The problem with that is that it means that as a company, If you're reliant on the government paying you to do work, it means you're only ever going to build things that the government and that politicians already believe are possible. And if you do that, you're never going to be able to build the things that are truly on the cutting edge. That's kind of been our sweet spot and where the defense crimes have failed is we use our own money to decide what to build, how to build it, when it's done. And that means …

AI assessment note: “biggest mistake they're making is not investing nearly enough in what the industry calls IRA”

Q Curious, but when you look at the complexity of the products that you're building today, what's the hardest elements? What were the elements where it was like, oh shit, this is really hard?

A Well, I mean, like our core product is something called Lattice, which is an AI powered sensor fusion network that can take data from tons of different sensors and merge it into a real-time common operating picture of everything that's going on right now, and that's going to happen in the near future that you can share with all of the machines and all of the people that you have operating in an area. One of the trickiest things about building something like that Is that we can't control all of the sensors. This isn't like a cell phone where we're building to a platform where we have deep hardware integration with everything. We kind of have to build our software system so that we can integrate with the hardware we make, but also hardware that's been deployed for literally decades. Whether it's in space, whether it's undersea, whether it's on land, whether it's mounted to an aircraft where the design lock happened 30 years ago. We get to do cool things like detect a target on the ground using some new cutting edge sensor. Push that through a secure network into an F-sixteen using a radio link that is pretty ancient technology by this point. But like I'd say, having to work with other people's tech where there's parts of the stack you just can't modify has been a huge challenge for me. And it has definitely been frustrating at times as a person who's used to more vertically integ…

AI assessment note: “having to work with other people's tech where there's parts of the stack you just can't modify”

Q Totally agree. Do you have mentors? Because it's a big realization and you've grown so much as a leader. Do you have mentors who've helped you in your own development as a leader?

A I definitely do. There's people that have helped me in the past. There's people who continue to help me. One of the things that is great about my life is that I have been in situations that most people my age never get to be in. I have been around people that most people my age don't get the chance to work with. So like, whether you're talking about world-class programmers like John Carmack, who Basically invented three D gaming and then continue to be relevant for decades past that. That's pretty rare in the game space for sure. Or, you know, working with people who hold senior government positions and have been doing so for decades to serve their country to even some of the researchers that I worked with before Oculus, when I worked in the university of Southern California, ICT mixed reality lab, I've had the benefit to work with a lot of people that most people my age do not get to work with. And I think that really has Made a big difference in my outlook. Like, put another way, I feel like if you could take your average person who's just, let's say, loser, gamer, internet, nobody, which is what I was for quite some time, and you were to give them the same experiences that I've had, they would almost have to try to not be capable. Like, if you've been around capable people and been mentored by capable people, you have to try to fail.

AI assessment note: “I definitely do. There's people that have helped me in the past.”

Q Can I ask, is that the vision then? Like, given how broken and outdated it is, I guess there is the opportunity to own vertical end to end. Is that not the most obvious opportunity to be the A two hundred billion dollar company.

A That is the end goal. Like in the end, I want to build products that make all of my other products more valuable. So the reason we started with building lattice is because that was something that we could build hardware products on top of that feed data in the lattice, and then also act on data from lattice. So like our century towers feed data in the lattice, our ghost helicopter drones feed data in the lattice. Some of our unannounced sensor systems that we've deployed are feeding data in the lattice. And then we have things like Anvil, which is our counter drone system, which is basically an interceptor that knocks drones out of the sky. And that's acting on data from Lattice. But what's really cool is that all of these products make the other products more valuable. Like Anvil makes our sentry towers more valuable because now it's a way to not just detect what's going on in the sky, but to control what's going on in the sky. And I think this is an approach that's been taken in consumer technology and enterprise technology for decades. Tech companies understand That it's better to build products that make your past products more valuable and your future products more valuable. In the defense space, because of the way the incentives work, where most contractors are paid kind of on a time and materials basis, they're incentivized to do the same work over and over again. They'r…

AI assessment note: “That is the end goal. Like in the end, I want to build products”

Q Terrible name for a show. But my question to you is, you know, you're an incredibly charismatic leader, speaker, as I said, everyone that I spoke to before this show, they all mentioned this kind of innate ability for leadership. When you look back at your leadership with the benefit of hindsight, how do you think you've changed as a leader over the eight years now since kind of 2012?

A I think there's a few things I've changed. The first is consciously realizing that I don't necessarily get to work on the things that are the most exciting to me, and I had to accept that when I started this company. Like, this was a big struggle with Oculus. When you start a tech company, you do it because you want to work on technology, right? That's why you're interested in the space in the first place. But as a company grows, I had to realize if I'm still doing optical design in my company, it's because I'm being negligent in my hiring process. I need to find people who are better than me because there's a lot of people out there in the world who are better than me. Same thing here at Anderil. I could be doing board layout. Like I could be laying out printed circuit boards, but it would be a huge disservice to our customers, to our employees, to our investors. If I was kind of playing house and having fun doing the things that make me feel relaxed and happy rather than doing the things that I'm uniquely good at, which is convincing people that they should be coming to work for me, convincing them that they are going to have a big impact, keeping people stoked about what we're doing so that they can keep up a high level Quality of work and a high intensity of work doing things like government sales where like it or not, even if I have a sales guy who is better than me at sel…

AI assessment note: “I think there's a few things I've changed. The first is consciously realizing”

Q that about kind of the entry into defense and the different kind of entry that different entrepreneurs are taking and how kind of billionaire versus not in the success that comes with that. I guess my point is that like, they're seemingly very at odds defense and then AR in your experience with Oculus. How do you look for inherent similarities and differences between the two seemingly quite opposed markets?

A I get asked this all the time and you're right. They are very, very different. I mean, you sell things in a different way. You develop things in a very different way. A lot of people expect me to have some kind of philosophical explanation of how they're two sides of the same coin, and I'm really applying my skills, blah, blah, blah. The reality is they have almost nothing in common. I had to build pretty much a new base of expertise to work in this space. We ended up working primarily on autonomous systems for DoD applications, and artificial intelligence is not a natural outcropping of virtual reality or augmented reality. But when I did a first principles analysis of where America was falling behind, where our allies were falling behind in the military, it was clear that that was the area where I could have the biggest impact. I wasn't going to have the biggest impact building manned fighter jets or building reconnaissance satellites or building aircraft carriers. It was going to be these kind of much smaller, much harder to make tightly integrated hardware and software systems that the Department of Defense is traditionally pretty bad at procuring.

AI assessment note: “The reality is they have almost nothing in common. I had to build pretty much”

Q could place blame on venture as an industry for not investing more in the space itself. My question to you is, I guess, you got founders fund early, and founders fund are very different from the rest. And that's kind of, you know, that ethos. Would you guys see venture change as an asset class to support the ecosystem more and really provide in the way that it could be?

A As an American, I wish that venture capital was flowing more towards defense focused companies. As somebody who's sympathetic to the venture capitalist perspective, I understand why they're not doing it. Like I mentioned earlier, there's only two unicorns in the last 30 years in defense. In the same period of time, there have been dozens of unicorns in social media apps, dozens of unicorns in automotive, Dozens of unicorns and fast casual dining, finance technology, biotech, med tech, consumer hardware, you name it, there's a lot more success. Defense is not a good industry to get into, and the only two big success stories, like I already mentioned, were founded by billionaires, and so most venture capitalists say, look, I'm interested in defense. I want America to have good technology, but how can I justify investing in something when there's no examples of success Aside from a few outliers that were funded by billionaires themselves. If you bring a company to them, that's not funded by a billionaire, they know that the overwhelming odds are that they're going to fail. And it's not even a matter of believing that the founders aren't capable. The companies aren't capable. I know venture capitalists who meet with companies and say, I love the founder. He's brilliant. I love the company. Their technology is amazing, but I don't believe they can ever achieve a financially signific…

AI assessment note: “that's why the DoD needs to generate more success stories so that venture capitalists will”

Q Nothing spooky at all. I'm sure the HR team will love this. Your favorite book and why? Talk to me.

A I'm not sure what my favorite book is right now. I was actually just talking about this with a friend. Growing up, my favorite book was Journey to the Center of the Earth, because it was a story about how a few people pulled off something extraordinary and Not because they were trying to do it for everybody else, but basically they were doing it for different reasons, but they were doing it for themselves, their own reasons. They did something incredible. They experienced something extraordinary. And that really spoke to me when I was younger. Now that I'm older, I've learned that very few things work like that. Everything's a team effort. Maybe it rings a little more fantastical these days, not just going to the center of the earth, but doing so as a team of just three or four people. Another book that I really, I don't know if I'd say it's my favorite lately, but I really liked it. Three-body problem. Not just as a piece of hard sci-fi, but also as a piece of hard science fiction from the Chinese perspective. It's very interesting to compare American science fiction and Chinese science fiction because there's baked in cultural assumptions that are just so different around collectivism and the value of the individual versus the value of the whole. What level of like screwing over individuals for the greater good versus sticking to your guns no matter what. It's very interestin…

AI assessment note: “Growing up, my favorite book was Journey to the Center of the Earth, because”

Q What's your biggest strength and your biggest weakness as a leader? 30 seconds on each.

A I think one of my biggest strengths is being able to convince people that what I'm working on is the most important thing in the world and the most important thing that they could be working on. Not just one time when you hire them, but continuously as they continue to work for you. That's what keeps the quality of the work high, the intensity of the work high, and the quality of the product really high. And like, this is true, actually, even going back before I started Oculus, you know, when I grew up, I ran internet forums where I convinced people that modifying vintage game consoles was the best thing ever. And it was the coolest thing ever. The same thing when I used to play sports when I was a kid, like convincing people that working with me was the best thing that they could possibly do. And it's kind of funny where it's not all that different going from eight years old to almost As far as weaknesses, I like to think that I don't have any weaknesses that I'm not managing. And if I do have weaknesses that I'm not managing, then hopefully I'm unaware of them. I would say one weakness I have is I get distracted easily by wanting to solve every problem that I know I'm capable of solving. I'll see something and say, oh my God, me and my team could just crush that problem. We could make such a big difference and we could do it very quickly. The problem is when there's hundreds …

AI assessment note: “one of my biggest strengths is being able to convince people”

Q I mean, you said that about the kind of company you want to build. When you think about like long, long term, what does Andrew look like in 10, 20, 30 years from now? Final one.

A I guess this goes back to what we said we wanted it to be when we first started raising money from founders, funds, and from others. I said, I want to build a defense product company that changes the way defense products are bought, that saves taxpayers hundreds of billions of dollars while making us tens of billions of dollars, and make sure that Western values are preserved here in the United States and abroad with our allies. Like, this business doesn't make sense to be in if your goal is just to make money. I'm going to make sure it makes money because I have to. Like, I literally cannot achieve my ideological outcomes unless I make this company large enough to matter. But if I wanted to just make money and that was my goal, I would have started a company in a different industry where there's proof of success. Like it wouldn't be in an industry where almost nobody succeeds. If you're working in defense, it has to be because you believe in the mission and because you want things to be better and because you don't believe things are good enough. And I know everyone says that that's why they work in defense. Places like Facebook or Twitter or Snapchat. I think that it's kind of not true. Like you're not going to make the world very different if you make Snapchat one percent better. But if you can make the United States Department of Defense one percent better, you are going to…

AI assessment note: “I want to build a defense product company that changes the way defense products are bought”

Q I mean, I totally agree. On the DoD, I am really interested. I spoke to John at Founders Fund before, and he said, picture a modernized DoD, and you're in charge of it. How would you structure it? What would you change? What would you optimize if you were leading?

A I would be a lot more like China. I think that China's done a very good job of focusing their resources on the technology that they believe is going to win the next war, not building up a massive arsenal of technology that will allow us to win the last war we already fought against. And I think the United States is very good at building the things that we're already good at and not very good at adopting new technology. You'll see this manifested, for example, in this dismissive attitude in a lot of defense circles around China, not having a blue water Navy. You have to say, haha, China only has one aircraft carrier. They can't project power. They have no clue what they're doing. Their Navy is a joke. Their boats are falling to pieces. Their engines are low quality. Like, yes, that is true. They don't have a very good Navy. They don't have a good blue water Navy for sure, but that's not what they're trying to do. If China wanted to have a good blue water Navy, they would be kicking our butts. They are so much better at building things at large scale quickly than we are. The reason they don't have a good Navy is because they're putting their points into other things. I mean, it's actually not all that much different than playing a game of civilization. If you've ever played that, they're going down a different tech tree and there's a tech tree that they think is going to be more …

AI assessment note: “I would be a lot more like China.”

Q Tell me, what's the biggest misconception you find people have of Android today?

A Oh boy. I'd say one of the biggest misconceptions is probably the idea that what we're doing is politically biased in one way or the other. I'd say there's a lot of people who say, oh, you're working on border security. That means that you're a Republican company. And the reality is that most of our leadership and honestly, most of the company actually leans more to the left. The reality is that border security is something that there's broad bipartisan consensus on. There's a lot of disagreement on immigration policy, but nobody credible in politics Thinks that the right way to solve immigration policy issues is to turn a blind eye to human trafficking, weapons trafficking, drug trafficking. Everyone agrees we need border security. And I think the same thing goes for military. You mentioned earlier that Silicon Valley seems to be against working with the DoD. And I think it's really not that Silicon Valley is against working with the DoD. I think that even itself is a misconception. Most people in the Valley support the military. Most of them would love to work with it. And they're letting a few people who, to be honest, like it's pretty fair when A Google employee says, hey, I didn't sign up to work on military technology. I don't want to work on this. Like, I understand where they're coming from, but it's important to recognize that those people are the minority. I think, if…

AI assessment note: “one of the biggest misconceptions is probably the idea that what we're doing is politically biased”

Q Can I ask, do you think you can make that change and have that impact from the company level with Anduril, or do you think it has to also come fundamentally and primarily from actually the DoD internally itself? Can you, more to the point, can you force it through with Anduril?

A So it has to come from everywhere, but I guess of all of the paths that I have to changing the way the DoD works, doing it through Anduril is the best way. I don't think it's through me being a congressman. I don't think it's through me paying congressmen. I don't think it's through me doing media talks about how important innovation is. I'm still going to do all of those things, but the most important thing I can do is put my money and my time where my mouth is, prove that things can be better, prove that we can build better technology, and then sell to the DoD and say, hey, look, DoD, you didn't have to fund all of this work. You can get good tech from companies that build it if you have the right structure around it. Now, The good news is you asked if DoD would have to want to change this themselves too, and the good news is they definitely do. You see a lot of new initiatives like the Defense Innovation Unit, like AFWERX. The Department of Defense, more than ever, agrees that small technology companies are a path to deploying innovative capabilities. And if you ask politicians, the zeitgeist has never been more in favor of innovation, at least in theory. 30 years ago, if you asked politicians if we're getting good bang for our buck, From the DOD. Many of them, maybe most of them would say yes. Nobody says that anymore. The average American knows that we're getting screwed. …

AI assessment note: “So it has to come from everywhere, but I guess of all of the paths”

Q I ask, do you think we're seeing a changing relationship between government and Silicon Valley? Like you said there, computer boy, whiz kid, whatever. You think you know this world, we know it really. Do you think it's changing to be more receptive, more understanding that actually companies like Andrew are actually paving the way for much of how kind of the future of their industry looks? Is it changing?

A To be a contrarian here, I'd say we're actually just a return to the past. Silicon Valley is born of DoD. The Department of Defense is you cannot really remove the two from each other in terms of how they started and how early Silicon Valley was influenced. It's a very recent and modern phenomenon that all these US tech companies are pulling away from doing work with the DoD. It's actually unprecedented in history, but I do think that it is going in the other direction. The good news is there's this kind of common belief that Silicon Valley as a whole does not want to work With the Department of Defense, that they don't want to work with the military. I think that's actually not quite fair. I would bet that upwards of 90% of Silicon Valley is very supportive of the military, and the perception that it's not is a symptom of another problem, which is that a very small group of radicals have managed to hijack the narrative and convince everyone that they speak for Silicon Valley on the whole. Like, it's crazy for every one person who's angry about what we're doing, who's angry that the DOD has Better technology. There are 10 or 20 people come in and say, hey, hey, I just want you to know, I agree with what you're doing, but don't tell anybody. I'm afraid of what will happen, and I really do think it's like a 10 to one ratio of people who support it to people who don't, and all 10 …

AI assessment note: “To be a contrarian here, I'd say we're actually just a return to the past.”

Q Can I ask, do you think you can make that change and have that impact from the company level with Anduril, or do you think it has to also come fundamentally and primarily from actually the DoD internally itself? Can you, more to the point, can you force it through with Anduril?

A So it has to come from everywhere, but I guess of all of the paths that I have to changing the way the DoD works, doing it through Anduril is the best way. I don't think it's through me being a congressman. I don't think it's through me paying congressmen. I don't think it's through me doing media talks about how important innovation is. I'm still going to do all of those things, but the most important thing I can do is put my money and my time where my mouth is, prove that things can be better, prove that we can build better technology, and then sell to the DoD and say, hey, look, DoD, you didn't have to fund all of this work. You can get good tech from companies that build it if you have the right structure around it. Now, The good news is you asked if DoD would have to want to change this themselves too, and the good news is they definitely do. You see a lot of new initiatives like the Defense Innovation Unit, like AFWERX. The Department of Defense, more than ever, agrees that small technology companies are a path to deploying innovative capabilities. And if you ask politicians, the zeitgeist has never been more in favor of innovation, at least in theory. 30 years ago, if you asked politicians if we're getting good bang for our buck, From the DOD. Many of them, maybe most of them would say yes. Nobody says that anymore. The average American knows that we're getting screwed. …

AI assessment note: “it has to come from everywhere, but... doing it through Anduril is the best way.”

Q Penultimate question. What's the biggest challenge in scaling journey of Andrew so far? The single biggest challenge.

A The biggest scaling challenge so far has been just the natural rate at which a company can grow. I mean, I grew Oculus to about 1400 people before I left, and we grew very, very quickly, and sometimes like I would argue maybe too quickly, especially right at the end. I don't want to do that here. I don't want to hire a thousand people in a year because I know that it's almost impossible for any organism to survive that. It's kind of like the infinity stones in Marvel. You can't absorb that much power so quickly or you will kill yourself. And I'd say that's been a problem for me because I don't want to build a little company. I don't want to build a medium company. I want to build a company that is big enough that we can be a major player that changes the way defense works. Is done. And it changes the way defense technology is procured. And it's very frustrating to me that we can't just kind of grow overnight to be that type of company, because I'm very confident I can raise the money to do it. I'm very confident we can hire the people to do it. But this big scaling challenge is bringing people on as fast as you can, while still retaining the culture and structure that made you successful in the first place. And so like, unfortunately, I know it's going to take at least a few more years before I get to where I want to be. Because you can't grow a company at infinite speed. That'…

AI assessment note: “The biggest scaling challenge so far has been just the natural rate at which a company can grow.”

Q when I had like a million bucks. Yeah. And then when I had like a million bucks, I tied that happiness to it. When I got it, I actually was more depressed than ever, which sounds awful, but like, it didn't make me happy, and did you find that with your meteoric rise, and obviously with the sail, or actually was it the amazing event that you always dreamed of?

A So, I don't want to be one of those people that says that I don't care about money, because I really do like money, and I like the freedom that it affords me to not only not worry about things, but also to pursue things that I would otherwise never pursue. Like, if I didn't have money, I wouldn't have a collection of vintage military vehicles. If I didn't have money, I wouldn't be restoring a bunch of cold war missile silos. You can kind of have nice hobbies that keep you relaxed when you have money. But when I started Oculus, it wasn't because I thought it was going to make money. I had been working on virtual reality for years at that point as just a hobby. I built my first head mounted display when I was 16 years old, maybe 15, I don't know, 1516, something like that. And I didn't really have to come up with a story about how it was going to make money until I needed to convince investors to give me money so that I could run the company. I guess the fact that it ended up making so much money was really kind of a happy coincidence. I happened to be passionate about something that was in the right place at the right time for me to work on it. It's been a little different with Underill, where I specifically at the start of the company wanted to work on something that I knew could be successful. I saw that this was an area where a lot of money could be made. To answer your quest…

AI assessment note: “when I made all of my money, it wasn't really that big of a change”

Q Andrew with you in the background is like, it's a lot more obvious, but as you said that Oculus wasn't, and even Andrew with the structural challenges that it faced in the early days, which weren't proven out like they have been now, What do you think gives Founders Fund the confidence to make the bold bets and I guess be as nutty as you put it as they are?

A Well, you know, and to be fair, it's not just Founders Fund. You know, we just raised our Series C. So since then we've been joined by a lot of other investors, you know, like General Catalyst and Lux and Andreessen Horowitz, Valor. I'm a big fan of party rounds. I like working with all of the people that I've worked with in the past who have treated me well. I guess I'm loyal to a fault and I want everyone who's helped me in the past to be along for this ride too. As to why they're making the bet, I think it's because We really quickly proved that we were building all of the right components. Like I said earlier, you can't just win by having a good product in defense. You have to understand the legal side. You have to understand procurement. You have to understand procurement better than government procurement officers, because most of them aren't even aware of all the legal authorities they have and the ways that they have to move money around. You have to be really good on the political side. You have to understand how to interface with politicians and convince them that your stuff really is going to make warfighters safer. And not just be a huge waste of taxpayer money. And so you need basically a legal machine, a lobbying machine, a product machine on hardware and software. You needed a great management team. You need a great finance team that's able to keep the kind of fi…

AI assessment note: “As to why they're making the bet, I think it's because We really quickly proved”

Q I ask, do you think we're seeing a changing relationship between government and Silicon Valley? Like you said there, computer boy, whiz kid, whatever. You think you know this world, we know it really. Do you think it's changing to be more receptive, more understanding that actually companies like Andrew are actually paving the way for much of how kind of the future of their industry looks? Is it changing?

A To be a contrarian here, I'd say we're actually just a return to the past. Silicon Valley is born of DoD. The Department of Defense is you cannot really remove the two from each other in terms of how they started and how early Silicon Valley was influenced. It's a very recent and modern phenomenon that all these US tech companies are pulling away from doing work with the DoD. It's actually unprecedented in history, but I do think that it is going in the other direction. The good news is there's this kind of common belief that Silicon Valley as a whole does not want to work With the Department of Defense, that they don't want to work with the military. I think that's actually not quite fair. I would bet that upwards of 90% of Silicon Valley is very supportive of the military, and the perception that it's not is a symptom of another problem, which is that a very small group of radicals have managed to hijack the narrative and convince everyone that they speak for Silicon Valley on the whole. Like, it's crazy for every one person who's angry about what we're doing, who's angry that the DOD has Better technology. There are 10 or 20 people come in and say, hey, hey, I just want you to know, I agree with what you're doing, but don't tell anybody. I'm afraid of what will happen, and I really do think it's like a 10 to one ratio of people who support it to people who don't, and all 10 …

AI assessment note: “I'd say we're actually just a return to the past.”

Q Andrew with you in the background is like, it's a lot more obvious, but as you said that Oculus wasn't, and even Andrew with the structural challenges that it faced in the early days, which weren't proven out like they have been now, What do you think gives Founders Fund the confidence to make the bold bets and I guess be as nutty as you put it as they are?

A Well, you know, and to be fair, it's not just Founders Fund. You know, we just raised our Series C. So since then we've been joined by a lot of other investors, you know, like General Catalyst and Lux and Andreessen Horowitz, Valor. I'm a big fan of party rounds. I like working with all of the people that I've worked with in the past who have treated me well. I guess I'm loyal to a fault and I want everyone who's helped me in the past to be along for this ride too. As to why they're making the bet, I think it's because We really quickly proved that we were building all of the right components. Like I said earlier, you can't just win by having a good product in defense. You have to understand the legal side. You have to understand procurement. You have to understand procurement better than government procurement officers, because most of them aren't even aware of all the legal authorities they have and the ways that they have to move money around. You have to be really good on the political side. You have to understand how to interface with politicians and convince them that your stuff really is going to make warfighters safer. And not just be a huge waste of taxpayer money. And so you need basically a legal machine, a lobbying machine, a product machine on hardware and software. You needed a great management team. You need a great finance team that's able to keep the kind of fi…

AI assessment note: “As to why they're making the bet, I think it's because We really quickly proved”

Q How do you deal with shit hit the fan moments? Like you make a big mistake in terms of choice of prioritization and resources go to something that they shouldn't have gone to and you should have prioritized something else. How do you deal with the shit hit the fan moments?

A I think that the most important thing is to never play yourself. You never want to come out of a mistake like that, convincing yourself, oh, I did the right thing. That totally made sense. I can't believe this. I got screwed. You cannot afford to be a professional victim. You have to look at it critically and say, how did I fail? How did we fail? And you have to be honest about that failure or you're not going to learn in the future. I know it sounds trite to say mistakes are a chance to learn. It allows you to learn for the future. Like, and I've definitely done the unhealthy version of this. Like there's times where I've made mistakes and it has eaten me up every night for months on end afterwards. But I try not to do that because in my experience, it hasn't been productive yet.

AI assessment note: “You have to look at it critically and say, how did I fail?”

Q Not at all. I've wanted to see this for a long time, but talk to me. How did you make your way into the world of startups? There's a little bit of context and come to found today, one of the fastest growing startups in our ecosystem in the unicorn that is Andrew Hill.

A So I'm used to moving fast. Oculus was one of the fastest multi-billion dollar exits of all time. When I started Oculus, I was 19 years old living in a 19 foot camper trailer. I had just dropped out of college. My parents weren't super stoked about that. And we went from just being a trailer to a multi-billion dollar acquisition by Facebook in less than two years. So that was an incredible experience. I learned a lot about how you run a company, how you grow a company. Even after we were acquired, I stayed around for a few years. We're trying to do the same thing here, not necessarily cash out quite so quickly. I'd say in the case of Oculus, we went for that acquisition because we felt like it can turbocharge what we were doing and allow us to do things we would never be able to do on our own. I think that the defense base is a little different. You kind of have to do things on your own because the system isn't set up to allow you to succeed when you're working through other partners and letting them kind of be in the driver's seat. Like you can't just be a subcontractor to a prime and expect to build A multi-billion dollar company. I'm not doing this because I want to build a fifty million dollar company. I'm not doing this because I want to build a five billion dollar company. I'm doing this because I want to build a fifty billion dollar company that will fundamentally change…

AI assessment note: “When I started Oculus, I was 19 years old living in a 19 foot camper trailer.”

Q when I had like a million bucks. Yeah. And then when I had like a million bucks, I tied that happiness to it. When I got it, I actually was more depressed than ever, which sounds awful, but like, it didn't make me happy, and did you find that with your meteoric rise, and obviously with the sail, or actually was it the amazing event that you always dreamed of?

A So, I don't want to be one of those people that says that I don't care about money, because I really do like money, and I like the freedom that it affords me to not only not worry about things, but also to pursue things that I would otherwise never pursue. Like, if I didn't have money, I wouldn't have a collection of vintage military vehicles. If I didn't have money, I wouldn't be restoring a bunch of cold war missile silos. You can kind of have nice hobbies that keep you relaxed when you have money. But when I started Oculus, it wasn't because I thought it was going to make money. I had been working on virtual reality for years at that point as just a hobby. I built my first head mounted display when I was 16 years old, maybe 15, I don't know, 1516, something like that. And I didn't really have to come up with a story about how it was going to make money until I needed to convince investors to give me money so that I could run the company. I guess the fact that it ended up making so much money was really kind of a happy coincidence. I happened to be passionate about something that was in the right place at the right time for me to work on it. It's been a little different with Underill, where I specifically at the start of the company wanted to work on something that I knew could be successful. I saw that this was an area where a lot of money could be made. To answer your quest…

AI assessment note: “when I made all of my money, it wasn't really that big of a change”

Q unpack there. And so one that I'm always thinking through is that how do you know the right time to release your second product? You don't want to be too aggressive. You want to know the first is working and have enough data around that, but you also don't want to be too slow. How do you think about when's the right time to do the second and the third?

A Generally, the way that we've looked at this is a continuous development process where we are Getting things out into the field, deploying them with our customers, solving real problems in war zones, and then getting continuous feedback from them. Features that they would like failings in our system. We didn't expect weaknesses in our system that we hadn't anticipated and just continuously developing the products to be better. And then that is very different from the consumer area where there's kind of very clearly delineated product releases. Like we're releasing this big new version and here's all of the features. If anything, I think the hard thing to know is when you can kind of stop Having to invest heavily in something and lock it and make it more stable. We don't have the same problem as a lot of other people do in the defense space where they have to think about cannibalizing their own products because all of our products are continuously updated. We don't sell somebody a software system and then sell them the new version a year later. Instead, we're basically continuously selling it to them usually as a service. And so we have the luxury of being able to continuously update it and make it better and better and better and better.

AI assessment note: “the way that we've looked at this is a continuous development process”