October 31, 2023 • 1hr 14min

Palmer Luckey - Inventing the Future of Defense - [Invest Like the Best, EP.350]

Invest Like the Best with Patrick O'Shaughnessy

Patrick O'Shaughnessy interviews Palmer Luckey, founder of defense technology company Anduril Industries and previously the founder of Oculus VR. At only 30 years old, Palmer has already experienced more than most people do in a 40-year career. The conversation covers innovation, invention, differentiated thinking, and Palmer's approach to building transformative companies in both the consumer VR and defense technology spaces.

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Key Takeaways

Synthetic long-chain hydrocarbon fuel could be a game-changing technology that disrupts investments in electric vehicles and hydrogen fuel cells if it can be produced cheaply enough
Palmer Luckey's approach to innovation involves looking back at old ideas that may have been ahead of their time technologically and reconsidering them with modern capabilities
Anduril's goal is to "save western civilization by saving taxpayers hundreds of billions of dollars a year as we make tens of billions of dollars a year" by being much more efficient than incumbent defense contractors
AI's biggest impact in defense is enabling scale - allowing one person to manage many autonomous systems rather than requiring a person for each system
Apple's Vision Pro VR headset strategy is about making VR desirable to everyone, even if not everyone can afford it yet, to prime the market for future mass adoption
Marketing in defense is very different from consumer products, requiring highly targeted approaches to a small group of decision makers rather than mass marketing
Palmer is optimistic about AGI, believing its benefits will accrue more to defenders than attackers, and that Anduril is well-positioned to take advantage of AGI breakthroughs

Introduction

Patrick O'Shaughnessy interviews Palmer Luckey, founder of defense technology company Anduril Industries and previously the founder of Oculus VR. At only 30 years old, Palmer has already experienced more than most people do in a 40-year career. The conversation covers innovation, invention, differentiated thinking, and Palmer's approach to building transformative companies in both the consumer VR and defense technology spaces.

Topics Discussed

Synthetic Long-Chain Hydrocarbon Fuel (3:14)

Palmer discusses the potential for synthetic long-chain hydrocarbon fuels (essentially artificial gasoline, diesel, and jet fuel) to disrupt investments in electric vehicles and hydrogen fuel cells:

If synthetic fuels can be produced cheaply enough (e.g. $1/gallon), it could make trillions invested in EVs and hydrogen "a waste of money and time"
Synthetic fuels could plug into existing, optimized systems rather than requiring all new infrastructure
Especially impactful for aviation, where electric planes spend most energy hauling batteries
Very little investment is going into this area compared to EVs/hydrogen despite the potential impact

"If someone can figure out how to do that cheaply enough, first of all, it's an incredible carbon capture mechanism. Two, if you can do it cheaply enough, let's say a dollar per gallon, then all of these trillions of dollars in investment into battery electric vehicles and hydrogen electric vehicles become really a waste of money and a waste of time." - Palmer Luckey

Palmer's Approach to Innovation (6:02)

Palmer explains his method for approaching innovation in new fields:

Look to the past for big ideas that may have been ahead of their time technologically
Study what people were thinking when they could consider more expansive possibilities
Identify technologies discarded in the past due to practical limitations that may now be feasible
Example: Oculus Rift used real-time distortion correction, an idea NASA had discarded in the 1980s as too computationally expensive at the time

"I love to go and see what everyone else who solved this problem thinks about it. Not in the recent times. I don't want to know what my competition looks like, because when I started Oculus, I wasn't looking at what existing companies were doing in VR, because clearly they were all doing it wrong." - Palmer Luckey

State of Innovation in the United States (9:07)

Palmer gives his assessment of the "soil" for innovation in the US:

Rates it a 6 out of 10 currently
US has great talent but fewer engineers graduating than strategic adversaries like China
Believes the US needs at least a billion people to remain competitive long-term
Suggests government policy changes like incentivizing education in areas of national interest

Anduril's Mission and Approach (34:37)

Palmer explains Anduril's mission and how they approach building defense technology:

Mission: "Save western civilization by saving taxpayers hundreds of billions of dollars a year as we make tens of billions of dollars a year"
Focus on being much more efficient than incumbent defense contractors
Built Lattice AI platform as a foundational technology that can be reused across many products
Prioritize problems based on Pentagon/Congress priorities, Anduril's capabilities, and where incumbents are underperforming

"I want to be doing that ten to one ratio. If I am making a billion dollars, I hope that it is by saving taxpayers $10 billion or $50 billion, killing a legacy program that didn't need to be around anymore." - Palmer Luckey

AI's Impact on Defense (50:10)

Palmer discusses how AI is transforming defense technology:

Biggest impact is enabling scale - allowing one person to manage many autonomous systems
Focus on use cases where AI can do better than a person or team of people at specific tasks
Enables large quantities of lower-cost autonomous systems vs. small numbers of exquisite manned systems
Critical as militaries struggle with recruitment and want to reduce personnel costs

"The most important thing that it has unlocked for us is ability to scale people. Focus on use cases where AI can do better than a person, or even better than a team of 100 or 1000 people at some one specific task." - Palmer Luckey

Apple's Vision Pro and the State of VR (57:06)

Palmer gives his thoughts on Apple's Vision Pro VR headset and the overall state of VR:

Praises Apple's approach of making a high-end product everyone wants, even if not everyone can afford it yet
Goal is to make VR desirable before making it affordable and accessible
Likes Apple's use of full reprojection vs. optical transparency for mixed reality
Vision Pro is about priming the audience for a VR revolution, not being the revolution itself

"They want to make VR something that everyone understands that they want in their lives. They see people using it and say, wow, I want that for myself, but I'm too poor. If that is what Apple can accomplish, they will have no problem down the road when they make a lower cost version of that headset." - Palmer Luckey

Marketing in Defense vs. Consumer Tech (1:03:51)

Palmer contrasts his marketing approach at Oculus vs. Anduril:

Oculus required "one to all" marketing to reach millions of potential customers
Defense requires highly targeted "one to few" marketing to a small group of decision makers
Key audiences for Anduril: potential recruits, politicians who control funding, and customers
Less emphasis on mass marketing tactics like trade shows, press tours, TV ads

"Put it another way, every person in the US who gets to decide what rocket Motors get purchased, you could fit them in a conference room. It's not millions of people that I need to reach. It's actually a very small group of people." - Palmer Luckey

Thoughts on AGI (1:06:34)

Palmer shares his perspective on artificial general intelligence (AGI):

Optimistic about AGI, believes benefits will accrue more to defenders than attackers
Not actively pursuing AGI at Anduril but building systems that can leverage AGI breakthroughs
Expects early AGI to require massive compute resources, limiting it to responsible actors
More concerned about "evil people with existing weapons" than slightly better AI weapons

"I am not scared of AGI the way that a lot of people are. I think that AGI is a technology where the benefits do accrue more to the defender than on the offensive side." - Palmer Luckey

Conclusion

Palmer Luckey demonstrates a unique approach to innovation and company-building, looking to the past for inspiration while focusing on creating massive impact in critical domains like virtual reality and defense technology. His willingness to engage with established systems and institutions while bringing an outsider's perspective has enabled him to drive significant change in multiple industries before the age of 30. Palmer's optimism about transformative technologies like synthetic fuels, artificial intelligence, and virtual reality, coupled with his pragmatic approach to bringing innovations to market, provides valuable insights for entrepreneurs and investors alike.