Technology
Nick Gillespie | 4.3.2024 10:45 AM
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Joe Lonsdale is a co-founder of the data analytics firm Palantir; OpenGov, which provides cloud software services for governments; and the University of Austin, which seeks to reform higher education. He's the managing partner of 8VC, a tech and life sciences venture capital fund, and is chairman of the board of the Cicero Institute, a nonprofit working to "restore liberty, accountability, and innovation in American governance."
Reason's Nick Gillespie asked Lonsdale why he relocated to Texas from California, how to curb government overreach while providing essential services, his goals for his podcast American Optimist, and his 2020 article, "Libertarianism is Dysfunctional, but Liberty is Great."
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This interview has been condensed edited for style and clarity.
Nick Gillespie: Your venture capital firm is called 8VC. What is that referring to?
Joe Lonsdale: Originally, we had a firm called Formation 8 with some Korean partners, and they took formation, I took eight. Eight's a lucky number in Asia. It's a lucky number actually in Judaism. It kind of represents beyond the seven days. So you can see infinity is tied to eight. It's a lucky number. You have to have lucky numbers.
Gillespie: And does it tie into the history of Silicon Valley at all?
Lonsdale: It does as well. We talk about waves of innovation in Silicon Valley. And the second big wave of innovation was the semiconductor wave. That's why it's called Silicon Valley, because of the silicon wafer. One of the three Nobel Prize winners who invented the transistor, [William] Shockley, he brought eight of the most impressive people he could find to Silicon Valley. And it turned out he was a great scientist but a terrible boss. And he kept giving them lie detector tests. And finally, they left and said enough of this, we're doing our own [thing]. And they got someone else to back them called [Sherman] Fairchild. So they built Fairchild Semiconductor. And those eight people at Fairchild Semiconductor, it was [Gordon] Moore of Moore's Law, it was Eugene Kleiner of Kleiner Perkins. It was the guys who built a lot of Silicon Valley. So it really pays homage to the history of the tech sector.
Gillespie: And then Shockley, just to cap that story, ended his career by promoting scientific racism.
Lonsdale: It's not ideal, I suppose. So yeah, at least fortunately, we're on the side of the eight people who didn't work for him anyway.
Gillespie: When did you move to Texas?
Lonsdale: 2020.
Gillespie: Good time to move. Good time to buy, I suppose. But you left California. You were raised in California. You went to school in California. You've thrived in California. You co-founded Palantir in California. Why did you move to Texas? And what does that say about governance strategies?
Lonsdale: There are a lot of things California has going for it, and we still have to go there sometimes for things we do. But California got to be really broke—and I wrote a piece in The Wall Street Journal at the time [about this]—it had about a thousand people working for six companies in Austin because you couldn't really scale companies in San Francisco anymore. It became really expensive. Basically, you'd hire someone in there, you pay them $300,000, and their spouse would really resent it because their standard of living for that much money was still not very high in Silicon Valley. Your staff would have to drive over an hour to come back and forth, even if they were paid well. So really not a good place for middle-class living standards.
Gillespie: Or even upper class. If you're making $300,000, you're in the top 2 percent or 5 percent.
Lonsdale: Not a good place for upper-middle-class standard, either, I should say. There are all sorts of issues in California. It's hard to build things. If you get sued, you're probably guilty until proven innocent, so the really bad court system and just all these reasons why we didn't really want to raise our family there culturally either. I'm pretty moderate socially, but there are really crazy things going on there, and you'd best rather raise your kids somewhere sane.
A lot of my friends actually left America. They got really negative. It's really sad. Some of them went because they made a lot of money and went to Switzerland, or Singapore, or elsewhere. And I really believe in America. I believe in our constitutional republic. I believe in the values that created this country. And so for me, choosing to go to Texas is like, let's stay here, let's fight for our country. Let's do it from somewhere sane.
Gillespie: What was most attractive about Texas? The four most populous states in the country are California, New York, Texas, and Florida. California and New York are losing people to Texas and Florida. What was it about Texas that you liked more than Florida?
Lonsdale: Yeah, we do love Florida. We love Gov. [Ron] DeSantis and the rule of law there and the great policy they do. If I was just a hedge fund investor, Palm Beach would be a great place to live. I have a lot of mentors there. Miami's a good place for that.
Culturally, Texas is a better place to build things. There's a history of building technology companies here in Austin, Texas. There are a lot more engineers. There are a lot of great engineering schools here, a lot of great companies. If you look at who's moved here to Austin, I have a lot of my fellow entrepreneurial friends. Elon Musk is spending time in Texas, not in Florida, for the same reasons as me I think.
Gillespie: In Texas, you said it's easy to build here. Can you talk about that a little bit more? Because that is something Texas is known for. It's got a lot of wide open space. Lonsdale: Yeah, there are less stupid rules. There are less bureaucrats. Even in this house, when we were trying to do some work in the back, we called the city and they said "You're in the extrajudicial territory, call the county." And we called the county, and he said, "Are y'all dumping sewage?" And we said, "No, sir. We're trying to build this extension." They said, "What did you call me for? Do what you'd like."
This is amazing, this place. It just lets you do what you want. Also, the governor and the people here, when you call them up with a problem as a business, they say, "How can I help you get this done? How can I help you build?" In California, famously when Elon Musk complained to them online, they said, "Fuck you," right? So, it's a very different culture of working with you to help enable you as a builder and stay out of your way vs. getting in your way.
Gillespie: Let's talk a little bit about some of your billionaire friends who left the country rather than staying here. Everybody has a right of exit, but are they doomers in a way? You are part of the effective accelerationist movement. You are very much a white-pilled optimist about the future. What's wrong with going to Singapore?
Lonsdale: Listen, I'm a realist. They're right that there's a lot we have to fix about America. My father raised me to be courageous. And your job as a leader is that you confront things that are broken and that's what you're supposed to do. That's part of me. It's part of my masculine urge, that I have to fix things. I have to stand up for what's right. And so to me, it's just not who I am, to run away.
And I could see the argument in different contexts in history where it did make sense to run away. Like I had Jewish relatives, some of whom fortunately left Poland on time. That was correct. I don't think there are places to run away to right now [where we] could get away from the types of battles that we need to fight in the world, that we need to win in the world. It's not obvious to me that liberty, freedom, markets, innovation for health care win out if America goes the wrong way. So, we have to have that fight here because if we lose, we'll probably lose everywhere else.
Gillespie: Are you always looking toward the future?
Lonsdale: I like to think I'm an entrepreneur who sees the world for how it is. I see what's possible. I see the gaps. I see where we are now, where we could be. I think that we can see what'll happen if we don't do something, what will happen if we do something. And I've built a lot of companies because I realized this thing's broken, but here is what's possible. And I see a lot of those gaps around policy and government as well. And I'm optimistic that with the right builders, we could do it. I'm not optimistic these things will just happen. But I'm optimistic that if a bunch of us get together and we fight for it, then we can win.
Gillespie: So let's talk about artificial intelligence, and how that plays out, because this seems to be the new bugaboo right now. Everybody is freaking out about it. What are the concerns over AI right now? And why are you on the positive side of things, rather than the "we got to slow down and regulate everything to death" side?
Lonsdale: There are a couple of different buckets I put the concerns into. One of the more extreme concerns, which was expressed well by people like Tim Urban and people like Elon Musk, kind of shows this exponential takeoff of AI. Throughout American history, we've had a lot of times where there are these messianic complexes where people are convinced that the Messiah is going to come and the world is going to end. And it just seems to occur every couple of generations. And this is a kind of secular version of a messianic complex that they're arguing for.
Gillespie: But you don't know if it's Jesus or the Antichrist, right?
Lonsdale: You could argue either one, very interestingly, or analogs of either one in some interesting ways. And so people are saying, yes, this thing takes off, it starts to improve itself, and it's very impressive how well this is working. And so how are we going to have to bear a new form of God effectively that's a thousand times smarter than people and just basically runs the world? And in 10 to 30 years, [that's] pretty unlikely, but there are smart people who believe that's the case and that's a worthy conversation.
Gillespie: But you're a smart person, and you're not betting on that. You're betting on something else.
Lonsdale: If it actually turns out that it is possible to create that with this technology, I don't think we're going to stop it long-term anyway. And I don't know if there's much I could do about it. So we can have that debate. It seems pretty unlikely to me. It seems like it'll take a lot longer than people think.
Gillespie: What are the things that AI will do for people that they're not understanding?
Lonsdale: So there are two buckets. There's a messianic bucket, and that's one argument. It's a very separate argument we can discuss or not, which is this very crazy end-of-time sort of debate. And then there's the everything-else argument where they're afraid of disinformation and destroying jobs. We shouldn't conflate the two arguments, right? They're two separate arguments, like, if you're going to have a God who destroys a job, that's like a stupid thing to debate. It's going to be different anyway.
So let's go to this bucket over here, what's actually going to happen. And as far as I could tell, this is going to be one of the best things ever for humanity. Productivity is the underlying factor for how well our civilization is doing, how well the economy is doing. And productivity can go way up over the next decade. It could basically free us from drudgery. It can make things really inexpensive for poor people and for everyone else.
Gillespie: Can you give a specific example of how you think—granted, all predictions are wrong—that AI will make life easier or better for people?
Lonsdale: So let's start with what it's already doing. So there are some that came out in the last month from companies like Klarna, which is a big payments company, and people have to call and deal with them. And they have 70 percent of the calls being handled by the AI now. And the people are happier with those calls and can call back less to bother them afterward. [It's] saving [Klarna] a lot of money on those. And there are lots of versions of this.
Michael Dell—who's also a major presence here in Austin—was saying the other day when he was here that he thinks he's going to have 20 percent higher productivity for his company of 100,000 people. And so basically, there are all sorts of applications of that. Michael is a very serious guy. He doesn't just make wild claims. He actually sees how in the next two years he's going to have certain salespeople being helped, certain marketing documents, certain customer support processes.
I'll give you one other one: health care billing. Sounds........