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This is Master's in Business with Barry Ridholds on Bloomberg Radio.
This week on the podcast Wow, this is really so exciting to share with you. We hosted a conference out in Huntington Beach, California, my firm ridhel Schwap Management along with Advisor Circle called future Proof. It's a giant event on the beach in Huntington Beach, California.
Part of the.
Event is a series of panels and interviews. In fireside chats, I got to sit down with Pallenteer co founder Joe Lonsdale. He's really a fascinating guy. He's been a serial entrepreneur, managing money for Peter Thiel, interning initially at a Whole Places PayPal, which he then just one successful company after another. Just a fascinating guy. So we spoke for about thirty
thirty five minutes. I thought the conversation was fascinating. We talked not only about Pallenteer and the defense industry and how the world of warfare is changing. Lonsdale is a serial entrepreneur who has had success after success after success, and is still a relatively young guy. And there's more fascinating things to come from him.
Here.
It is my discussion with palenteers Joe Lonsdale in Huntington Beach at future Proof twenty twenty four. So I just highlighted a handful of things about your career, but I really want to delve into the specifics. You're at Stanford studying computer science and somehow you land a job as an intern at PayPal.
Tell us a little bit about that.
Well, this was a pretty cool place. So Elon Musk with his smartest friends started the company back then in the nineties called X and Peter Thiel and his smartest friends started Confinity, and they were two of eight competitors, and they decided rather and destroy each other, to merge.
It was actually interesting times, like people were working so hard that some of the people working for Peter at one point had not gotten enough sleep and were suggesting ways to bomb the office of the other guys.
They realized this is betterly bad.
We should probably stop this, and so the companies merged a form PayPal, and a lot of the most talented people from stan Aford computer science went there.
At that time. It was amazing place.
Elon kept trying to rename PayPal back to x dot com, which they didn't let him do, so I guess he eventually got his way twenty years later with Twitter. But no, it was a really fun place to learn and a lot of my friends there, these guys were like ten or fifteen years older than me. A lot of people who were working there ended up going on to start YouTube and Yelp and you know, LinkedIn and all sorts of great companies.
So a fun place to learn.
Right, that was quite a brain trust over there.
Yeah, your next role is it Peter Teal's hedge fund, Clarium Capital. You described that as one of the top intellectual think tanks in the world. Tell us a little bit about your experience working with Teal at Clarium Capital.
Yeah.
Sure, that was a global macro hedge fund, and so that's a really fun part of finance where you just get to try to figure out at a high level what's going on in the world, and lots of arguments about politics and economics and history and financial markets, and you try to on one hat as quantitative you're modeling different things like, you know, the Australian currency versus a price of commodities versus you know, what's going on in China, and on the other hand, you're kind of just just
discussing what's going to happen the next five or ten years. And we you know, we had a really good ten year run. But why I was there. I tried to hire a bunch of my smartest friends to help us, and they thought finance was boring, and we started a project based on how PayPal was going after all the bad guys because you know, the child in Russian mafia I had been stealing our money at PayPal, and we ended up building these investigative tools and create pounder out
of there. So that's what that's what I ended up doing it instead.
So I just want to put a little flesh on the bones. You said you had a pretty good run. You ended up with a very nice ten year track record, but first two years out of the gate something like plus thirty percent and plus fifty percent?
Am I getting those numbers about right?
Yeah?
I mean, if you want to know, this is macrofinance, right, So it's a fun area. Like an example of one of the best trades we figured out that worked for a few years is Greenspan had cut interest rates and there is more money than ever before going into the GSS, Fanny May and Freddie Mack, and so you had this massive amount of money there, and because these guys were so big, when they would hedge their mortgage portfolios, it
would move all the global fixed income. And so what happened was, you remember, like late two thousand and two, you had like five six percent interest rates and the race started to fall, and so people started refinancing their homes. And when people start refinancing their homes, the duration of
mortgages goes down. So in order to balance the durations, Fanny Man and Freddie Mack had to buy huge amounts of ten year notes, but they about to buy so much that actually made their industrates go lower, which led to more refinancing, which led to have them having buying more. So was this feedback effect, and you're able to measure the feedback effect.
You got down to like one.
Year duration three percent ten year notes back then, and then all of a sudden it was snapped back really quick because all the money was seeing the economy. So anyway you can kind of mapped this stuff out, figure out how to trade fixed income. You know, it's a fun, fun environment.
That that must have been a fun environment.
So, so you mentioned Palenteer, I have to mention how old were you.
When you were one of the co founders of Palenteer. You were a young guy.
It's twenty one. I'm forty two now, so it's a long time ago.
And since now we're going to talk about Palenteer. Congratulations they're entering the S and P five hundred.
It's an an awesome milestone.
At twenty one, did you ever imagine something like that.
Yeah, I was a pretty obnoxious kid, so you know, actually, Palenteer it was great. We gave offers, so we were known for having the top engineering culture. Peter was investor in Facebook at the time, so our competition was Palenter and Facebook for the best engineers. And you really had to convince these people this is going to be a big upside place.
And so you give them offers, and you give them three options.
They could have a higher salary but less equity, less stock, you know, medium, medium, where you have a lower salary but more stock, and.
I draw up on the option for the first two hundred people.
We'd put a table and we'd say, here's how much your stock might be worth. If this company's worth half a billion dollars or a billion dollars or five billion dollars. I got so much shit for including five billion dollars as one of the possibilities.
People are like, this is a ridiculous show.
And the market cap today it's about eighty two billion now, So it worked out for it's a long time.
But it worked out twenty years. It for eighty billion dollars. It's a well worth trade.
So when the company launches, it's a big data analytics company. Today the focus is defense, commercial and government. Was this a natural evolution or was there a pivot somewhere alonger No, we.
Started the company to kill the bad guys. Yeah, let's be clear. I don't know they're supposed to say. I don't work there anymore, so I can say it now. We started company after nine to eleven to kill the bad guys and stop attacks. And we ended up helping run the targeting systems in forty alted countries and wiping out over ten thousand terrorists, including a lot of the most important ones.
So, and it protects celebrities too. But let's get the bad guys.
Yeah, And it turns out the hard data problems you solve when you run the infrastructure could be used for a lot of other things. You're basically building ontologies of information and workflows and organizing all the data the government And when we start a palenter, the government at the time spent like thirty eight billion dollars gathering data, So I don't even know what it spends now, but massive
amounts of information and tens of thousands of databases. How to hell do you make all this stuff talk to each other? And so by solving those problems to kind of organize that, it turns out you now how the data in a.
Form where AI can be used really easily.
So today polunteers really caught the AI wave because it enables AI workflows no one else can.
And am I correct in saying During COVID, plunteer helped governments figure out how to monitor, how to track, how to roll out vaccines. What was Pallenteer's role during the pandemic.
Yeah, I mean it's it's it's used by the armed forces to organize all their logiosis and supplies and everything.
So it's a very similar problem.
How do you use all the data coming in about how to prioritize things in a pandemic? Because you're coordinating just massive numbers of things and production and all sorts of stuff. I mean, you have a lot of fortunate y funder companies using it to manage all of their and optimize all.
Of their production and distribution. So obviously it works very well for that.
For the pandemic, I think, I think like thirty six countries used it for that too, So it's good.
So it's a proven technology today. What was it like getting governments to recognize the value of this in the early two thousands, they would distress It.
Was almost as difficult as it was to get Arias to take auta par seriously the first five years. So no, it's uh, it's actually very funny. You do you think you think after a punteer, we were like, oh, this is going to be easy. No, it's it's listen, governments. Governments are very funny. They they want to use things that are new and innovative, but they want to use things that everyone else is already using. So breaking in is a very chicken and egg problem. That's very hard.
It turns out that there's a lot of money in the special forces and special operations units who frankly their lives are a lot more on the line than almost anyone else because they're they're constantly doing really dangerous missions around the world, and then they're running a lot of
the most important things that our armed forces do. And those groups have such bold and such confident people that we're able to break in work with them, get them to prove that it worked, and then that kind of set the precedent for other parts of government to then work with us.
So thank thank goodness for our special obsc groups.
So wasn't DARPA that first started with you or would did you have any work with them?
I think DARPA was helpful a little bit, but it really the thing that really matters is people using it on the ground where lives are on the line. You want, if you have something that's the best you want to it's going to break in because people need it because there because something something is existential where they're going to die if they don't have it. They're not gonna be able to the mission if they don't have it. So
DARPA is more of an academic thing. That's smart, but I'd much rather work with the people whose lives are on the line, and that that's how you really break in with the best things you.
Mentioned at a par and Ai.
Just so you know, chat GBT is what told me it was five trillion dollars.
Well, nachieven, chat GBT is behind.
So so you found the company in two thousand and nine.
Today you're the chairman.
It began life as a cloud based software platform specializing in data aggregation, analytics, and reporting of portfolios.
What was the original business model?
Well, you know, I had my family office at first, right around then it was a smaller family office, and then I had a lot of friends and people I talked to who ran family offices, who ran rias. There were new groups on the West Coast like Iconic and others building these firms around the tech world on raa Land, and everyone hated their software. And I looked at it and it was like, this is a mess, and there's
not a really good solution here. And you know, we were mapping out there's a lot of new possibility thanks to the cloud, thanks to what you could do with data. So we said, let's build something that's better. And I naively thought we would have something that was significantly better within a year or two. It turned out it took us hundreds of millions of dollars in several years. But I am quite confidence the best at this point.
So the genesis was, Hey, I have to manage my own capital and the tools aren't good, I'm going to create it. Or was the original plan. I have an idea and everybody should be using it.
It was a business I think in general, in general, when you have like some area that you realize is broken for you and for people you know, rather than just build it for yourself, I think it's like it's a good excuse to build a business around it. So I was actually CEO full time for a few years getting us off the ground. Eric Poryer, who's running for over ten years now, is a much better CEO than me. So I'm a proud chairman now. But no, we built
it as a business. I mean, listen, you guys. When we first took there's seven thousand custodians in the US, and so we first hooked up data. The biggest custodians are people like Fidelity and Schwab and others. And we get this all set up. We spent, like you know, a bunch of time on the first year. We hook up the live day we're getting going and it's all wrong. They're like, oh, what do we do wrong? And you know, and it turns out even those custodians just how bad
data this is. The space is a message that shows out there's lots of hard problems to solve to make this stuff all work right together. So it's it is and everyone wants to customizing differently. Every ria has their own way of doing things, their own way of showing things, and so which it.
Turned out it took us several more years to get it right.
So so seven trillion dollars, you have some very large rias on it, you have broker dealers like Morgan standing on it. How big can at a par scale?
Well, I think there's about two hundred and fifty trillion dollars globally that's addressable. Maybe only one hundred and fifty to two hundred of that would use a resolution. So even though we're going really quickly now I think we're growing like over thirty percent a year, still are still probably at least an our decade of fast growth.
I mean, this is a giant market, and you know, we're still learning.
I think I think they're still learning every every week from clients about how to serve them better. There's there's I think about twelve hundred firms or so give or take on the platform now, and and you know, I'd love to see them triple out over the next over the next few years.
So the most of what out of part focuses on our private our public markets, stops, bonds, mutual funds, ETFs. But you also said, hey, this private market thingy is going to get big one day.
Well, being able to report on every possible thing someone owns its key for out of part, but out of by out of part itself doesn't help people access the private markets.
So let's talk a little bit about opto and that platform. The idea behind opto and your chairman of Opto Investments is to focus on private markets. Tell us what you see in that space. Well, what I saw is that the way people tend to come to you.
So so obviously I run an investment firm, A lot of my friends run investment firms, have a lot of strong opinions about private markets, right, and this is this is an area where in the nineteen nineties there is a lot more public companies. There's a small number of private companies today, you have more private companies and public companies, and frankly, a lot of my smartest friends, people doing things that are changing how the world works, are mostly
doing that within private companies. And so today, if you're not accessing private markets, you're going to get left way behind your returns. I think, especially the next ten years, given how AI is changing productivity in so many parts of our economy, we could talk about it's very clear you get left behind, and that it's messed up that a lot of people don't have access to what's clearly
the higher returning areas if if they're done right. And what I saw is the way people were trying to sell people on private market stuff is basically purely a brokerage model where they come to your firm and they say, we're going to make money by selling you kind of mediocre crap. That's how a lot of these things operate. And I think that's actually frankly discussing it's not it's just not. It's just misaligned, Like it's not how any
of us would do business normally. Is that you you don't want to put money into the things that you're getting paid to put money in, so you want to you want to have an aligned model where we all make money together by accessing the best things. And private market is especially venture capital, but frankly, certain parts of PE, certain parts of all credit, all these other things, they
have a very high disparity. You really want to get in the top decile, top quartile stuff and you're gonna do great and if you get into mediocre stuff, you're gonna have mediocre results. And so so just the whole
spaces seemed misaligned to me. And then on top of that, it's really stressful for a lot of people to get all their clients into these things because they're just lots more paperwork, lots of messes, lots of legal stuff, and like, why not make it as close as possible to doing something in the public markets to do something in private markets? And really technology and AI can solve that. So opto it's about making people aligned is having one platform.
Where you do everything.
And frankly, it's about using my network and my friends networks to put what we think is the very best stuff on it that my family office is doing, and let's share that with others.
So at this event, we have over two thousand rias of these some of them are single practice, small small operations. Some are really big firms with tens of billions, hundreds of billions of dollars on them. How can large and small firms integrate opto into their practice?
Yeah, I mean they go.
There are both lots of small firms and some very large firms now on opto.
The goals that it makes it as.
Easy as possible, similar to Adapar, which has obviously been around longer and as a giant, giant company. Now, I mean, opto is growing very quickly and we want to learn from rias like what about this could be easier for you to use it? But we have dozens of firms that have that have created custom funds on it for their clients and access things that I think otherwise they never would have accessed, and made it really easy for them to do it.
So I would love people's feedback on what we're doing.
Here is a younger company but growing really fast, and I'm really proud to kind of get people the best access in the alt world. I think it's such a fun, interesting world that a lot of people don't know how to approach if they know, if they haven't been doing it in the past, or if they have been doing some but maybe they would have certain expertise in other areas.
Sometimes for our custom funds, like they'll choose certain areas, certain managers they know, but they will compliment it and help them do that with other areas they haven't studied as much.
And so you know, we'll love people's feedback.
So you wear a lot of hats, you're chairmen of out of par you're deeply involved in, opto tell us about your day job.
Eight VC a venture capital front.
Yeah, I know. At the end of the day, I went an entrepreneur.
I like to build things, and a lot of a lot of the people from from palent here from Adapar have gone on to build a build lots of other companies, and so I've been coaching. I started coaching a lot of them, just like with PayPal, where we had sixteen billion dollar companies come out of that. After eBay bought us, Palenteers now had over one hundred successful companies come out of it that people have started over the last couple
of decades. And and so you know, I ended up ended up saying, you know, it makes sense to actually build an investment firm. My mentors told me I basically was doing an investment firm. Didn't have enough money, enough people, so so we so the last twelve years we put together a pretty big firm in the venture capital space.
We build, we build and launch companies. We back companies early, and I mean we're not Yeah, it's nice and venture If you don't raise big funds, they become very, very oversubscribed. So I'm not here to raise money for AIGHTVC. But it's a it's a fun area. And I'll tell you since you're asking about there, there's really two areas that we're probably really well known for the last few years.
One of them is defense.
We've started multiple new defense companies, including nearby here. We actually backed early ANDROL with Palmer Lucky and so my expounder colleagues, and they're become a new defense prime, which is really cool. If you haven't checked it out online, there's amazing videos of the things they're doing. And then the other the other two one of them, you know, drone swarms have become a huge problem.
This is really hard to stop.
We're spending two million dollars missiles to shoot down cheap little drones with bombs coming in our troops and they'll swarm one hundred at once. So we figured out how to use new technology to send out microwave radiation really really far from pretty small, pretty small device to shoot down swarms of drones, and we're now deployed live. It turns out the AI chips can get the power to hit the guy. You might try tomitter all at once
turn them off. So we build that, and we have another company building thousands of ships for the US Navy, smaller ships because it turns out China has two hundred times our shipbuilding capacity, which is frankly a huge crisis. You know, it used to being World War Two, Germans had better ships than we did, but every time we
lose a ship, you'd build three morecs. We have the best building capacity America now with with literally two hundred times the ship building capacity in China, very scary for our ability to turn them. So we're figuring out how to take our best and brightest. Frankly, Elon Musk's Who's a Good Friend has like really revitalized advanced manufacturing in America. We're taking some of that talent putting it into military areas as well to make sure we stay ahead.
Of the bad guys. So so wors we're doing a lot of defense.
And then the one one other area I'll mention is what we call AI services. And so there's a huge part of our economy right now that we can we've showing we can actually double or triple a productivity using AI. And so this is this is this is stuff like healthcare, building, logistics, building back office processes.
In the alts world, it's like how do you know, how do you manage and subscribe and deal with all the al paperwork and stuff.
There's just lots of these areas that are gonna just be completely changed, and so we think there's multi trilion dollar opportunities in those areas and building a lot of companies that are succeeding in them.
I want to stay with defense a little bit because you're involved in so many really interesting areas. I first heard of Palmer Lucky with the Oculus, which you were an early investor in before I think Facebook ended up buying buying that.
Yeah, Facebook bought up for over two billion dollars just a few years. Then you made an ability here at like twenty two or something, which is go go to your head pretty fast.
And then not too long ago, maybe it was Wired magazine did a profile on really interesting things that Palmer is doing with drone technology and defense technology.
Tell us a little bit about what's going on in that space.
Yeah.
So, basically, Pounteer in SpaceX were the first two companies to break in and effectively become some form of defense prime, the first new ones in thirty years because we had we had all these old primes, they all consolidated after the Cold were end in the nineties, and they basically had a total lock on DC and Poundeer. It took us a long time, a lot of stubbornness to break in and and you know, some points we had to sue the US government because they were doing crazy things
that we want. SpaceX similarly had to sue the US government because they just discriminated against new things, right, and obviously SpaceX good thing they want because they're obviously one hundred times better than they alternative. Frankly, after doing Palenteer, I said, this defense stuff is just really stressful. It's really you know, hard to break into. You I'm gonna do out of par instead. Turns out you guys are stressful too. But but but you know, I'm like, I've
done enough defense. And we started up being pretty bullish on things going on between China and the US, and very naively thought the world is just gonna go in a kind of more peaceful, more prosperous direction. And we saw this guy is Shiji Ping come in and I have friends with a lot of guys who built these companies in China. A lot of them believe in free markets read Milton Friedman, like share a lot of our values. These are not just because they're Chinese. They're not about people,
you know, they're not CCP themselves. And we saw Suji Pink start cracking down on these guys. A lot of them disappeared. They have had multiple friends who knew really well who died in their sleep in their forties, you know, after being tech billionaires. And we saw him also making a lot of our friends force their top engineers to work on defense projects. Obviously we don't do that in the US, but this became very concerning because China does have really top talent and they are forcing them to
build new things in defense hardware. Meanwhile, in the US, those old companies that solidated in the nineties, they're hiring basically none of our smartest friends. So this is a crisis. You have China building really new advanced defense things. You have us spending lots of money very wastefully with without top talent. And we said, wow, we need to get
back in and fix this. So Palmer with three of my old palanteer guys, after you know, after selling Oculus to Facebook, and they kicked him out of Facebook because he did some politics they didn't like.
He's on the right.
But so he and these guys start this new company nearby here and it's become the most important new defense prime in hardware. They have all sorts of products. The one you should check out onlines called the Roadrunner. If you've ever seen Elon's rockets that kind of go up and land themselves. He has the same thing for advanced missiles. And so these missiles come in his box and it'll go up and it'll track and destroy the bad guys.
But if not, if you don't use it, if it doesn't explode, it'll come back in a land and it'll wait to be used again. And so not only is it like the twelfth the cost of a Patriot missile, it also can be reused we're actually putting member that ePRESS company that shoots things down with microwave radiation. We're putting it up with that on it. So you can imagine a swarm of these going flying, shooting that, turning things off and coming back and landing to use it again.
And you know, modern warfare is gonna be swarms of autonomous small vessels, small drones like all these things. And we can't afford to do what we've been doing with the defense primes, which is to build things that are way too expensive, kind of last generations technology, and you're gonna run out of them against against the swarms our adversaries are gonna have, so we're really trying to make sure we stay ahead of them.
So I want to combine two things you mentioned, the new technologies swarming and the massive overcapacity to build chips of China versus the US. What have we learned from the Russian invasion of Ukraine and how the Ukrainians are defending themselves with technology. How can that be applied towards any potential invasion of Taiwan by China.
Yeah, so I mean Palans here, and uh Palnce here, and Androl Palmer's company are very active in Ukraine doing a lot of doing a lot of important things there. We've learned it's about dorn droness. We learned it about costs. So, for example, the US makes these anti radiation missiles that are three million dollars each. We sold three hundred of them to Poland I think a few months ago for a billion dollars. And these missiles are able to find
jammers and take them out. Russia's figured out how to build these gammers, and these gemmers, by the way, they stop artillery from targeting. They really are dominant on the battlefield. So it's electronic warfare. They figure out how to build them like twenty thirty thousand dollars. You can't win a war with three million dollar things being use to take out thirty thousand dollar things. You're just gonna run out of No matter how rich you are, you're gonna run
out of money on the battlefields. A war is like an engineering thing where it's about scarcity, right, And so we've learned you have to build cheaper, smarter, distributed systems, and you know, the electronic warfare stuf's fascinating. I listen, there's a lots of smart people who are against us going into Russia, like we probably should be careful with nuclear power. So I'm not gonna say this is good
or not, but it's interesting. Ukraine was able to basically create like these electronic warfare bubbles by figuring out how to jam sensors in different ways and kind of create a protection bubble around their forces. Is that then did the major incursion and it was all about electronic warfare and turning on and off these sensors along with like how to manipulate swarms and so battlefield is totally changing
versus how we do these things twenty years ago. And we're trying to make sure we build companies here in technologies general response to this and go fast on it.
So all of these ships, that giant ships that China's building, is it likely or possible that there will be a small autonomous swarm of vessels that counter balance that.
Well, China's pretty smart, so I think they're mostly building submarines, which are difficult. But yes. So Saronic is the latest company we helped starts run by a former nav cl of eleven years in Austin, Texas. Law of the Admirals of the Fleet are very involved, and what we're doing is gonna is We're even next year in Austin. We're gonna have six hundred ships we build that are twenty four feet, fourteen feet and six feet. These are weaponized
automus vessels. We're teaching a navy how to use AI to have the coordinate. So what we showed them when they agree is we can basically triple the battle effectiveness of our fleet by complementing all the big ships of the line with about thirty smaller weaponized vessels that swarm and coordinate and help in different ways.
It's kind of fun. It's like a little video game sort of thing.
I actually have a lot of La Vido game talent helping us map it out and practice battles and stuff. But no, yes, we have to do lots of small ships if we want to stay ahead of them. And unfortunately our DoD is not as competent as it used to be. But our private companies are the best in the world. So we're going to keep getting involved same as private companies did in World War Two and make sure we stay ahead of the bad guys.
So let's shift gears.
I want to talk about open GOV which is another product project of yours. You provide software for over two thousand municipalities and state agencies.
What was that adoption practice?
Like?
How long did that take?
Well, we sold open gov earlier this year for one point eight billion dollars to Cox. And you know, originally, my friends and I we were wondering why California was taxing us so much and where they were spending the money. This is about thirteen fourteen years ago. And so I got about twenty Stanford students in a nonprofit at first, and we tried to just put everything online.
It was great. I didn't have my name on it.
So all these students get getting attacked by the unions because they really don't like it when you show them spending lots of money and government departments. So it basically showed that California had a bunch of departments that were dominated by the special interests, that we're spending about fifty to sixty percent more than this was thirteen years ago than you'd imagine by the model.
Right, of course, it's corrupt.
And all these cities started emailing us saying, oh, this is really cool, show us for our spending.
Are we doing something good?
Or not. And we said, sure, send us the data, and the cities would say, well, how do we send the data over? And we looked into it and there's tens of thousands of municipalities in the US and they mostly don't have access to their own information. They have to pay their IT consultants huge amounts of money to do a report. They couldn't even see what they're spending
versus city next door for similar services. And so we decided to build this thing called open gup and we build a way for them to see all their data. And then we realized governments don't like paying for new things. They only can pay for the things they're already doing. So we built a bunch of software for them to run all their budgeting and their transparency and their processes and asset management.
And it just built a big gup tech comp.
So I'm kind of fascinated how you've bounced the cross sectors big data, defense, government, healthcare, finance, even now education. How do you approach learning a space that you have been in before.
Well, you know, the for building these companies and for succeeding as an investor and ventor. There's really two things that matter. The most one is the very top technology talent and technology cultures. So culture is a places like Opto where we're iterating with you. It's because we have like these really amazing talented people who are building really quickly and who are speaking to people and getting feedback
with them. And the other thing we're looking for is like where is a gap in the world, where is something Here's where it could be, and here's where it is now. So again with so I think, go back to all and think about that. It's very clear there's a gap. The incentives are misaligned for how people are accessing alts, the platforms are wasting a lot of their time, and it's just it's not easy for them to see what the best things are and to really quickly iterate and do their.
Job for the clients. And so it's very obvious there's a gap there.
And so what you do is you use UCLA hypothesis. You get a really great tech culture where the people at opto own a bunch of the company themselves, are really talented people who've had wins before, know how to build and iterate in texts that from out of par or from other places. And then and then, and then you build and you iterate with clients because no matter how smart we think, we are going to come to you and show it to you. There's gonna be things
that are wrong. There's gonna be things that are not useful for you. But because you have a great tech culture, you can iterate very quickly and learn. And so the company's now been around for a few years, is now the point where people are starting to really love it because they've been, you know, doing a based on feedback. So when you approach a new space, it's not about
being an expert in this space. It's about having a really amazing culture that talks to the experts and learns from them and builds with them over time.
And Joe, I love this quote of yours and I have to ask you about it. My passions are repairing broken industries and government in calculating classical virtues, prioritizing families, and enabling a free and prosperous society. I'm kind of politician, right, you're running, well, discuss the quote.
I can't imagine you're ever running for office, are you.
Sounds like it'd be a horrible job, to be honest, I listen, our society is facing a lot of really broken things right now. There's a lot of stuff that's wrong, and I think I think virtue, classical virtues are missing in our society. I think courage is not a virtue that's taught to our lead. If you go to a top one hundred university, you are taught the opposite of courage. You're taught to shut up, virtue signal, go along, don't think for yourself, don't oppose the borg. Whatever they say
is right, and it's really broken. I think it's really scary what we face in our society right now. So you know, I think the fundamental units of the West are the classical virtues, are the liberty values around the Enlightenment, are our functional families with two parent households. I think these are all things that make our society functional. And if we don't say it and we don't fight for it, we're gonna have a really broken society.
All right.
We have time for a couple of questions from Slido. Let's take look, what do you look for when evaluating fund managers for yourself and your family office?
So when I'm looking for fund managers, I mean for me, because I have a network with these people. I want to know that a lot of my friends really respect them.
I want to know they have some unfair advantages.
I want to know that they have obviously an amazing track record, and then I want to know that there's some reason why they're still in the game and focus. I think a lot of people who've had a lot of success, there's various things happen in their lives and they're no longer working.
They all long have the same.
Culture, So I mean, I want to know the culture of the organization around them at their fund and know that they are still working as hard as they were when they first created that, you know, for the first success, because I think that's that's something that slips very easily, so you got to watch out for it.
And here's a perfect question to wrap up on what are the most exciting trends you're seeing in the marketplace today?
So the most exciting trend by far, I started to hint at it earlier is what's going on with applying AI to services industries. There's about five trillion dollars of wages in the US in the services sector. Over two trillion dollars of those wages are in the areas where we've already shown you can double the proctivity, in some cases triple the cash flow from these old legacy businesses. This is a whole new area of tech enabled services that actually works.
Now.
We're seeing, example, healthcare billing two to eighty billion dollar revenue, industry typical margins twenty percent. We already have companies getting fifty sixty percent margin. Fixing that space, there's huge parts of our economy. We're gonna have proctivity shoot upwards. If we can manage not to break our country with the stupid government stuff the next several years, we're gonna have a very productive society.
That was my conversation with Joe Lonsdale. He is the co founder of Palanteer, as well as a number of other finance and technology related startups. I thought the discussion was fascinating and I can't wait to get him in the studio for a full ninety minutes to really do a deep dive into his career. If you enjoy this conversation, well be showing and check out any of the five hundred previous discussions we've had over the past ten years.
You can find those at iTunes, Spotify, Bloomberg YouTube, wherever you find your favorite podcasts, and be sure and check out my new short form podcast, At the Money ten minute discussions with experts about topics related to your money, earning it, spending it, and most importantly, investing it. At the Money in the Master's in Business, feed or wherever you get your favorite podcasts,