Joe Lonsdale: The Future of TikTok; Is it a Danger to US National Security? | E1125

Intro (00:00:00)

• Joe Lonsdale criticizes the current education system for stifling free thought and encouraging students to conform rather than pursue truth.
• He expresses excitement about the upcoming discussion with Joe Lonsdale.

Joe’s Childhood (00:00:45)

• Joe Lonsdale describes himself as an overconfident child who excelled academically and had a lot of opinions.
• He was the oldest of his generation and had a lot of confidence and leadership skills.
• Despite his talents, he was always aware of his limitations and the need to improve.
• He realized that there would always be people better than him, which motivated him to constantly strive for improvement.

Importance of Competition & Self-Awareness (00:03:09)

• Joe Lonsdale believes in comparing oneself to others to see what's possible and challenge oneself.
• He appreciates the haters as they drive him to prove them wrong and keep going.
• Lonsdale receives messages from McKenzie Consultants who are inspired by his 21-minute VC and start their own 19-minute VC.

Biggest Needle-Moving Moment (00:04:18)

• Being allowed into PayPal was a significant moment in Joe Lonsdale's career.
• He learned a lot from Peter Thiel and got exposed to people like the Facebook team and Kevin Hartz at Zoom.
• Convincing Peter Thiel to fund Palantir and keep it going despite opposition was critical.
• Palantir was seen as a crazy project compared to other ventures like a restaurant that lost $7 million.
• Lonsdale emphasizes the importance of not spending excessively on restaurant buildouts.

America as a Frontier Nation (00:06:07)

• America is a frontier nation where people are constantly trying new things and taking risks.
• The frontier is a place of accountability where things that don't work fail quickly.
• The spirit of the frontier is one of entrepreneurship, innovation, and accountability.
• The core nation is safer and more protected, but it can also be bureaucratic and slow to change.
• A dialectic between the frontier and the core is necessary for a nation to advance and solve problems.
• Lack of accountability is one of the things preventing America from taking advantage of the benefits of the frontier.
• Special interests often become more concerned with their own interests than with the common good, which can lead to the decline of a civilization.

Lack of Accountability in America’s Core (00:09:35)

• The current prison system in the US lacks accountability and has high recidivism rates.
• For-profit prisons can be more efficient and effective if tied to performance metrics like lower recidivism and higher employment rates.
• The Cyro Institute has successfully passed laws that tie funding to results in areas like vocational schools, leading to better outcomes.
• The "woke mind virus" is a term used to describe a focus on virtue signaling and non-functional societal issues at the expense of competence.
• The woke mind virus is often associated with progressive values, such as fairness and helping those in need, but its expression is ineffective in achieving these goals.

Woke Mind Virus is Real? (00:14:03)

• The woke mind virus is a performative religion that is not tied to meritocracy or usefulness.
• It is characterized by shaming and unforgiveness, and it is not correlated with a functional society.
• Most CEOs are nervous about speaking their minds due to the backlash from the woke crowd.
• It is important to consider the potential consequences of expressing controversial thoughts in public.
• Wokeness is a luxury belief that is afforded by a certain level of wealth and comfort.
• When accountability is removed, things don't matter as much, and people can spend time on nonsense.

Concept of Fully Developed Core & Deglobalization (00:17:07)

• Decadent and unaccountable institutions, such as universities, often lead to nonsense beliefs and virtue signaling.
• Broken and inefficient systems, like those found in academia, should be exposed to competition and metrics to drive improvement.
• Wokeness can be an indicator of brokenness, but the focus should be on fixing the underlying issues that harm society, such as the shift in academic culture towards the radical left.
• The University of Austin is being established as an alternative educational model that prioritizes intellectual foundations, interdisciplinary learning, and bold leadership.
• The culture in academia has become increasingly hostile to moderate or conservative individuals, with two-thirds of students reporting self-censorship due to fear of repercussions for expressing their opinions.
• This environment is antithetical to the principles of a liberal education, which should encourage open dialogue and the free exchange of ideas.

What’s Wrong with Universities? (00:21:42)

• The current state of universities is concerning, with a focus on self-advancement rather than pursuing truth and knowledge, leading to the spread of nonsense in society.
• Radical ideologues form a small percentage of society but have managed to infiltrate various departments, administrations, and companies, leading to a culture of fear and cancel culture.
• Elon Musk serves as an example of someone who stands up against nonsense and reveals hidden truths, inspiring others to do the same.
• To restore America as a frontier nation, courageous individuals are needed to address unaccountable bureaucracies and the current regulatory state, which has been captured by corporations and special interests.
• A solution is needed that involves smart policy and technology to make the administrative state justify its rules and eliminate unnecessary ones, requiring thoughtful entrepreneurs and individuals to stand up and push back against unaccountable bureaucracies and monopolies.

Restoring America as a Frontier Nation (00:27:04)

• Joe Lonsdale believes in focusing on the states as they are more controllable and matter more.
• He agrees that the upcoming election is important but thinks both sides have imperfect candidates.
• Lonsdale tends to agree with more of Trump's policies and the people around him, who aim to reduce bureaucracy and shrink wasteful parts of the government.
• He acknowledges Trump's imperfections and problematic behavior but believes his side is more likely to push for positive changes.
• Lonsdale expresses concern about China's increasing influence in America, particularly through platforms like TikTok.

Concerns & Impact of Trump’s Win (00:29:07)

• Lonsdale suggests forcing China to divest TikTok as he believes China controls the algorithm and can manipulate tens of millions of Americans.
• He views Xi Jinping as a significant threat due to his problematic nature and obsession with the United States.
• Lonsdale emphasizes that China poses the biggest threat to the US, despite acknowledging the amazing qualities of the Chinese people.
• He expresses optimism about Chinese innovation and technology but is concerned about the current situation due to Xi Jinping's actions.
• Lonsdale hopes for a free China in the future, believing that cooperation with the Chinese people would greatly benefit the world.

China’s Influence & Approach to Dealing with it (00:30:28)

• Globalization has led to increased isolation and hostility between nations.
• China's actions have contributed to a period of de-globalization.
• It is important to form alliances and work together with other nations for mutual benefit.
• Decoupling from China may be necessary, but complete isolation is not desirable.
• Trade with Russia should be limited due to its aggressive actions.
• Russia possesses advanced capabilities and is a potential threat.
• It is important to find a balance between supporting Ukraine and avoiding unnecessary conflict.
• The situation in Israel is complex and has historical roots.
• Israel's declaration of independence led to attacks from Arab armies.
• Israel is a vital homeland for the Jewish people and is highly valued.

Continue Funding Zelensky? (00:34:00)

• Hamas attacked Israel and must be destroyed.
• Hamas uses civilians as human shields and holds hostages.
• Israel will continue fighting until Hamas stops using civilians as shields, releases the hostages, and is replaced by a government that does not support terrorism.

Israeli-Palestinian Conflict (00:34:52)

• Schools in the area teach children to hate Jews and celebrate killing them.
• This creates a "death cult" that must be dealt with by attacking and eliminating the bad actors.
• Despite the brainwashing, there are still good people among them who deserve human dignity.
• It is necessary to go after and eliminate the bad guys who attack and kill.
• Joe Lonsdale has four daughters and is expecting a son soon.
• He is still learning how to be a good father and is not an expert.
• He encourages his daughters to pursue their interests and provides them with individual attention.
• He believes spending lots of time with his children and showing them he cares is most important.

Role of Parenting (00:38:07)

• Children can be an opportunity cost for work and pursuing one's mission.
• Having children helps with setting priorities and saying no to things that one doesn't have time for.
• It's important to schedule time for sleep, workouts, and family, and to protect these times as much as possible.
• Exposing children to the challenges and problems in the world can help them develop hunger, ambition, and hustle.
• As a wealthy parent, it's important to show children the gaps in the world that need fixing and encourage them to use their resources and abilities to make a positive impact.

Balancing Work & Family (00:39:57)

• Both people and markets are necessary for building successful companies or nonprofits.
• The best people are essential for building great companies and nonprofits.
• There are exceptions where companies have achieved great success with less talented people in exceptional markets, but these are rare.

Instilling Ambition in Kids (00:41:08)

• Twitter's success was an exception, not the norm.
• The best teams and culture increase the chances of success.
• Diversification can be a mistake, concentration can lead to bigger successes.

Importance of People & Markets (00:42:10)

• Palantir, OpenGov, and Epis are successful companies founded by the speaker.
• Adapar could have been bigger faster with the right leadership and talent.
• OpenGov is also in a strong position.

Diversification vs. Concentration (00:43:44)

• Joe Lonsdale reflects on his decision to diversify his efforts across multiple companies instead of focusing on a single venture.
• He acknowledges that there might have been missed opportunities and slower progress due to not being fully dedicated to each project.
• Lonsdale highlights the benefits of diversification, such as being able to support various entrepreneurs and learn from them.
• He expresses his enjoyment in working with different partners and understanding economic trends.
• Lonsdale acknowledges that his approach may have resulted in less financial success compared to entrepreneurs who focus on a single venture.

Reflecting on Concentrated Efforts (00:45:04)

• Joe Lonsdale receives a weekly report on his net worth but does not disclose the specific amount.
• He emphasizes that his focus is on liquidity to enable further investments, rather than accumulating wealth.
• Lonsdale describes himself as someone who maintains a high level of liquidity (95%) to continuously invest in new projects, build new things, and support various causes.
• He finds joy in using his wealth to make a positive impact, such as sending aid to the Philippines and supporting non-profit organizations.

Role of Net Worth (00:46:00)

• Joe Lonsdale believes that money should be used to fix broken things and create new things that should exist.
• He thinks that the best way to have an impact on the world is sometimes through creating for-profit companies.
• Lonsdale regrets selling his shares in successful companies too early and believes in holding onto great investments for the long term.
• OpenGov started as a nonprofit that aimed to make government data accessible online.
• Cities and state agencies were interested in OpenGov's services but were being charged high fees by consultants to provide data.
• Lonsdale realized that there was a market opportunity to provide this service more efficiently and started a for-profit company, OpenGov, to do so.

Using Wealth to Make a Difference (00:48:58)

• Joe Lonsdale believes that money and success enable individuals to have a positive impact on society.
• He cites the success of OpenGov as an example of how a self-sustaining organization can positively impact thousands of cities and state agencies.
• Lonsdale acknowledges that not all his ventures have been successful, such as Backplane, a social media platform he co-founded with Lady Gaga.
• He reflects on the lessons learned from Backplane's failure, including the challenges of transitioning from enterprise software to consumer products and the importance of identifying gaps in the market.
• Lonsdale emphasizes the importance of focusing on one's strengths and avoiding ventures that are "too much fun" or outside one's expertise.

Lady Gaga’s Company (00:51:53)

• Joe Lonsdale invested in Wish, an online retailer, in 2010.
• Wish grew quickly and was valued at $25 billion when it went public.
• The company has since crashed due to various factors including changes in laws and regulations, actions by the Chinese government, and internal issues.

Why Wish Failed (00:53:55)

• Joe Lonsdale personally lost a few hundred million dollars by not selling his Wish stocks early enough.
• He regrets not taking more profits when the price was still high.
• Despite the loss, his angel fund still had a 10x formation and very good returns.
• Joe Lonsdale believes that venture capital is still a good business if you are among the best in the world at it.
• It is difficult for those who are not great entrepreneurs and don't have unfair advantages to succeed in venture capital.
• Lonsdale emphasizes the importance of having unique skills and unfair advantages to do well in venture capital.
• Joe Lonsdale is bullish on the AI services trend and believes it will raise productivity.
• He sees opportunities for making money by replacing and fixing big parts of the economy with AI-powered solutions.
• Lonsdale believes that entrepreneurs and venture capitalists who partner with them will capture the returns from the AI services trend.
• Lonsdale compares the current AI services trend to the "smart enterprise wave" of the last 15 years, which saw the rise of cloud computing and big data.
• He believes that AI services will similarly transform industries by taking things from where they are to what's possible.
• Lonsdale highlights the value created by enterprise companies during the smart enterprise wave and expects AI services to create even more value.

Future of VC (00:56:39)

• The last 15 years have seen significant growth and value creation in the tech industry.
• Many companies have been upgraded and transformed through technology adoption.
• There are fewer opportunities left for such transformations, as most sectors have been modernized.
• The question now is what the next frontier for venture capital is.
• AI has the potential to further enhance the existing SAS companies and improve their tech cultures.
• AI can also create new opportunities and disrupt industries that have not yet been modernized.

Rise of AI Services (00:57:58)

• AI has opened up a significant portion of the economy that was previously inaccessible to traditional service companies.
• This has created opportunities for tech companies to compete with outdated pre-internet companies.
• AI enables the automation of tasks, such as healthcare billing, which can lead to significant cost savings and improved efficiency.
• There are numerous opportunities for venture capitalists to invest in companies that leverage AI to improve efficiency in various industries.
• The success of AI companies often lies in identifying weak competition and targeting areas where there is potential for significant improvement.
• What have you changed your mind on most in the last 12 months?
  • Joe Lonsdale realized that he still has a lot to learn about parenting despite reading many parenting books.
• What are you most concerned about in the world today?
  • Joe Lonsdale is deeply concerned about the geopolitical situation with China and Russia and the potential for war in the next four years.
• If you could choose one person as a co-founder of a new company today, who would you choose first?
  • Joe Lonsdale considers Elon Musk to be an exceptional co-founder, but acknowledges that Musk's current commitments may limit his availability.

Quick-Fire Round (01:01:26)

• Joe Lonsdale describes Peter Thiel as having a high IQ, very high clock speed, and a willingness to go straight to what matters, dismissing all else.
• Lonsdale mentions a document he wrote that Thiel circulated online, containing lessons from working with Thiel.
• One of the key lessons Lonsdale learned from Thiel is that there's usually one dominant reason for something, and if there are multiple reasons, it means there are no clear reasons.
• Lonsdale emphasizes the importance of identifying the dominant reason to avoid sloppy thinking.
• In ten years, Joe Lonsdale wants to have a happy and healthy family.
• He wants the people he works with to be satisfied in their careers and successful.
• Lonsdale aims to solve hundreds of problems in society and uplift millions of lives.