Uncapped #9 | Qasar Younis from Applied Intuition

[00:00] So number one, I love the car business in a way that I've never loved, you know, any other, like, beyond a business. Why do you love it so much? I mean, I came to the US and GM money. So there's an emotional, you know, component there. Like my uncle was a General Motors engineer. He bought us the tickets that we came to America on and then supported us. All right. Thanks so much for doing this. You're one of the CEOs that I look up to the most, but... [00:22] there's no content about you online. - Wow, I'm deeply flattered. - When I started this, I was like, I've gotta get you. Oh yeah, he'll, every single one, right to him. So I wanna start with, [00:33] When you began, [00:35] working on this company. You were at a place where you had already started a company that was like probably really hard. You know, you went to Google and then you were like the COO at YC and you had this comfortable good job. You already knew that starting a company is pretty brutal, kind of sucks. And you started one anyway, which is very different than like a 22 year old starting a company who's just like bright eyed and doesn't know how hard it is. But you decided to. So can you talk about what was the psychology for you when you began working on the company, knowing that you could have you could have gone [01:05] a VC firm. You could have gone and been a COO at a public company probably. Like you had a bunch of options. Why'd you do it? Yeah. First thing is I didn't quite know because the first company I had it was three years, but it was like this. It did it full time for a while, then did it part time, et cetera. And it was like, it failed. It was in Chicago. It kind of failed quietly and literally didn't know anybody. I mean, my co-founders from that company know us, but like, we didn't raise a dollar. It was just, you know, it's like a tree falls in the forest. If a company dies without raising money and no one even knew it existed, was it really a company?

[01:35] was 10 months when it was acquired by Google, and it was a good outcome for us financially. We were like three poor, you know, kids. And so, um, it wasn't-- we didn't have the grind. -10 months is nothing. - It's nothing. You blink and 10 months is done. So, partly I didn't know, but I knew just from the YC experience, that there were a lot of smart founders that went out and did all the right things and still failed. And so, uh, I think for me on YC, even going to YC, originally the way that I got into YC, [02:05] as an employee was. [02:07] my co-founder here, Peter Ludwig and I, we're thinking of doing a robo-taxi company. And I'd met some of these Sequoia partners, and they were like, "We don't think it's a good business." And so I was like, "Oh, shit. [02:17] You know, you take that advice. One of my superpowers is, I take feedback. Like, that is, like, I listen and I really re-evaluate my preconceived notion. And all the way to when I started my career in automotive, you know, I was knee-deep in automotive. And I moved over to Silicon Valley software extremely pragmatically. And, you know, we say often all of our values can be reduced to radical pragmatism. [02:47] Thank you. [02:48] what you're good at, what the market is saying to you about the thing you're gonna do, and then, um, where they could be wrong, possibly. So when the Sequoia guy says, specifically, one person said, "We'll give you the money to you and Peter to do a robotaxi company, but I don't think it's a good business." To me, it was like, "Okay, I gotta really listen to that feedback." And I went to PG's, Paul Graham's house, and said, "Oh, what do you think?" And he said, "Well,

[03:09] you should consider joining YC. And my wife at the time was pregnant with our son, and he's like, don't start a family and just start up at the same time. And I also listened to that advice. And then in terms of the true inflection point of leaving YC, which is leaving Google was a tough decision because it was a great job. It was the first time to be in... Also, people forget what Google... Like today, people at Google, like, what, 14, 15 years later, is very different than Google at that time. At that time, you know, NVIDIA was near bankruptcy. [03:39] Apple had come out with this MacBook Air. Wasn't Apple today. Steve Jobs is still alive. Yeah, Google felt really strong then. [03:45] It was the apex predator. [03:47] Who else was there? Facebook was under 1,000 people. 2010, Facebook was a tiny company, relatively speaking. It was a small company. And so, it was like, Google was the company to work at. And there was really no number two. Everyone was trying to work at Google, and everything-- So... But it wasn't that hard to leave, because I think I've never emotionally felt that I wanted to be an employee forever. Like, that was a part of it. Also, working with Paul and working with Sam, these are like, you know, I'm not that smart, but I'm smart enough to know that these people are exceptional. [04:17] So getting the exposure to those people, I think, was really important, and made the transition. Leaving YC was actually the more difficult decision, because there's a reason that you said. Fundamentally, I think it came down to [04:29] I always felt-- One, I already thought of, like, you know, my view was go in, learn a bench, and try to do the third company. And then, like, I enjoyed the work. And then that was actually what made it more difficult. But really was like, am I an investor or am I a founder? - Yeah. - And that clear delineation is investors are lone wolf

[04:47] You know, they're great. They're great investors. They're kind of like thoughtful, academic, independent, contrarian to some, you know, maybe even to a fault. Those are like what really great investors look like. [04:58] And then the best founders are actually super opinionated, and they're almost like... [05:07] difficult. Yeah. And I think I'm more difficult today [05:10] to be with at any time in my career. And I'm seeing the manifestation of who I really am. - Yeah, it's an unfortunate thing that I think a lot of the great founders happen to be very disagreeable. I happen to be like a very agreeable person, which I think, you know, it makes your life easy, but I think to build [05:28] you know, really iconic companies a lot of times, you need to be willing to just do a lot of stuff that's uncomfortable, and tell people their work's not good enough, or you don't care if, you know, other people want to do it this way or you're doing it that way. And I think, like, you know, I would say my two-- you know, I have many faults, but two kind of glaring faults in my, you know, disposition. One is I do work a lot, almost to a degree, which is, you know, I used to say all the time, "I want to be the person that works more than anybody you've ever met." [05:57] So I'm creating that identity. - You were always that way? - Yeah. - Even before this company? - Yeah, yeah. I grew up poor, so it was just like deep in my-- like, you know, I don't say this as like some sort of like back patting, but I had always doing shit myself. [06:09] paid myself for undergrad. And as my parents are just, you know, they didn't have the abilities and the means to provide, so I had to do that. And then same thing with grad school stuff. So it's always been on my own back and, you know, always in the relatives. It's like Arnold Schwarzenegger saying, where he says, "No one's really doing it themselves. They're doing it with the help of other people." But in the sense of,

[06:27] You know, that sense. But going back to that inflection point of choosing to leave YC, one is... So, working all the time, that actually made people uncomfortable. At Google, it made people uncomfortable. Less so at YC, because you're kind of, you're around a bunch of ex-CEOs and founders, and they all work, like, all the time. But at Google, I remember people asking me, like, "Why do you work so much?" And I was like, [06:48] "Oh, I guess there's, like, the wrong way of doing that." And the second thing is having really strong opinions. And I just can't let things go. If I think something is being done wrong, I will, you know, take my deep breaths, and I just can't not say I think that's the wrong strategy. And I think when you're not the boss, [07:07] That is very difficult to work with somebody like that. Did you think about it as like you were at a point in your career where you were like it was your last moment to like pick a path and you were still kind of a stem cell. You could have gone and been an investor. You could have been a founder, but was there like a [07:22] function in your mind of, like, I need to make my choice now, like, for good, basically? I think that, you know, you're-- basically, your mid-30s are a very important point in your career, because you're old enough to basically get whatever job-- or you have enough experience to know, like, what you're good at and what the market wants. But you're also now at the point you're-- you got 20 years, how do you-- where you can really-- that's your-- you know, the way that I think about life, and I've talked about this inside of Applied, is you kind of get, like, these-- these, uh, Post-It notes. [07:51] Each post-it notes is five years. [07:53] So how many of those do you get? -Yeah. -Six? Yeah, maybe. [07:57] eight maybe if you're lucky you gotta write what you're gonna do in those so you know Google was one

[08:01] Y Combinator was one of them, Harvard Business School, and Automotive Engineer. I'm running, like, I'm already four Post-its out, right? I'm already four Post-its out, and that's after you're an adult. Yeah, and ideally, if you do... [08:14] you know, work that really matters, one of those post-its is going to be a 15 year post-it. Yeah. And so then you really don't get that many. You really don't get that many. Funny, I'm 35 and I just did this, you know, starting, you know, being an investor after having been a founder. Yeah. And I had a lot of these similar background thoughts because I do think that there's this mid-career moment where you know enough and you're in a situation where you can kind of set yourself up in different ways, but you still have a lot in front of you. And yeah. Yeah. And so at that time when I decided to between deciding to leave YC [08:44] was like a four or five month period, where I told Paul and Jessica, "Hey, I'm going," which is August of '16. My last day was December 31st '16. I had that time. And their view was like, "Hey, [08:54] maybe you don't want to start a company, maybe you don't want to leave. You know, the way the YC works is the next batch starts in January. So it's like, "Oh, this is already rolling, so think about it." In that time, the real-- first was like funds actually reaching out and saying, "Hey, do you want to work at a fund?" And I think just because I'm a rational person, it was like, "Okay, let me talk. Is there something there?" And ultimately, like, it was never gonna be, you know, Andreessen Horowitz units. It's not gonna be Kleiner Perkins units or whatever, you know, Coastal units or whatever the firm is. And... [09:23] And also, I had a good gig at YC, so it's like, why would I step into a parallel kind of thing? So that didn't quite make sense. It's like, "Oh, start a fund, or start a company." And I really explored those things. The thing that ultimately tipped me

[09:35] Peter, my co-founder, having an idea that actually really, and then it wasn't a 50, it wasn't like a, definitely this is the right thing. Now. Yeah, but at the time it was like a 70, 30 call or something? 51, 49. That close. Yeah, super, super close. Uh-huh. [09:49] Super, super close. - Of start this company and start a fund. - Start a fund. - Yeah. - Yeah, super, super close. And I think like I said, in hindsight, the narrative is gonna be very easy. Like I was an automotive engineer, and I would do software and AI for, [10:01] of vehicle intelligence, like machines, cars, trucks, takes. It seems so obvious, but at the time it was not like that. - It's funny 'cause you probably could have started a fund, you would have made some killer investments, and then you'd tell a story in that parallel universe about how it was always obvious, and it's always what you should have done. - Exactly, exactly. So your brain just rationalizes the reality. But I can tell you, [10:19] the empirical thing that I knew, the thing that I do know as fundamentals, I enjoy this more. [10:24] -than anything I've done. - Yeah. And I, you know, like, next year will be extremely difficult to watch, I say this. Like, this job has been easier than working at YC, working at Google, working at Bosch. Even at the beginning? [10:36] Yeah. [10:37] Wow. [10:38] Because for me, the thing that bothers me the most-- and you have to kind of really know yourself, and this I know about myself, is the people I'm with, that's the dominant thing. If I have tension with the people I'm with, and I have like, you know, we're not in sync and harmonious, [10:54] I have, you know, that just grinds my gears. You also have much more control over everything as a CEO than as a VC. That's one of the biggest things I've noticed. 100%. Flipping is I used to have control over everything and now I don't. Yeah. And, which is okay. But that's like a huge difference. And so if you're... But the control comes with a cost. Of course. Nothing is free. Of course. So now you have the responsibility that comes with it, which is, did you hire the right people? Are you picking the right... You know, you're making decisions every day, which are always in the gray zone. And one of the key hallmarks of apply that we just...

[11:24] about it just today earlier in staff meetings like decisiveness decisiveness decisiveness you've got to make decisions as a leader without all the information and then by the way they got to be right yep a lot of times when someone like i feel like when people start their and that's a hard piece of advice though it's very hard yeah when people start their companies in their early 20s let's say versus their mid 30s oftentimes i think the story is you know in their early 20s there was [11:54] boom, they realize that Airbnb was a thing and, you know, the cereal and whatever. Yeah. And then a lot of times when people are later in their careers, it's like they saw the whole movie. And I think you did see the whole movie. Yeah. Yeah. Absolutely. How important. Why see was huge in that. Yeah. Just see the you see it play again and again and again. And you knew you knew how a company was built, but you also knew what [12:13] this market and this product would be because of how you grew up and so i'm guessing part of what got you 51 49 and the direction of starting applied was that you felt pretty confident that there was a real business to build here yeah and peter my co-founder i mean we have a tremendous relationship and i think you know our parents live a quarter mile from each other in michigan yeah which is kind of so the foundation was just crazy strong yeah yeah and we shared values i think i think like you and as you get older you start to realize like these are my people they're not my people like you that that that starts happening as well and like my people broadly speaking are [12:43] Michigan people, they're Sunnyvale people. It's less the, I would say the, like I could never do a consumer company. It's just not, we're kind of like Detroit guys. And we kind of, we grew up in factories. I've literally worked for many, many years in factories, go to the General Motors Institute. It's just a very different, and it's not obvious. When you talk to me, I'm just a Silicon Valley guy. I worked at YC, I worked at Google. Like that's not, you would say, what are you talking about? - But that's not where you came from. - Yeah, but that's not where you came from, right. And so where I'm from Silicon Valley is being an immigrant. That's very Silicon, being an engineer, that's very Silicon Valley.

[13:13] which is like being very Midwest. And that way, like the Marc Andreessen's and, you know, we get along a lot. He's similarly from the Midwest. Peter's similarly from the Midwest. You can sense some of this trait, and you can sense some of these values. But just in terms of, again, back to that inflection point, for me, where, you know, the Peter thing kind of goes over, the other personal things going over, it's not obvious. But once you're in it, [13:38] Then it was like, "Oh, this is my thing." Like, I can just make all these decisions. And you're saying, you know, in the early-- the early phases, more difficult than the later phases. [13:47] I think it's been similar. There's different sets of problems. One thing is true is now, again, hindsight, I think my skill set is just way better being a founder. [13:56] Product design, engineering, those are your bread and butter of being a product company. Running an organization, you know, I had that experience. So, yeah, now it seems like it was the right idea. [14:07] How much has the movie played out similarly [14:11] compared to what you thought it would be on day one. [14:13] Um, [14:14] I think shockingly, [14:16] to what our plan is. I mean, we-- So, [14:20] unlike other folks, maybe 20-year-old founders, we, like, enumerated. Like, there's this great Napoleon line, which is like, um, he talks about how people think he's a great field marshal, that he's, when he's in war in his memoirs, he writes that he was in battle, that he would make these decisions. He's like, "No, no, I just studied the battlefield way better than anybody else, and I just thought through the permutations of if then this will happen." And we did a lot of that. So we're like, "We're going to start this thing, and if this works out, the other competitors are

[14:50] do that like and then the crazy thing is like you're like you just thought harder than other people almost yeah one of my first engineering managers had this uh uh thing we were working at a flint v6 v6 engine plant in flint michigan um and he had this uh uh [15:05] sign above his desk which said, "No problem can withstand the constant onslaught of thought." And like, [15:11] 25 years later, you know, I think about that like every second day. And so there is like, and I don't know if that's right or wrong. Well, it's funny because, you know, the, you know, every plan is good until, you know, it meets reality or whatever. It's actually like a very different lens on that, which is one is like, you know, think about it, but not until you get out into the real world will you know. And this is actually saying. [15:31] you know, think about it hard, and if you think hard enough, then you'll know. - Yeah, and if you have enough experience, this experience matters. That's why not being 20 and being a 30-year-old is better, because you can just look at other companies. Like, again, it's going back to that whole thing of like, [15:44] being very clairvoyant about what you're good at, what you're not good at, how the market is gonna naturally react to some product like this in the market. Do you have as much of a vision on the next 10 years right now as you did on the first 10 years when you started? Or do you have less clarity today than you did then for some reason? I would say more now, mainly because when we were starting, there was a lack of confidence that it would actually do that. [16:08] the business would open. And just for everybody to get on the same page of what our business is, we have three, you know, rough areas. We have engineering tools, we have operating system, and we have autonomy. [16:19] So we do the same. And that is just like there is a company. Microsoft had the same thing from 1975 to 1982. They were a tooling company. Then they got an operating systems and they got an application like Office and stuff like that. Today's Microsoft is very different. So we're really talking about Microsoft from 75 to, let's say, 95 or something like that or 2000. But then they're all in PCs. We're all on cars and trucks and tanks and jets.

[16:42] but it's the same concept. You have software that you, you know, tools and software and applications that sit on top of these, you know, pieces of hardware that somebody else has manufactured, somebody else is making. And so, [16:55] you know, that you can already see, that's being informed. Like, that's not-- we're not coming up with this as a student of history, you know. That absolutely plays into our strategy. [17:04] Where are we right now in just like the landscape with auto in general and automotive? Yeah, I mean, I don't know when this will come out, but it's tariff season right now. And, you know, the car business. So number one, I love the car business in the [17:18] in a way that I've never loved, you know, any other like beyond a business. Why do you love it so much? [17:24] I grew-- I mean, I came to the US in GM money. So there's an emotional, you know, component there. Like, my uncle was a General Motors engineer. He bought us the tickets that we came to America on, and then supported us. And then I went to the General Motors Institute, and it paid for my college. And I worked at General Motors, and I worked at Bosch, both in the US and in Japan. And then I spent some time in Germany as a student. And so I just know the industry. -Do you love, like, the cars or the people or the engineering? -Yeah. I love the cars. -Or is it the whole thing? It's the cars. -The whole thing. I like the cars and the engineering that goes into the cars.

[17:54] on, you know, databases. There are a thousand YouTube channels on cars. And every sub-brand of car has their car-- there's Subaru car clubs, and there's, you know, Civic-- like, everything that you can think of. There's, you know, Jeeps, people who go out and, you know, off-roading. So it's a giant community. Are you more likely to go deep on, like, a really cool engine, or, like, a supercar? [18:14] - Both, I mean, great engines are in supercars. - Yeah, okay. - So, I mean, I absolutely like-- - But you liked the whole thing. - Yeah, I liked the whole thing. I mean, I can tell you the history of the Ford Mustang or the Porsche 911. I can tell you the difference between a GT3 RS versus a GT2 RS and, you know-- - You know all the players in the ecosystem. - Yeah, I just love it. I mean, that's why you go to GMI as a 16-year-old. You're like, "I love cars, and where am I gonna go to work on cars?" I go to the General Motors Institute in Flint, Michigan. - What was that like? What was the GMI like? [18:42] -so different than any school. - I know nothing about it. I mean, I grew up in St. Louis, Missouri, but I have no frame of reference on this. So... [18:50] It is a fascinating school. It was started 100 years in 1919, when General Motors didn't have enough engineers, and they basically started the school in order to get more engineers. You can imagine if the Bay Area doesn't have enough AI engineers, for example, a company that's super flush with cash would start an AI academy, as an example, and then that just existed. The difference about GMI and other schools is you work half the time, you go to school half the time. Resonates with a poor kid like me because I can immediately start working. So you, and unlike other co-ops like at Waterloo and some other places, [19:20] with you for those five years, and then they pay you, like, you know, at an increasing rate. And by the time you're in your fifth year, you're a senior, you're making almost an engineer's salary, and you're almost doing an engineer's work. And since it exists for 100 years, it's a very, you know, well-oiled machine. Like, you don't go in and they're like, what's an intern? They're like, when you leave on a Friday, there's a chance there's a GMI kid on Monday from the opposite section coming in and picking up your work. So there's continuity. So it's a very industry.

[19:50] It is really an industry school. - Does this exist in other industries in the same way? - I haven't heard-- - West Point exists. - Yeah, West Point. - And I, like, you know, part of me wanted to go to West Point. I just love that regimented, you know, structure as well. It just spoke to me. But yeah, so when you go into that world, you can imagine the guys who are at GMI, and it's almost all men. There was a desire to make it like a gender-balanced school. It's like literally like 90% men. [20:20] and you have to do this corporate co-op. So it already filtered like a very particular type of person. And so-- - And you start at 16? - Yeah, you start at 18. You start at 18. - 18, okay. But I started working at General Motors at 18, which is kind of a crazy thing, you know? But you become an adult real fast. And the biggest thing that you learn is, "Oh, what happens in the office is super different than what you're learning." I'd learn like fluid dynamics. You learn thermo. You're like, "What do I ever use thermo at work?" At work, it's like-- [20:48] people trying to get promoted in a project in this, like, you know, Pontiac that's gonna get launched as Corvette program, and you're like, "Oh, this is, like, super different." And that was also very, like, telling and informative to me. But the macro point is, when Peter and I started this company, we thought, [21:03] we-- Like, other people must know the car business. It's such a giant business. They live in Silicon Valley. -Teslas right there. -I just don't. And, like, eight years into the business, very few people actually understand [21:14] the car business. And then as we got into defense, then we got into construction and mining and trucking, you just realize that these ecosystems are actually quite far from each other. Defense has become a bit closer to Silicon Valley because of a couple of, you know, strong companies like Anderil and Palantir and stuff. But generally speaking, they're still kind of different ecosystems. And I think one of the secrets that we had in getting that flywheel going is we understand the market so well. I mean, the joke we used to make is like, we forgot more about the car business than most

[21:41] if the founder was to enter it. I mean, it's like for Peter's childhood, his father was a chief engineer on radar for one of the big suppliers and worked at General Motors. There's just no way to catch up. He's like every dinner he had growing up, every adult male in Peter's family worked in the car business as an engineer. So when you go to barbecues, every dinner you talk about this supplier, Takata's going under, what's happening, TW, TRW's getting bought by ZF, and what does ZF do? ZF does, you know, like you just, all this stuff. It's kind of [22:11] and Cupertino, but Silicon Valley's inside of the universe. Fast forward to 2075, Silicon Valley's just another thing. But you grow up in it, everybody works in the business. It's not a cool business, it's just everybody works in it. And then by the way, in the car business, 'cause it's also consumer. So you sit in cars, people rent. I worked on a '69 Mustang over a summer, you rebuild the engine. So when you do that kind of stuff, it's like true passion. I remember I'd meet people who come from Kansas, and they were like, "Why'd you move to Warren?" [22:41] to work at GM and you're like, what? You moved across country? I'm just here because I, you know. Yeah, just here. And then that's when you meet people in the Bay Area who are like moving across the world to work in the Bay Area. But there's some people who are just born here. And to them, that's a little more strange. Totally. Yeah. So like, where are we in, like with cars today, obviously, like there's a ton of intelligence that's being added. Obviously in San Francisco, you can feel it. You can also just see it, you know, if you buy a new car, you can feel that they are updating quickly. What's like the landscape and the latest right now?

[23:11] Um, I mean, if you look at a parking lot, there's just not a lot of intelligence. Most cars are still a mechanical electrical system. They'll have some connection to your phone. They're mostly dumb. And our vision of the future is, every moving machine will be intelligent. That is-- [23:26] the world that we see. - Self-driving is like just one small part of that whole thing. - The heart of that intelligence. - Yeah. - It's a part of that intelligence, but it's not the whole thing. Yeah. What are the other big parts of this? [23:36] I don't know if you think of it as like, you know, different pillars of it, but like obviously mobility is a big part of it. The in-cabin experience. So if you're in a tank, if you're in a fighter jet, there's already a lot of work in order to make the warfighter more efficient in their executing tasks. But that integration can be way tighter. And I think defense in the future, right now defense is still typically one person with one machine or a small group of people with one machine. And I think in the future, it's the opposite where it's one person with lots of machines. [24:06] And that's like, you see the early versions of that through swarms of drones, but I think that is going to be prevalent in kind of the future. And so the machines are the ones that can be at risk rather than the human operator. Is that like you're prompting a swarm that can now do swarm level things? Is that kind of what you mean? Yeah, absolutely. Got it. And, but the human is still relevant in making ultimately a lot of those decisions, especially when you're talking about taking lives. Would that happen on a construction site that like one person is coordinating between, you know, a digger and an excavator? I think it'll happen. It's still far from that. It's still far from that. [24:36] So you asked, what are the subcomponents? So one component is the thing that you just autonomy, the other component is interaction with the machine. The other component is literally just the guts of how to run software on these things. That seems so trivial to us, but these machines are typically built by lots of sub-companies that will assemble all these parts together into a truck.

[24:56] And so, typically, the OEM, the original equipment manufacturer, [25:01] the Scania's of, you know, biggest, uh, uh, Trayton Group, biggest commercial trucking company in Europe. Um, they're assembling parts, but some of those parts are getting from other folks. As we go into the future, those-- you're gonna be defragging of those parts, because it's partly an electrical power train, and partly just because you're bringing all this compute that exists throughout the whole vehicle into a centralized compute. Once you have a beefy central compute, you can do a lot more things with it. [25:27] you can interact with it. It can run, you know, models on it. And suddenly, it's more intelligent. And so then you can do more intelligent fleet management, you can do all of the things that you would kind of normally expect. Just think about it, just this dumb car, [25:41] or this dumb tank, [25:43] becoming more like your phone. [25:45] I remember when I was in the surprisingly early days of Lattice, but definitely as things progressed, our customers weren't just like, "We just want some software. We have the whole plan." They were like, "We also want help making the plan for how we're going to do performance management or whatever." And as I'm listening to you talk, I'm imagining that when you're talking, [26:03] to one of your customers, they're not just like, we know the spec, you give me the parts, I'm good to go. But are rather like, can you help me get into the future? And so I'm wondering out loud about like, what is your relationship like with these customers you work with? Because I'm guessing that extremely deep you're thinking all day about what they could be doing that they might not have even thought about yet. And then you're like partnering with them in a different way. I mean, like in the lot of the word partner gets thrown around, like, basically. But I can see it for this company. Yeah.

[26:33] they do the hardware side. And so, they're bringing a set of expertise that we don't have. It's not in our-- in our-- [26:39] company. And so it is very much like, let's do product planning. So some people ask us, like late stage investors ask us, you know, how, you know, is it easy to replace you guys or what is it? It's like, we are as deep in these companies as you possibly can. You're like, I would guess some people on your team and some people on your customers team feel like actual teammates. Yeah, I mean, it's extremely intimate. You're working on, [27:02] -just giant projects. - Yeah. You know, when you're making a new... [27:06] That is thousands of engineers that work together. Those are, like, if you ever think how complex it is, just open the hood of your car. Every little screw has a team behind it. -It has to make sure that that whole thing, -It's crazy. and that screw with that weight is... It's crazy that we can make a car, honestly. -It's unbelievable. -Yeah. [27:24] It's unbelievable. It's the most complex thing that humans make at scale. - Yeah. - We make rockets. More than an iPhone, I guess, which is like the other big, like, you know, thing that you always look at. I'm like, wow, I can't believe we have an iPhone, which I also can't believe. Yeah, but an iPhone is like, I would say, you know, [27:38] one-tenth the complexity maybe one-fiftieth totally like it's just so like you fly down the highway at 75 miles an hour and you don't think twice like this thing is gonna like the wheels are not gonna fall off what about employees like is that another big thing that you have to educate people on because like you know a lot less yeah the employees because they're they're our employee base comes from really two big pools it's the traditional silicon valley gensui you know engineer or uh ai software uh uh you know background stanford eeks berkeley that's what

[28:08] group that we all know and there's a whole other group which are like the automotive defense uh construction mining trucking folks and they don't really know silicon so you have to educate them [28:17] this group on how to work like Silicon Valley, directness, speed, efficiency, et cetera, and this group on safety criticality, on how these markets move, how these markets buy, like what does a vehicle life cycle look like? And it's not as hard as you would think, because you're just in it all day. Whereas an investor or a partner, you know, for them, software is gonna be a new thing for an investor, and this is like a new area altogether. 'Cause they have to learn two categories, they have to learn software and AI, and they have to learn vehicle manufacturers. [28:47] - Yep. - And there's a lot of errors. Aside from cars, you also mentioned tanks, you mentioned the military. And so obviously, like, there's like a big dual use thing going on here where you're both in-- We're a true dual use company. The government and, you know, commercial. And so like, what is that like, how different is that? What does it require from you to build a dual use company that's working with both arms? Like, the way you do business must be completely different. So. [29:14] So, just for everybody who is not in the business, just a little bit of education, you have companies like Andrel, who is really working primarily in defense. And they might work in multiple countries and things like this, in multiple, let's say, domains. But they are working primarily for a very specific vertical, which is the defense market. A company like us, we are working across a bunch of verticals. And the defense vertical will use the same products,

[29:40] roughly, that we have for the other verticals. [29:42] but it's not only made for the defense vertical. The pros of that is you're essentially subsidizing these very expensive [29:50] technologies [29:52] through non-defense uses. And then you augment them for the defense. You know, there's there are specific things that the defense ecosystem has. [30:00] I think the future is more dual-use companies, to be very honest. I think Palantir is a great example. Started as more of a defense-oriented company, does a lot more commercial work now. So I think that's just... I think you're going to see more and more of that. You see a big boom in defense tech investing. I think the thing that a lot of people will recognize once you get into the defense ecosystem is there's limitations there too. It's not like this endless market. [30:24] with no competitors. I mean, there's really mature competitors there. There's emergent competitors there. And then it's the pot of money isn't as big as people think. They hear these big numbers like a trillion dollars, but that money is used for labor, literally soldiers, that's used and supply chains and logistics. And then some is used for technology. But there's like a lot more cars than tanks, you know, and there's some like high level numbers you could just look at and say, OK, like it's not the spending is humongous, obviously, but it's probably tapping into specific budgets. [30:54] The global automotive industry is 3% of the world's GDPs. -Wow. -It is the biggest of the industrials. And the industrials is one of the biggest markets, period. And so when you add defense and construction mining, all these other things, that's like five-ish some percent of the GDP. So for our-- I think the magic trick that we're playing as a dual-use company is, how do you build things that can work across these different verticals?

[31:16] you know, without a lot of augmentation, and then that makes everything cheaper. And that's a, you know, that's kind of... And the companies have done this before, but our automotive suppliers before, our defense suppliers before, they'll overlap each other. They'll make something for, you know, one type of vehicle, and then they'll actually resell it for another type of vehicle. Does your own work change as you now, you know, as you work with the military or whatever? Because, you know, obviously, you got to know more about the government. You got to know more people at the government. Like, what does that change for you? I'm also now curious after that to ask about, like, what have you learned? [31:46] What do you think about the tariff situation? What do you think about just like the overall climate at the moment? - Yeah, so I mean, I've said this many times where I'll repeat it, which is, I think, [31:55] American tech companies, small and large, are-- maybe obligated is too strong of a word, but-- [32:02] Nothing comes out of an obligated-- like, you're almost obligated to help the US government. If you're a citizen of this country, you get the benefits of being a citizen of this country. And you-- it is such a privilege to say, "Well, I don't want to work with defense or the government." It's like, "Well, you are getting a lot of the upsides of being an American." Right? So, at some moral or ethical or mission foundation, we believe it's important for the company. And this is-- you know, we started our defense work a year after we started the company.

[32:32] And it was less in vogue then. I think now it's no longer controversial, frankly speaking. So I think that is a... But the defense ecosystem is very different. [32:41] how you allocate dollars, how you talk to the DoD. So we do all that stuff, including all the way to, you know, having facility clearance, having cleared engineers, and cleared senior executives who can work on top secret things. You don't really have that in trucking. Like, it is-- Now, don't get me wrong, the trucking industry, as an example, is very nationalistic, is very global, is very competitive, but it doesn't have the same connotations. Now, for other countries, actually, trucking and construction, mining, and cars are like their defense industries. [33:11] To Italy, Ferrari is a big deal. [33:14] You know, to Hyundai. Hyundai to Korea is a big deal. Toyota to Japan is a big deal. Renault to France, right? Scania to Sweden. These are... I mean, not only there's like some emotional thing about Renault and France, [33:28] there's a jobs program involved. In the Valley, we forget this very thing that exists in defense and construction. In the Valley, we just have the top part of the pyramid, which is kind of highly paid engineers and the support staff that are around there. In these other industries, you have a giant, you know, workforce. So you got the executives and then the engineers, and then you have a huge labor pool who builds this stuff, maintains this stuff, takes this stuff to the field. And so, you know, when a factory opens up, [33:55] that's 3,000 to 5,[redacted address] of living. So that, we understand the defense context,

[34:04] you know, this senator wants this new plant in their, you know, state or their district. But it actually exists in all the... [34:12] commercial industries as well. Where a new factory goes is actually a big deal. - Yeah. - And that's why you have these taxes. So for us, we've just had to become way more sophisticated about working with a government. It is its own complete [34:25] It's its own universe. It's very different. - I wanna talk about... - For any founder listening, I wouldn't walk into the defense vertical, like, with some casualness. It is... it's its own universe. It's not like building a B2B SaaS app. [34:40] No. It's just a very-- the way that things are bought is very, very different. [34:44] Yeah, actually, I want to talk now about like the company and culture and management as a company that is simultaneously deeply Silicon Valley and also deeply, you know, other parts of America. I remember during COVID that you [35:01] stayed i think pretty much in person five days a week we've been a person person as long as the government has allowed us we have been in person i feel like i think i remember you telling me once that like the day you were allowed to get people back in with masks you're back we were back and like everybody else was like freaking out you know and you know going remote because covet is a conspiracy no kidding let's do conspiracy theories next um i would like to do that yeah i mean i think but there was that you know you're down in sunnyvale it took me like five hours to [35:31] - Look at which square footage you have. - I don't know where we are. - This is Sunnyvale. - Yeah, I mean, you probably, I mean, now it's cool to do defense, but I bet you, knowing, you know, just the climate we've lived through, I bet you it didn't feel, you know, so great to be supporting

[35:45] defense at some point in Silicon Valley in history. So you've done a lot of these things. And so I guess I'm curious what the [35:51] common threads on the culture have been to be a Silicon Valley company that's also... - Like a little anti-Silicon Valley. - A little anti-Silicon Valley. Yeah, yeah. I think it's the Sam Walton in his great book, Made in America. And he says one of the things he says, "He's always swimming against the stream." Like just as an instinct, swim against the stream. And so I think that's really... which is like, if everybody does the thing, it's probably like priced out somehow. So if you're trying to build a company in San Francisco, you're priced out in the sense of, there's other companies like you. [36:21] companies like in Sunnyvale, but there's a lot of good engineers, everywhere from South San Jose all the way up to, like, let's say, Burlingame, Red... We have, you know, a big double-digit percentage of our workforce comes from San Francisco down in Caltrain. So I think that's a part of it. It's like, some of it's just skepticism of the mainstream, but really it's like, how do you carve your own path? And then we're very first principles thinking, so we just debated out. [36:44] Take the COVID example. I'll give you that. You know, it sounds like we had this clairvoyant view. The way we made that decision is we had, I think it was four or five different meetings. The early applied people, the parents, the new grads, um... [36:58] SF people. It was like this, like, we had-- And they're all, like, discussions of, let's say, five to 15 people. And the discussion was, "Should we go fully remote, or should we go back in office, or should we do hybrid?" And, you know, I did the GitLab investment at YC. So I'm not against remote, like, at some fundamental dogmatic level. Radical pragmatism. That's the name of the game. And so that whole discussion can boil down to-- We originally were, like, hybrid. Nobody wanted to be fully remote. That was across all the groups. The new grads, the parents,

[37:28] Nobody wanted to be fully remote. So we're like a hybrid or full-time office. Within the hybrid group, we have customers coming on site all the time. We do interviews every day. So then we were like, logistically, how do we do interviews? Only Wednesday, Thursday, Friday? Well, a CTO comes from, you know, from Toyota. [37:42] They're not gonna tell you-- They're just gonna come to whatever one-hour slot that they have available when they're in Silicon Valley. And so then we're like, "Well--" And then we have offices everywhere else. We have-- on both sides of the time spectrum. [37:54] On Munich, you know, when we do all hands, we have to do them at 2:00 p.m. because in Tokyo and Korea, it's 6:00 a.m. and in Munich, it's 10:00, 11:00 p.m., depending on the time zone. And it's just like... So you're really covering the full spectrum. It's like the three corners of the world, right, in terms of time zones. And so... [38:10] All of that led to, OK, we're probably in office. And then it was like, well, we should probably be in office as a consistent thing. If all these principles are true here, they're probably true in Germany, they're proven in other places. So we made the decision. What we didn't do is [38:23] what was everyone else thinking? What was everyone else going to do? [38:26] If there is a version of that, I mean, I say this, like, kind of tongue in cheek, we're like, whatever the big companies do, we should do the opposite of. [38:32] So whatever Google does, we should just do the opposite of that. And ironically, before, Google was never remote, -and then they were all remote. - Yeah. And so we just were always flipped to that, you know. I think we got to be like, when we started the company, we very seriously considered being a remote company. [38:46] How do you feel when you see things

[38:49] as a sort of like a, you know, intrinsic contrarian? How do you feel when you see the world come around to you? Does it make you uneasy or are you like, "I told you so"? You know, if there's a person that I'd love to emulate, if I could, it's Andy Grove. You know, I mean, we as a company and part of onboarding for managers, we read high output management. - I mean, that's... - It's like one of my favorite managers. - Yeah. - And so you, you know, and then like we, you know, the joke I make to, again, like these are kind of weird things. The joke I make is like, the engineers is like, wear a collared shirt because the norm is to not wear a collared shirt. [39:19] Contrarian almost just a [39:21] push the principles that you pulled so dearly, that everyone should be casual, or everyone should be formal. Like, whatever it is, you're just pushing it. And then in that, you know, in that conflict, is when you actually discover what the truth is. Without that conflict, you live in these assumptions. [39:36] and then you don't know what the truth is, because you might think something slightly different than me. So a core part of our culture is just... [39:43] Debate, debate, debate. [39:44] say what's on your mind, let's have that conversation. That doesn't mean it has to be disrespectful. It doesn't mean that it's a culture of constant yelling. And you don't have to do that stuff. But I think there are get-along cultures, and there are cultures that are actively pushing each other. [39:59] And we're definitely in that category. Do you have any, like, contrarian beats you're on right now? [40:04] Like, I mean, what's the most... I mean, yeah, I do. I mean, this is the macro stuff. I mean, 'cause you... Macro being this month, this year, this time, you have big, you know, [40:15] amount of investments going into broadly Gen.AI, specifically, in humanoid robotics, like, right now in this universe.

[40:22] -I mean, I just think, where's the business models? - Yeah. I mean, I just think, where's the business models? Because when you take applied intuition as an example, in 2016, 2017, lots of companies are getting funded in autonomy. [40:31] billion-dollar raises were the craze. -Autonomy was a hot, hot thing. -Yeah. All the tech currency lists everything, it was all autonomy, autonomy, autonomy. And now it's like, you know, self-driving is almost out of vogue. It's coming back because the Waymos are starting to flood San Francisco. But I think, like, the point about, say, the human-aid robots or Gen AI companies, I think maybe they're real-- I don't know if this is true. [40:51] I don't know if this is true, so I could be completely wrong. Probably the really good ones are gonna emerge in four or five years from now. [40:57] Because the ecosystem is going to learn a lot about the space, and then the most important thing you're going to learn is what the business model is. [41:04] I would think based on [41:06] how you spend your time. You would think that we will end up with very smart humanoid robots, though. [41:11] So you believe in the product happening. You just don't believe there's a good business there yet. [41:14] -It just has to be found. - Yeah. It might even exist. It might even exist in a company that's well-funded right now. It just has to be discovered. And is the reason you think that is 'cause you're like, "Why should I build a humanoid when I could have a caterpillar, or I could have, like, a machine in a factory doing a purpose-built thing?" Yeah, exactly. [41:30] Like, it's just first principles. - Uh-huh. - Even though, like, it's-- We had one of those Chinese unitary-- - Like, why do I need a human-shaped robot? - Yeah, yeah. Though it's so emotional. We had one of them in the office with the Chinese team here, and they're showing their-- you know, that's like, [41:43] Really, the whole company gathers around. I mean, hundreds of people. It's like a celebrity. -We've had Marc Andreessen walk down the house. -That's real fun. We've had Sam come, and you didn't have as many people than this, you know, humanoid robot.

[41:58] You can't discount that. [42:00] to fool you as an engineer or as a founder into thinking something is actually a good thing than it not so just like step back and and have that debate of like what really is the thing here yeah and i think for applied we did that we believed in autonomy we built a horizontal business where you can give the tools to all these people to build and so then you're kind of abstracted away so i think there's some version of that the companies by the way are trying to do the applied play in humanoids as well right now so the ecosystem gets more more more sharp i feel like [42:30] on like Wall Street, whether it's like at a hedge fund or like a Goldman or something, I feel sometimes surprised that actually public investors are [42:41] you'd think that they are short-term minded, and they're not, is my experience. And I think actually in some ways, [42:46] I think there might be like a U-shape where it's like early stage investors think very long term, real like public investors think very long term. And maybe it's like the growth investors that are like the most short term minded because they're just getting taught to think about like, [43:00] how long till liquidity and what's my mark going to be there? I think it's all over. [43:04] I think the brain wants to find that pattern. I don't think there's a lot more noise than signal in there. I think I've-- [43:12] I've certainly met seed folks who are trying to flip their money by Series C and are just looking at the markup because they want to get the next fund raised. So they're optimizing to invest in what is going to get marked up. [43:24] Which, by the way, is not a bad strategy. 'Cause I know a specific investor who's-- that's their strategy and done exceedingly well. Their view is just like,

[43:31] Ride the hype. [43:32] interesting because the hype is going to get funded again yeah and then if you it's the old classic question what does a company make money or does money make a company yeah the reality is if we're starting two humanoid robotics companies and i raised three million you raised 250 million yeah that's a better out of you're better on you're gonna win and everyone thinks you're gonna win yeah employees think you're gonna win your customers think you're gonna win the target who's gonna maybe yeah exactly exactly and then so like uh it's self-fulfilling absolutely so i don't think [44:02] that are like, you know, I can see that they're gonna dump on... when the public-- the company goes public, 'cause they're just looking for that 20% bump. [44:09] you know, return. And then you met, like, you know, early stage investors that wanted to dump early stage. I don't think there's truth in it. Do you feel like as the job's changing, it's making you change, too? Like, [44:18] Do you think that doing this job changes who you are? [44:23] And the reason I'm asking is because I felt like in a lot of ways, I mean, I think whatever work we do changes in some ways, but I felt like there were so many things about, you know, last was not as big as applied, but, you know, there's hundreds of people and, you know, you experience a lot of those things and, um, [44:38] I felt like it was very hard to not be, I think in many more good ways than bad ways. It changes your psychology, your behavior, like it does update. [44:48] your software a little bit? Yeah, yeah. I'm not removed enough from myself to have that objective third-party view. I'm sure I've changed, without a doubt. And it's impossible not to, based on the surroundings. But I can say, again, maybe it's like rationalization, you never know, I feel more myself

[45:06] today than I've ever felt. That's great. Yeah. I mean, it's like, I feel that's a huge privilege. That's amazing. Yeah. And you can just like settle into yourself and still have a long way to go. Yeah. Maybe that's a good thing though. You're getting old. It's like, you just come to peace with like, these are things I'm good at. These are things I'm not good at. For me, I'm like, even just like having kids takes a little bit of the edge off of just like, I don't really care about a list of things. There's a list of things that I used to care about that I don't care about anymore. And I guess there's just a lot of things about getting older that [45:33] -update that. -Yeah, there's one thing that reminded me, that I want to repeat, which is my last co-founder had this line, where he said, Michael Ma, and he said, "No matter how successful you become as a founder or, you know, venture investor or whatever, if your kids don't like you, you're a failure." -Yep. [45:51] And that just, like, for me, I think 10 years ago, that would have kind of made sense. To me, it's like-- - Now you're like, "That is so true." - That's-- There's nothing more true than that. - Yeah. - So true that it doesn't even belong in this conversation, and I want to interject in it, because I believe it's so absolutely true. Then the Gandhi line, "What's truth?" "Truth is what stands the test of time." So when we are, we will all die. When we're-- Hopefully, we make it to 80, 90, we're laying in that bed. [46:15] you're not gonna think about this fucking podcast. You're not gonna think about the fundraising. - Oh, this is a good podcast, though. - Yeah. - I'll probably watch it one more time later. - So what are you gonna think about? You're gonna think about your kids. You're gonna think about, "Oh, I had a good working career." You know, "I had a good relationship with my parents." Well, that's the thing you're gonna think about. [46:30] And then everything else is kind of grazed out. And so I think becoming more...

[46:36] okay with the professional stuff and being like, "Hey, I'm gonna always give direct feedback." - Yeah. - Like, that's just gonna be-- I just cannot lower my bar. I ask on a weekly basis on my team, "Am I just being too, you know, pedantic?" And one of the team members on our team is one of our engineering leads. He said this at WhatsApp. I was like, "I don't know if I'm just being an asshole here, and I'm actually just--" And he goes, "No, no." [46:59] your only role in this company is to maintain that bar. And we maintain that bar, everything else, all the products will get taken care of, all the-- [47:06] But as soon as you lower that bar, everyone becomes more mediocre. And so I think you as a founder, [47:12] as not only you as starting your firm, but anybody out there who's starting the thing, you have to kind of figure out, like, as the company changes, are you becoming more of yourself, or are you becoming less of yourself? Then you kind of ideally want to orient that to more of yourself, and then you become more comfortable. And yeah, but it's not easy, 'cause I think your brain just rationalizes it. One thing is absolutely true, is what's the parallel universe where applied intuition fails? [47:33] We raised $10, $20 million. We never made a part of Mark Fitt. We might be partnering together in a venture fund. Who knows? That would have been great. Still, I would rather it work out than that. On the last note, on that topic, for founders, because obviously, you know, you saw a bunch at YC. You've been doing your own very successful one now. You angel invest. What are the things that, you know, when you find yourself talking to a founder, what do you focus on most with helping people or advising right now? [48:02] There's this book called Into Thin Air, which is about this faded Everest climb, and it was a journalist who wanted to just talk about

[48:10] Everest tourism, and he ends up being in this trip where... 16 climbers ultimately die in a blizzard. It was the worst single camp incident. And in this blizzard, when he gets hit, he's coming down the mountain. And there is a Japanese climber, and she's going up the mountain. And he sees... [48:28] He's like, "I'm a hundred yards. I just got to make it to the tents, and I'll live." And there's people who've fallen off. All this is because everyone's lacking oxygen. So everyone's kind of in this delirious state. So he's going down the mountain towards the camp. This woman starts pulling on him and says, "No, no. The camp is that way." And he's like, "No. The camp is right there." And he goes, "I looked in her eyes, and you could see that she was gone." - And I make a decision. - Mm-hmm. [48:52] Am I going to die too? [48:54] or am I going to leave her? [48:56] Obviously left her, she dies. I meet founders all the time who are going up the wrong side of the mountain. - Oh, wow. - And you're just like, [49:05] -this company's not gonna work. - So what do you do? You tell them, but they can't, because we all have to believe... -that you're doing the right thing. - You know what's so hard about that is, as a founder, so many people are telling you you're going up the wrong mountain. - Yes. - And even when you're going up the right mountain, there's gonna be people telling you that you're wrong. - There's people telling you that you're wrong. - Yeah. Still. - I think you might be still. - Yeah, exactly. - I can't tell if this is working or not. - Who knows? That's the thing, it's working. [49:31] It's working is a state in time. - Yeah. -It's not a permanent state. - Yeah. And there's a lot of head fakes right now, but available with like a new paradigm and everything like that. And I think, I think, um, so I find myself often talking to founders and having that conversation. I think it's not easy to start a company. It's really, really hard to stop a company. Yeah.

[49:49] Do you then end up in a contentious conversation, or is it usually just like, I disagree and moves on? I think you can only tell a founder. I mean, almost always an investor in the company. Yeah. Yeah. [50:00] And I'm saying, "Hey, I'm not telling you because it's in my financial interest for you to stop this. I know you have six million in the bank." [50:06] Thank you. [50:07] This isn't what it looks like. And I think the crazy thing, you know, and there is a lesson to be taken away where applied, [50:13] Again, there's a parallel universe that doesn't work. -But it hasn't been hard. - Yeah. [50:18] Yeah. [50:18] - It's like it's been pulled out of you the whole time. - Yeah. - Yeah. - Actually, this is something to YC's credit that I really, I mean, there's many things to YC's credit, but this point I give to them strongly, which is they will tell founders pretty directly if this isn't working. And I think a lot of investors aren't willing to have those kinds of conversations with founders because we've gotten to a place where everybody knows that, [50:39] screw the haters. - The Casser Yunus is maintaining a list of the people who passed on the company. And when it crosses 100 billion. - Yeah, yeah, yeah. Well, at our next podcast, that's what we're gonna do is we're gonna go through in a few years. - Yeah, we're gonna go through this. - But I can tell you, just again, on the VC side. - Yeah. [50:53] It's very hard if you're looking at a Series A company and you're passing, [50:57] you don't know if it's making the right decision. Yeah, probably not. So how are you like, you're like, I'm not going to invest, but you might actually be on the right thing. For sure. 100%. It is very hard. [51:07] all right well um i got a lot of your time here this was awesome i really appreciated it thanks for it went by in a flash it was fast yeah thanks bunch