Joe Lonsdale

The presidential campaigns of Senator Bernie Sanders and Senator Elizabeth Warren sparked national debate about many progressive policies that failed to gain mainstream attention in the past. Both senators are pitching a “wealth tax” as part of their arsenal to disrupt an economic system that they believe is rigged against common Americans.

American libertarianism has become a useless, purely performative sort of politics. Many libertarians I know seem blinded to the fact that the American social contract has fundamentally changed in character. At least since the New Deal, the political reality is that government involvement in our lives has increased in irreversible ways.

America’s nonprofit sector is booming. There are now over one and a half million nonprofits registered with the IRS, contributing nearly one trillion dollars to the economy. Private giving has risen to $430 billion, the highest level ever. Such private philanthropy often accomplishes things government services cannot.

American capitalism is under siege. Nationalist-Right politicians defend reincarnations of 20th century industrial policy and blame weak wage growth on immigrants and foreign exporters. Meanwhile far-Left politicians including Bernie Sanders and Elizabeth Warren have popularized traditional Marxist critiques of the rich and want the federal government to nationalize banks, the healthcare system, and other sectors of the economy. Each rejects market competition in favor of expanded state involvement in the American economy.

No matter who holds power, individuals and groups have the right to spend money to communicate their ideas.

Price-signaling is the backbone of a free market. Prices allow customers, businesses, and investors to decide when there is too much or too little of some good, and to bargain if a good is too expensive.

Our government is plagued by polarization, gridlock, and special interest capture which — combined with an overgrown administrative state and poor policy in many sectors — stall economic mobility and meaningful social progress.

We have had the privilege of investing in dozens of great entrepreneurs, but we have passed on investments in thousands of others. Because we’re presented with so many investment opportunities, we tend to use heuristics as a first screen.

8VC traditionally invests in companies that tackle industry-wide problems by reimagining traditional paradigms and helping modernize some of our oldest technological infrastructure.

American drug spending is out of control. At $330B a year, American expenditures on prescription drugs subsidize pharmaceutical R&D for the rest of the planet and allow foreign governments use price controls to keep drugs artificially cheap for their citizens.

America should harness entrepreneurial innovation in higher education by financially rewarding for-profit colleges only if they help students succeed in the American economy.

America’s reactive model of kidney care enriches an oligopolistic dialysis industry, wastes billions of dollars a year, and creates worse health outcomes for millions of Americans each decade

State governments should competitively reimburse private prisons that are most effective at reducing recidivism and helping prisoners reintegrate into normal American life. Only by rewiring incentives can we attract the best and brightest entrepreneurs to solving America's mass incarceration nightmare.

CEOs shouldn’t worry about their budget all the time — on a day-to-day basis they should work on managing their company, building an awesome product, developing key relationships, identifying distribution channels, etc.

Most of our generation lacks historical perspective on justice and persecution, so we’ve put together a brief paper on how these ideas have evolved in the context of Western Civilization.

When an employee of a privately held technology company leaves the company and exercises her stock options, she typically has 3 months to qualify for favorable tax treatment.

The only way to create prosperity is to do more with less. In economic terms, an increase in productivity is an increase in the amount or quality of output generated for each unit of input. Jobs do not make society wealthier – productivity does.

For most, the word “charity” evokes concepts of altruism and justice completely divorced from considerations of efficiency and profit. The distinction between the spheres of charity and commerce is reflected in the unique legal status accorded to each, and the kinds of people each sector tends to attract.

Hello, World! Announcing Terminal, by Joe Lonsdale and Jack Abraham Talent is the technology ecosystem’s most precious resource. Innovation occurs when gifted and hard-working entrepreneurs bend their wills to solve the world’s most challenging problems. A primary indicium of a healthy startup is the talent of the engineers involved. At Palantir, Addepar, Zenreach, Milo and the other companies we have started, we focused on building the kinds of organizations that attract the best minds. There is no formula for innovation, but the best proxy is a group of brilliant, highly motivated people clustered together, working towards a shared goal.

Good things happen in eights. In 1957, Eugene Kleiner and seven other engineers quit their jobs at Shockley Semiconductor Laboratory. Kleiner, a Jewish émigré of Austrian extraction, secured a $1.5 million investment from Sherman Fairchild to found Fairchild Semiconductor, the first major computer chip manufacturer in Silicon Valley. In the subsequent decades, the “Traitorous 8” founded a host of spin-off companies so wildly successful that Fairchild and its offspring are today reputedly worth over $2 trillion.

This podcast is from June 10th, 2017

I am not by any means a philosopher although I have worked with some talented people in the discipline. But certain philosophical concepts deeply inform the way I think about the world. The idea of "opposing truths at extremes" is a powerful concept that I came to appreciate in my twenties.

An increasingly popular concern is that robots will eat up labor’s share of income at an accelerating rate, leaving ordinary workers impoverished and unemployed. A common topic at dinner conversations in Silicon Valley is universal basic income, and the typical argument advanced for UBI is that we are destined to indefinitely continue losing jobs faster than we replace them. Variants on this theme have circulated since the dawn of the Industrial Revolution. Improvements in farming technology have been greeted with skepticism since ancient times for these reasons. Mechanical contraptions for sewing and other tasks were decried as potentially ruinous to workers in Elizabethan England. Around the same time that working-class Luddite Rebellion and Captain Swing protestors rioted and destroyed machinery, upper class Victorians issued treatises on the bleak prospects for most workers.

In 1930 the economist John Maynard Keynes wrote a short, influential essay entitled Economic Possibilities for our Grandchildren. The Depression had not yet hit rock bottom, but Keynes was worried about a macroeconomic trend he called “technological unemployment” — namely, “unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”[1] Automation anxiety is an ancient phenomenon, and includes a lineage of distinguished British thinkers dating back to the dawn of the Industrial Revolution. In the following decades, Keynes’ essay became the focal point of a large literature on the idea that machines will create widespread structural unemployment.

I want the loss of anyone in the company to hurt us, but not fatally, including the likes of me. Every job performance review I give my direct-reporting managers includes the question, ‘Who’s your replacement? If you don’t have one now, I can’t consider you for bigger things. If you don’t have one the next time I ask, you may no longer be a direct report.

We recently put together a speech outlining the major functions of a modern Venture Capitalist. These notes from the speech articulate our basic framework for thinking about the shifting nature of the Venture Capital industry.

This blog addresses a recurring topic for our CEOs — how to think about the value of experience at a technology startup, the seniority of a company’s team, and when it’s the right time to make certain executive hires.

Our age is not short of great ideas — of ways new technology can be applied to fix global industries and increase prosperity. But we are starting to notice a serious deficit in Silicon Valley: a shortage of great leaders. A common refrain from startup entrepreneurs is that they have no problem attracting high-energy contributors, but are having difficulty finding talented, driven executives who can lead and inspire. It is growing harder to ignore SV’s leadership deficit as one of the central challenges for companies fighting to scale — and as a central question for Silicon Valley’s impact on the world at large.

Since the recovery from the dot-com crash, doomsday prophets have consistently warned of a bubble in the private technology company ecosystem. This may sound like a valid concern to Silicon Valley-outsiders confronted with a spectacle of far-fetched startup ideas, wild blow-ups, and the transfer of large sums of money into the hands of audacious twenty-somethings. But we are not in a tech bubble. Iterative, trial and error experimentation is the mechanism by which firms drive the evolution of the market economy; it is the natural adaptation of industry to new technological paradigms. Moreover the amount of money involved in this vital discovery process is a tiny fraction of total economic output. Like any industrial revolution, the present era is one of rapid flux of the economy in response to new technological possibilities. Economic historians looking back on the present period will characterize it as the early innings of Golden Age of the information technology revolution.

Secretary Shultz is one of the great men of our age, and I am lucky to have gotten to know him over the past several years during his time at the Hoover Institute at Stanford. Born in 1920, he has lived an extraordinary life and is still actively working on some of the most important problems of our time including nuclear non-proliferation and mentorship of government leaders.

Pittsburgh, which was founded two centuries ago in 1816, was one of the great economic centers of the United States. It was the 8th biggest city by population in 1920, and it peaked at over 700,000 in the 1940s. A geographic center where the rail lines met between cities including Chicago, Cleveland, DC, and New York, Pittsburgh was the home of great industrialists including Mellon, Heinz, Frick and Westinghouse, to name a few who many of us still recognize today. During the second world war, Pittsburgh itself produced as much steel as each Axis power and was at the heart of American industrial success.

The convertible note is a useful and common financing structure in Silicon Valley. It’s a form of debt that is really more a type of equity — one where the valuation hasn’t been determined yet.

Although certain TV portrayals are clearly unrealistic or over the top for comedic value, this episode dealt with a lot of issues we face in our industry.

Some of the most talented people I used to work with at Palantir founded Blend, and it exemplifies much of what we have written about at Formation 8 and now 8VC (www.8vc.com). Blend aligns with our views about how to create a top technology culture and focus on an uncrowded, yet critical, vertical. It also exemplifies the ‘Smart Enterprise’ theme, as it replaces legacy infrastructure with deep Silicon Valley technology to help an underserved industry and create tremendous value for American lenders and borrowers alike.

Congress gives the Pentagon $600 billion a year: our largest non-entitlement expense. In return, the military must spend money efficiently and report back to civilian leaders. Fulfilling these obligations builds trust and ensures every dollar in the defense budget benefits America and our sons and daughters who protect us.

We believe the technologists and entrepreneurs of our generation are in a position to have a more widespread, positive impact on the world than any group in any previous generation — and that we have an ethical duty to recognize and act on our power. We believe in the power of technology and business to enable greater prosperity. We believe in progress, and in markets, and in creating opportunity for all.

Lately I’ve had a strong sense that we’re living at a particularly important time in history, and I feel really lucky to get be able to interact with a lot of the actors firsthand.

One of the fun things about venture capital is you are constantly learning new ideas and strategies from one business and then applying them to others. Inasmuch as there is a useful purpose to what we do as VCs, I tend to think it’s our duty not only to mentor entrepreneurs and executive teams, but also to learn from them and the others involved. We can then pass on lessons to aid the startup ecosystem and help businesses succeed and grow their impact.

Technology is not reaching its full potential, but we think that world-changing applications are closer (and different) than people realize. Information technology has advanced dramatically over the last few decades, and it is starting to revolutionize nearly every industry. Silicon Valley entrepreneurs and their teams are focusing their talents on new areas, because nearly every industry can operate much differently and better than it currently does. The realization of this potential in the coming years will lead to a shift in global prosperity.

There are hundreds of millions of people around the globe who could safely repay loans but nonetheless do not have access to a line of credit. Financial institutions in developing economies are broken and inefficient, and hard-working people have not been given the chance to establish a credit history. The inability of middle-class people to receive loans in developing countries has had a stifling effect on economic growth and prosperity around the globe.

There are 5.7 million businesses in the United States, 89.9% of which have fewer than twenty employees. In aggregate, small and medium businesses (SMBs) produce nearly half of GDP and account for roughly 60% of new job creation. They are the lifeblood of the American economy.

Entrepreneurship isn’t easy but if anyone has made it look that way it is Joe Lonsdale, founder of Palantir. Here is his advice on becoming a great entrepreneur.

Early last year, I wrote an article explaining how our team views the concept of duty for leaders in the technology ecosystem. We believe that this duty involves looking beyond conventional startups to study complex industries and using technology to tackle the biggest problems we can find.

Building an engineering- and technology-led culture is the hardest and most important challenge faced by entrepreneurs building tech companies. Great technology companies are valuable not because of their IP but because they are engines equipped to discover and build the tools necessary to solve hard problems and achieve their vision. People power these engines, and getting culture right in a young, fast-growing company requires a significant, ongoing investment in strategy and tactics that involves the entire team. We’ve noticed many of the great technology companies share several key characteristics and want to share what we’ve observed as well as highlight three foundational principles that lead to top engineering cultures.

Healthcare consumes more than 17% of US GDP, and our government is on course to go bankrupt based on promises it’s made in the space. This is nearly twice what other major countries spend, and those countries aren’t exactly efficient either — but we in the US are worse. Whether or not you blame companies, our regulatory framework, or both, this is clearly a huge problem.

The term ‘big data’ is a pervasive Silicon Valley colloquialism. The expression now describes a range of technologies, from back-end infrastructure to front-end consumer software applications. This development corresponds with a trend: the allocation of billions of dollars by investors into ‘big data’ companies which, simply put, stand little chance of becoming transformative companies.

Government represents one of the most challenging sectors in which to build a business. Yet the challenges represent opportunities for those bold enough to tackle them. Winning requires patience, deep pockets, and cutting-edge technology.Below we discuss four key points that indicate dramatic upside for the best companies: 1) Old technology provides opportunities for order-of-magnitude improvements; 2) Big institutions signal huge markets; 3) Industry pressures demand new efficiencies; and 4) Challenging sales cycles increase barriers to entry and foster customer retention. One can expect similar dynamics across other old-line industries like finance, energy, healthcare, and education.

How does one build a defensible business? In today’s startup ecosystem, where seed financing is abundant and the barriers to building scalable IT tools are steadily diminishing, the question of how to maintain a competitive advantage is one that must be at the top of every entrepreneur’s mind.Over the past 15 years the consumer space has consolidated around a few massive companies: Google, Facebook, Apple, and Amazon. Even in the face of tens of thousands of would-be competitors with low distribution costs, these players maintain large, loyal user bases and consistently generate billions of dollars in revenue. They accomplish this by strategically controlling the most valuable commodity in the Twenty-First century economy — information.

Over the last hundred years, five major trends have dominated Silicon Valley (SV): “Electronic Tools,” “Semiconductor,” “Enterprise,” “Telecom,” and “Consumer.” A sixth trend has emerged. We call it “Smart Enterprise.”

Please see the attached notes on seed-stage or “angel” investing. I hope this document proves a useful guide and perhaps it will help you avoid a mistake, especially those of you in New York where the technology-investing culture is taking off.

The global economy will transform in the next decade. The present post-industrial economy, in which developed countries experience the limits of extensive growth, will give way to a digital global economy that requires different skills for workers and investors. Fortunes are at risk. Last-generation business models will collapse and a new generation of investors and entrepreneurs will create value across old-line industries through new trends in Information Technology (IT).

These lessons summarize what Joe Lonsdale learned from working over many years with Peter Thiel, our chairman and one of our founders. These are very much worth reading for everyone at Palantir — they will change the way you think.

By the time that Alexander the Great’s armies had conquered most of the known world, it had become much harder to get the men to fight — even for one of the most talented and inspiring leaders that has ever lived. Brought up in the world’s leading martial culture, and having just conquered the rest of Greece under King Philip of Macedon, Alexander’s father, the soldiers were trained in the coordinated use of the giant pike sarissas, better battle organization and physical preparation, and possessed the unbridled spirit of free men. Their talent and advantages allowed them to sweep out of Greece and to cut through the Persian Empire and then anybody else in their path — whether they were liberating or enslaving is a matter of debate, but they believed they were liberators, as did Livy 300 years later. Only men inspired by a higher cause could have achieved so much.