Building a Multi-Billion Dollar Hard Tech Company | Qasar Younis, CEO of Applied Intuition | Ep. 9

[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 a bunch for doing this. You're one of the CEOs that I look up to the most, but there's no content about you online. Wow, I'm deeply flattered. When I started this, I was like, I've got to get you. [00:30] single one. So I want to 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 [01:05] a VC firm. You could have been a COO at a public company probably. You had a bunch of options. Why'd you do that? Yeah. First thing is I didn't quite know because the first company I had 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 going to fail. 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 we didn't raise a dollar. It's like a tree falls in the forest. If a company dies without raising money and no one even knew it

[01:35] The second one was 10 months when it was acquired by Google, and it was a good outcome for us financially. We were like three poor kids. You didn't have the grind. 10 months is nothing. You blink and 10 months is done. 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. [02:05] as an employee was, my co-founder here, Peter Ludwig, and I, we're thinking of doing a robo-taxi company. And I 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 reevaluate 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 going to do, and then 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 got to really listen to that feedback. And I went to PG's, Parlegram's house, and said, oh, what do you think? And he said, well, 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

[03:18] 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 14, 15 years later, is very different than Google at that time. At that time, you know, NVIDIA was near bankruptcy. Apple had come out with this MacBook Air. It 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 a thousand 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. But it wasn't that hard to leave because I think I've never emotionally felt that I wanted to be an employee forever. That was a part of it. [04:17] So like getting the exposure to those people, I think was really important and like made the transition. Leaving YC was actually the more difficult decision because the reason that you said. Fundamentally, I think it came down to. [04:28] 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] They're great. They're great investors are kind of like thoughtful, academic, independent, contrarian to some, maybe even to a fault. Those are like 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 than [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] 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 other people want to do it this way or you're doing it that way. I would say my two – I have many faults, but two kind of glaring faults in my disposition. One is I do work a lot almost to a degree, which is – 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. So I grew up poor. So it's like deep in my, like, you know, I don't say this as like some sort of like back patting, but I had to do 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. 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 CEOs and founders and they all work like all the time. But at Google, I remember people asking 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 doing being done wrong, I will, you know, take my deep breaths. And I just 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 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 going to do. [07:37] at 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 post-it notes. [07:51] Each post-it notes is five years. So how many of those do you get? Six? Yeah, maybe. [07:56] eight, maybe if you're lucky. You get to write what you're going to do in those. So, you know, Google was one of them. Y Combinator was one of them. Harvard Business School and Automotive Engineer. Yeah, I'm running like I'm already four post-its out. Yeah, right. I'm already four post-its out. And that's before 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. It's funny, I'm 35 and I just did this, you know, starting, you know, being an investor after having been a founder. 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 had decided to, between deciding to leave YC and actually [08:44] I see 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, '60. I had that time and their view was like, hey, [08:53] 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 going to be, you know, Andreessen Horowitz Unis. It's not going to be Kleiner Perkins Unis or whatever, you know, Coastal Unis 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 in hindsight, the narrative is going to be very easy. Like I was an automotive engineer and I would do software and AI for business. [10:01] of vehicle intelligence, machines, cars, trucks, tanks. It seems so obvious, but at the time it was not like that. It's funny because 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. So your brain just rationalizes the reality. But I can tell you 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. 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. 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, you know, in sync and harmonious. [10:54] I have – 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, 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're making decisions every day, which are always in the gray zone.

[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 the cereal and whatever. 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. YC was huge in that. You just see the you see a 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, which is kind of. So the foundation was just crazy strong on both of those fronts. 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

[12:43] Michigan people, they're Sunnyvale people. It's less the, you know, 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, you know, we grew up in factories. I've literally worked for many, many years in factories, go to General Motors Institute. It's just a very different, and it's not obvious when you talk to me. Yeah. I'm just a Silicon Valley guy. I worked at YC, worked at Google. Like, that's not, you would say, well, what are you talking about? That's not where you came from. Yeah, but that's how it came from. Right. And so where I'm from, Silicon Valley is being an immigrant. That's very Silicon, [13:13] not, which is like being very Midwest. And that way, like the Mark Andreessen's and, you know, we get along a lot. He's similarly from the Midwest, Peter's similarly from the Midwest. And you can send some of this tray and you can send 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, then it was like, oh, this is my thing. Like I can just make all these decisions. And you're [13:43] early phases is 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. 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 like to the what our plan is. I mean, we, 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 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. [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 thing. We were working at a Flint V6, V6 engine plant in Flint, Michigan. And he had this sign above his desk which said, "No problem can withstand the constant onslaught of thought." [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 uh 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 no think about it hard and if you think hard enough then you'll know yeah and if you have enough experience this experience matters why not being 20 and being

[15:41] And it's going back to that whole thing of like, um, [15:44] Being very clairvoyant about what you're good at what you're not good at know how the market is going to actually 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 and [16:08] the business would open. And just for everybody to get on the same page of what our business is, we have three 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 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 or 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 is manufacturing, somebody else is making. And so, [16:55] you know, that you've already seen 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 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 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. [17:35] And it paid for my college. And I worked at General Motors and I worked at Bosch, both in the U.S. 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? Is it the whole thing? The whole thing. I like the cars and the engineering that goes into the car. So, you know, like there are not a thousand YouTube channels 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. [18:05] and off-roading. So it's a giant community. Are you more likely to go deep on a really cool engine or a supercar? [18:14] Both. I mean, great engines are in supercars. So, I mean, I absolutely like it. But you like the whole thing? Yeah, I like 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 going to go to work on cars? I go to the General Motors Institute in Flint, Michigan. What was that? What was the GMI like? [18:42] So different than any school. I mean, I grew up in St. Louis, Missouri, but I have no frame of reference on this. So, so, um,

[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. [19:20] with you for those five years, and then they pay you 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 well-oiled machine. 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. They call it the West Point of Automotive. [19:50] the it is really an industry school does this exist in other industries in the same way i haven't west point exists and i 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 um but yeah so when you go into that world you can imagine the guys who are at gmi and it's almost all men it was there wasn't a desire to make it a like a gender balanced school it's like literally like 90 percent men yeah and um

[20:20] in and you have to do this corporate co-op. So it already filtered like a very particular type of person. And so… You started at 16? You started at 18. 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 [20:48] people trying to get promoted in a project and this like, you know, Pontiac that's going to 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. Tesla's right there. And like eight years into the business, like very few people actually understand 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 Andrel and Palantir and stuff. But generally speaking, they're still kind of different ecosystems. [21:33] wheel 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, he'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 he's like every dinner he had growing up, every every male adult male in Peter's family worked in the car business as an engineer. So when you go to barbecues, you have every dinner you talk about this supplier to Kata's going under what's having TWTRWs get bought by the ZF. And what does that have to do?

[22:11] Cupertino. But Silicon Valley is inside of the universe. Fast forward to 2075, Silicon Valley is just another thing. When 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, it's because it's also consumer. So you sit in cars, people rent. I worked on a '69 Mustang over a summer, and 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 did you move to Warren?" And they're [22:41] to work at GM and you're like, "What? You moved across country? I'm just here because I would." There's like this is my dream. And then that's when you meet people in the Bay Area who are like, moved 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. 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 [23:11] pretty dumb. 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 intelligence. It's a part of that intelligence, but it's not the whole thing. Yeah. What are the other big parts of the [23:36] I don't know if you think of it as like 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. 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 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 the biggest or a training group, biggest commercial trucking company in Europe. They're assembling parts, but some of those parts are getting from other folks. As we go into the future, those are going to be defragging of those parts because it's [25:16] partly an electrical powertrain 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. You can interact with it. It can run 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 normally expect. Just think about

[25:41] or this dumb tank becoming more like your phone. 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 what is your relationship like with these customers you work with because I'm guessing that you're thinking all day about what they could be doing that they might not have even thought about yet and then you're partnering with them in a different way. I mean, a lot of the word partner gets thrown around basically. [26:33] side, 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, in our, in our, in our, in our, in our, in our, in our, [26:39] company. And so it is very much like let's do product planning. So then 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's like, no, 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 customer's team feel like actual teammates. Yeah, I mean, it's extremely intimate. You're working on, [27:02] just giant projects. When you're making a new project, [27:06] truck. That is thousands of engineers that work together. 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 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, but 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 like the wheels are not going to 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 there are employee base comes from really two big pools. It's the traditional Silicon Valley, Gensui, you know, engineer or AI software, you know, background, Stanford, EECS, Berkeley. [28:08] group that we all know. Then there's a whole other group which are like the automotive, defense, construction, mining, trucking folks, and they don't really know Silicon Valley. [28:17] this group on how to work like Silicon Valley, directness, speed, efficiency, etc. And this group on, you know, safety, criticality on how these markets move, how these markets buy, like what is a vehicle lifecycle look like. And it's not as hard as you would think because you're just in it all day. Yeah. Whereas an investor or a partner, you know, for them, software is going to be anything for investor. This is like a new area altogether. Because they have to like learn two categories and they have to learn software and AI and they have to learn like vehicle manufacturers. [28:47] And then 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 is, we'll use the same products, 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 and [29:52] through non-defense uses and then you augment them for the defense. You know, 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 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 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, and supply chains, and logistics, and then some is used for technology. Right, but there's a lot more cars than tanks. There's some high-level numbers you could just look at and say, "Okay, it's not." The spending is humongous, obviously, but it's probably tapping into specific budgets.

[30:54] The mobile automotive industry is 3% of the world's GDPs. 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, and that's kind of and the companies have done this before, but our automotive suppliers before our defense suppliers before they'll overlap each. 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 know, 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? [31:46] you think about the tariff situation? What do you think about just 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 for, maybe obligated is too strong of a word, [32:02] Nothing comes out of that 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 as a [32:39] 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 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. 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. [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 uh 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 three to five thousand families who now have a way of living. So that we understand the defense context.

[34:04] you know, the senator wants this new plant in their, you know, state or their district. But actually it exists in all the [34:12] commercial industries as well. Where a new factory goes is actually a big deal 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. For any founder listening, I wouldn't walk into the defense vertical with some casualness. 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] I mean, look where we are. Look at what square footage you have. I don't know where we are. This is a site you built, by the way. 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 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's always swim against the stream, like just as an instinct swim against the stream. And so I think that's really that which is like, if everybody does the thing, it's 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, right? And we have, you know, a big double digit percent of our workforce comes from San Francisco down to Caltrain. And 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. Take the COVID example. I'll give you that. You know, it sounds like we had this clairvoyant view. [36:51] four or five different meetings, the early applied people, the parents, the new grads, [36:58] SF people. It was like this, like we had, and they're all like the good 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 do hybrid? And I, you know, I did the GitLab investment at YC. So I'm not against the remote, like at some fundamental dogmatic level, radical pragmatism. That's the, that's the name of the game. And so the, 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,

[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, the CTO comes from Toyota. [37:42] They're not going to tell you, they're just going to 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. Right? [37:54] 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. So you're really covering the full spectrum. It's like the three corners of the world, right, in terms of time zones. [38:10] All of that led to, OK, we're probably in office. And then it was like, well, we should probably in office as a consistent thing. If all these principles are true here, they're probably true in Germany, they're proven 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 do the opposite of that. Ironically, before Google was never remote, and then they were all remote. Yeah. And so we just were always flipped to that. I think we got to be like when we started the company, we very seriously consider being a remote company. [38:46] How do you feel when you see things 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 my favorite manager. Yeah. And so, you know, and then like we, you know, the joke I make to, again, like this is kind of weird.

[39:16] wear a collared shirt so you almost so i think you're contrarian almost just a [39:21] push the principles that you pull 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 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 like 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 know, you don't have to do that stuff. But I think there are like get along cultures and there are cultures are like actively pushing each other. Yeah. [39:59] And we're definitely in that category. Do you have any like contrarian beats you're on right now? [40:04] I mean, what's the most – I mean, yeah, this is the macro stuff. I mean, because macro being this month, this year, this time, you have big 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? Because when you take applied intuition as an example, in 2016, 2017, lots of companies getting funded in autonomy. [40:31] Billion dollar raises were the craze. Autonomy was a hot, hot thing. All the tech crunch lists everything was all autonomy, autonomy, autonomy. And now it's like self-driving is almost out of oak. It's coming back because the Waymos are starting to flood San Francisco. But I think like the point about human robots or gen AI companies, I think maybe they're really 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 going to emerge in four or five years from now. 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. 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 the reason you think that is because 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. It's just first principles. Even though like we had one of those Chinese unitary. Like why do I need a human-shaped robot? Yeah, yeah. [41:41] 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. We've had Sam come, and you didn't have as many people than this 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 step back and have that debate of like, what really is the thing here? And I think for applied, we did that. We believe 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. And the companies, by the way, are trying to do the applied play in humanoids as well right now. So the ecosystem gets more sharp. I feel like when I talk to

[42:30] on Wall Street, whether it's at a hedge fund or at 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 to liquidity and what's my mark going to be there? I think it's all over. [43:04] I don't I think the brain wants to find that pattern I don't think they're they're think there's a lot more noise and signal in there I think I've you know [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 because I know a specific investor who's that's their strategy and done exceedingly well. Their view is just like ride the hype. [43:32] Interesting. Because the hype is going to get funded again. 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 better. You're better on, you're going to win. And everyone thinks you're going to win. Yeah. Employees think you're going to win. Your customers think you're going to win the target. And then it's self-fulfilling. That's right. Yeah, exactly. Exactly. And then so like it's self-fulfilling. Absolutely. So I don't think there, I think I've met late stage investors.

[44:02] investors that are like, you know, I can see that they're going to dump on when the public company is public because they're just looking for that 20 percent bump. [44:09] return, and then you met early stage investors that wanted to dump early stage. I don't think there's truth in it. Do you think as the job's changing, it's making you change too? [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, Lattice 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 – [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, I am not removed enough for myself to have that objective third-party view. I'm sure I've changed without a doubt. It is impossible not to based on the surroundings. But I can say, again, maybe it's like rationalization, you never know. I feel more myself. [45:05] Thank you. [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 yeah but that's a long way to go with the company 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 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 there's a list of things that i used to care about that i don't care about anymore yeah and i guess there's just a lot of things about getting older that

[45:33] Yeah, there's one thing that reminded me that I want to repeat, which is my last co-founder's had this line where he said, Michael Ma, and he said, no matter how successful you become as a founder or venture investor or whatever, if your kids don't like you, you're a failure. Yep. 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. There's nothing more true than that. Yeah. [46:03] I want to interject in because I believe it's so absolutely true. Then the Gandhi line of what's truth. Truth is what stands the test of time. So when we are, we will all die. When we're hopefully we'll make it to 80, 90, we're laying in that bed. Um, [46:14] You're not going to think about this fucking podcast. You're not going to think about the fundraising. I was a good podcast. I'll probably watch it one more time later. So what are you going to think about? You're going to think about your kids. You're going to think about, oh, this guy had a good working career. I had a good relationship with my parents. That's the thing you're going to think about. [46:30] 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 going to always give direct feedback. Yeah. Like that's just going to be who 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 bet you 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 you listen to lower the bar, everyone becomes more mediocre. And so I think you as a founder, [47:12] Not only you as starting your firm, but anybody out there who's starting the thing, you have to kind of figure out, 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. But it's not easy because I think your brain just rationalizes it. One thing is absolutely true is what's the parallel universe where applied intuition fails? Mm-hmm. [47:33] We raised 10, $20 million. We never find a partner Mark Fitt. We might be partnering together on the venture fund. Who knows? That would have been great. I would rather it work out than that. On the last note, on that topic, for founders, because obviously you saw a bunch at YC, you've been doing your own very successful one now, you angel invest. What are the things that when you find yourself talking to a founder, what do you focus on most with helping people or advising right now? [48:01] There's a book called Into Thin Air, which is about this faded Everest climb. And it was a journalist who wanted to just talk about Everest tourism. And he ends up being in this trip where 16 climbers ultimately died 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] Base camp, he's like, I'm 100 yards. I just got to make the tents and I live. And there's people who fall in 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.

[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. [49:05] this company's not going to work so what do you do you tell them but they can't because we're we all have to believe that you're doing the right thing so hard about that is as a founder so many people are telling you you're going up the wrong mountain and even when you're going up the right mountain there's going to be people telling you that you're wrong yeah still i think you might be still doesn't seem exactly i can't tell if this is working or not who knows like that's the thing that that's things like it's working [49:31] It's working is a state in time. It's not a permanent state. Yeah, and there's a lot of head fakes right now available with like a new paradigm and everything like that. Yeah, and I think 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. [50:00] And I'm saying, hey, like, 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. Yeah. 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. [50:18] Yeah. [50:18] It's like it's been pulled out of you the whole time. Yeah. Yeah. Yeah. Actually, this is something to YC's credit that I really, I mean, there's many things to YC's credit, but at 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, you know,

[50:39] 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 going to do is we're going to go through in a few years. I can tell you, just again on the VC side, it's very hard if you're looking at a Series A company and you're passing. [50:57] You don't know if you're 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. All right. Well, I got a lot of your time here. This was awesome. I really appreciated it. Thanks for coming. It went by in a flash. It was fast. Thanks for coming down. Thanks a bunch.