 This is the Reason Interview with Nick Gillespie. My guest today is Joe Lonsdale, a founder of the data analytics firm Palantir, of OpenGov, which provides cloud software services for governments, and the University of Austin, which seeks to reform higher education. He's the managing partner of 8VC, a tech and life sciences venture capital fund, and is chairman of the board of the Cicero Institute, a non-profit working to restore liberty, accountability, and innovation in American governance. A California native who relocated his family and business to Texas, we talk about why he left the Golden State, how to curb government overreach while providing essential services, his goals for his podcast, American Optimist, and his 2020 article, Libertarianism is dysfunctional, but liberty is great. Here is the Reason Interview with Joe Lonsdale. Joe Lonsdale, thanks for talking to me. Thanks for having me, Nick. You know, let me start with something very basic. Your VC firm is called 8VC. Explain what that refers to. The 8, I mean, oh, well, you know, originally we had a firm called Formation 8 with some Korean partners, and they took formation. I took 8's lucky number in Asia. It's a lucky number, actually in Judaism, it kind of represents beyond the seven days that it represents beyond. So you can see the affinity is kind of tied to 8. It's a lucky number. And does it tie into the history of Silicon Valley? It does as well, you're right. So one of my favorite stories there is, you know, we talk about waves of innovation in Silicon Valley, and the second big wave of innovation was the semiconductor wave. It's why it's called Silicon Valley, it's the Silicon Wave for us. And you know, the guy who, one of the three Nobel Prize winners who invented the transistor Shockley, he brought eight of the most impressive people he could find to Silicon Valley, and turned out he was a great scientist, but terrible boss, and he kept giving them lie detector tests, and finally they left, and they said, this is enough of this, we're doing our own. And they got someone else to back them called Fairchild, so they built Fairchild Semi. And those eight people at Fairchild Semi, it was more of Moore's Law, it was Eugene Kleiner of Kleiner Perkins, it was the guys who built a lot of Silicon Valley, so it's really a piece of homage to the history of the tech sector. And then Shockley, just to cap that story, ended his career by promoting scientific racism. So he... It's not ideal, I suppose, either. So yeah, at least fortunately, we're on the side of the eight people who didn't work with anyone anymore. That's right, yeah. I guess another question. When did you move to Texas in 2020? 2020. 2020, good time to move, good time to buy, I suppose, but you left California, you're raised in California, you went to school in California, you've thrived in California, you co-founded Palantir in California. Why did you move to Texas, and what does that say about governance strategies? You know, there's a lot of things California has going for it, and we still have to go there sometime for things we do, California got to be really broken. I wrote a piece in the Wall Street Journal at the time. You know, I had about 1,000 people working for six companies in Austin, because you couldn't really scale companies in San Francisco anymore. It became really expensive. Basically, you know, you'd hire someone and you'd pay them $300,000, and their spouse would really resent it because their standard of living for that much money was still not very high in Silicon Valley. You know, our staff would have to drive over an hour to come back and forth, even if they were paid well. So really, really not a good place for middle class living standards. Government... Or even upper class. If you're 300,000, they're on the top two or five percent probably. Not a good place for middle class living standards either, I should say, exactly. It's like depending on how you look at it. But it's basically a lot of billionaires and a lot of people who are just getting along. You know, there's all sorts of issues in California. The home has been broken into recently, or the crime, it's hard to build things. If you get sued, you're probably guilty until proven innocence, the really bad core system. Just all these reasons why we didn't really want to raise our family there, culturally either. You know, I'm pretty moderate as a, you know, socially I, you know, but you know, there's just really crazy things going on there and you'd much rather raise your kids than we're saying. And to me, you know, a lot of my friends actually left America. They got really negative. It's really sad. Some of them went, you know, they gave me a lot of money and went to Switzerland or Singapore or elsewhere. And I really believe in America. I believe in our constitutional republic. I believe in the values that created this country. And so for me, choosing to go to Texas is like, let's stay here. Let's fight for our country, but let's do it from somewhere sane. Why, what was most attractive about Texas? I mean, cause people, you know, the four most populous states in the country are California, New York, Texas, Florida. And California and New York are losing people to Texas and Florida. What was it about Texas that you liked more than Florida? Yeah, you know, I'm, we do love Florida. We love Governor DeSantis and the rule of law there and the great policy they do. Texas. Do you like the white boots that he wears? I'm not as partial to the white boots. Yeah, that's, that's, that's tougher for me, but, but we have just passed a lot of great legislation with them. And listen, I think if I was just a hedge fund investor, Palm Beach would be a great place to live. I have a lot of mentors there. I think Miami's a good place for that. You know, culturally, Texas is a better place to build things. There's a lot more, there's a history of building technology companies here in Austin, Texas. There's a lot more engineers, a lot more, there's one of the great engineering schools that's here, a lot of great companies. If you look at who's moved here to Austin, Texas, I have a lot of my fellow entrepreneurial friends. So Elon Musk is spending time in Texas, not in Florida for the same reasons as me, I think. In Texas, you said it's easy to build here. Can you talk about that a little bit more? Cause that is something Texas is known for. I mean, it's got a lot of wide open space on the city level. Many cities don't have any kind of zoning or very limited zoning and planning ordinances and things like that. What is it about Texas? Yeah, there's, there's, there's less stupid rules. There's less bureaucrats. You know, even this house, when we were trying to do some work in back, I think we, we called the city and they said, you're in the extraditional territory, call the county. And we called the county and he said, are you all dumping sewage? And we said, no, sir, we're trying to like build this extension. He said, oh, then why are you all calling me forage? Do what you'd like. And I'm like, this is amazing, this place. It just lets you do what you want. And, you know, and also say the governor and the people here, when you call them up with a problem as a business, they say, how can I help you? How can I help you get this done? How can I help you build? In California, I think famously, when Elon Musk complained to them online, they said, F you, right? And so, so it's a very different culture of kind of working with you to help enable you as a builder and stay out of your way, frankly, versus getting in your way. Let's talk a little bit about some of your, billionaire friends who left the country rather than staying here. And it's, you know, everybody has a right of exit and that's a wise strategy. They have a right to do it. All of us, at some point, our grandparents or great-grandparents exited somewhere to come here, right? But, you know, Ed, are they doomers in a way? I mean, you are, you know, part of the effect of accelerationist movements. You are very much a white-pilled kind of optimist about the future. What's wrong with going to Singapore? Listen, I'm a realist. I think they're right that there's a lot we have to fix about America. My father raised me to be courageous and your job as a leader is you confront things that are broken and that's what you're supposed to do. That's what's part of my masculine urge is I have to fix things. I have to stand up for what's right. And so, to me, it's just not who I am to run away. And, you know, I could see the argument in different contexts in history where it did make sense to run away. Like I had Jewish relatives and some of whom, you know, fortunately left Poland on time. That was correct. I don't think there are places to run away to right now that could get away from the types of battles that we need to fight in the world, that we need to win in the world. So there's not obvious to me that liberty and freedom and markets and innovation for healthcare for all these other areas win out if America goes the wrong way. So I think we have to have that fight here because if we lose, we'll probably lose everywhere else. So are you just kind of temperamentally, I don't even wanna say an optimist, but looking towards the future and wanting to build the future as opposed to wanting to kind of preserve or conserve the present or the past? Or, you know, what goes into that thinking for you to be, you know, part of saying, okay, we need to be doing more stuff. We need to be trying more stuff. We need to be opening things up more. You know, I guess I like to think I'm an entrepreneur who sees the world for how it is, I see what's possible. I see the gaps. I see where we are now and where we could be. And I like to see, you know, I think that we can see what'll happen if we don't do something and it'll happen if we do something. And I've built a lot of companies because I realized this thing's broken, but here's what's possible. And I see a lot of those gaps around policy and government as well. And I mean, I'm optimistic that with the right builders, we could do it. I'm not optimistic that these things will just happen. I'm optimistic that if a bunch of us get together and we fight for it, that we can't win. Let's talk first about some of the businesses you built and then we'll talk about some of the policy stuff that you're doing through Cicero and whatnot. And I guess before we go on to that, like we're not gonna read tomorrow that you have a secret bunker in New Zealand or anything like that. No, actually, I don't have. Or even a known bunker. I don't have, I listen, I respect if people have bunkers all around the world. I don't think there's anything wrong with doing that. You know, I have places around the United States, but no, I'm making my stand here. I'm an American. So let's talk about AI and how that plays out. Because this seems to be the new bugaboo right now that everybody is freaking out about AI. There are, I don't know, it feels to me like it's starting to shift where people, as they become a little bit more comfortable with AI or at least as it's kind of moving through the system now, they're like, oh, this is actually gonna be helpful as opposed to this is gonna put me out of a job or make me a slave to a machine. What is the crux about, you know, kind of concerns over AI right now and why are you on the positive side of things rather than the kind of, we gotta slow down and regulate everything to death? Yeah, you know, there's really, there's really a couple different buckets I've put the concerns into. I think one of the more extreme concerns, which, you know, I think there's expressed well by people like Tim Urban and people like Elon Musk, kind of show this exponential takeoff of AI. And, you know, there's a lot of techies who, it's kind of interesting, throughout American history, we've had a lot of times where there's these messianic complexes where people are convinced that the messiah is gonna come and the world's going to end. And it just seems to occur every couple of generations. And this is a kind of a secular version of a messianic complex that they're arguing for and the idea of being in the single area. But you don't know if it's Jesus or the Antichrist, right? I think you could argue either one actually, very interestingly or analogs of either one in some interesting ways. And so people are saying, yes, this thing takes off, it starts to improve itself. And listen, it's very impressive how well this is working. And so how are we going to have brought to bear a new form of God effectively that's a thousand times smarter than people and just basically runs the world in 10, 20, 30 years? I think it's pretty unlikely, but I think there are smart people who believe that's the case. And that's a worthy conversation. You're a smart person and you're not betting on that. You're betting on something else. You know, if it actually turns out that it is possible to create that with this technology, I don't think we're gonna stop it long-term anyway. And I don't know if there's much I could do about it. So we have that debate. I think it seems pretty unlikely to me. I think it seems like it'll take a lot longer than people think. What are the things that AI will do for people that they're not kind of understanding? What's the value? So there's the two buckets. There's the psionic bucket and that's one argument. And I think it's a very separate argument we can discuss or not, which is this very crazy at the end of time sort of debate. And then there's like everything else argument where they're like afraid of disinformation. They're afraid of destroying jobs. They're afraid of like, and we shouldn't conflate these two arguments, right? They're two separate arguments. Like if you're gonna have a God who destroyed a job, that's like a stupid thing to debate. Like it's gonna be different anyway. So let's go over this bucket over here, like what's actually going to happen. And as far as I could tell, this is going to be like one of the best things ever for humanity, to the point where it's like, I mean, productivity as you know, it's like the underlying factor for how well our civilization is doing, how all the economy is doing. And I think productivity could go way up over the next decade. I think it could basically free us from drudgery. It can make things really inexpensive for poor people and for everyone else. Can you give like a specific example of how do you think granted all predictions are wrong? But that AI will make life easier or better for people. Yeah, so let's start with what it's already doing, right? So there's something that came out in the last month from companies like Klarna, which is a big payments company and people have to call and deal with them. And I think they have 70% of the calls being handled by the AI now. And the people are happier with those calls and they can call back less to bother them afterwards and saving them a lot of money on those. And there's lots of versions of this. Michael Dell, who's also a major presence here in Austin, Texas, I think he was saying the other day when he was here that he thinks he's going to have 20% higher productivity for his company of 120,000 people. And so basically, there's all sorts of applications of that. You know, Michael's a very serious guy. He doesn't just make wild claims. It's like he actually sees how he thinks in the next two years, he's going to have this for like certain sales people being helped, certain marketing documents, certain customer support processes. And so you have, and then I'll give you one other one, healthcare billing. Sounds like a boring area. Why are we talking about it? Over $200 billion a year spent on healthcare billing in the U.S. as people on, you know, office parks, you know, going back and forth with insurance companies and there's like tens of thousands of rules each for thousands of companies. It's a mess. Millions of people try to do this. And so it turns out we already, we have companies that are making that a few times more productive, which is going to pull out another $100 billion a way to the economy. So you have this productivity hitting in all these areas. Seems very likely over the next few years. Let's talk about Palantir. You were, you're one of the co-founders in what, it was 2003, is that right? I was 20, 21 years old and we started it back then. How did you start at that, I thought you were at Stanford? I just finished at Stanford. I was helping Peter. Peter Teal. Peter Teal was an investor with Facebook at the time. And we had a hedge fund. We were running together. I was working for him at it and he backed my roommate and I to start this. I hired most of the first couple hundred people. And the idea was is that a PayPal where Peter had started and sold PayPal before and I was an intern at PayPal and the Chinese and Russian mafia were stealing all of our money. You would go into PayPal as Peter Teal and Elon Musk merged two companies to become that. And so we had to figure out how to stop the bad guys. And it turned out that all the talent that had been brought together in Silicon Valley around that time, around that first tech bubble in 2000 we're able to figure out things like how to investigate bad guys. They were way ahead of what the government was doing. This was a shocking realization that all these young engineers were actually way ahead because we always kind of had been brought up. Even in the computer science world you hear stories about the NSA in the 1970s doing things that no one even understood till 15 years later. They were so far ahead of us. And tell the congressional hearings. That revealed them. Well, the congressional hearings revealed them. But honestly they would do things and people would be able to look at it and then academics couldn't explain it and then academics learned why with much more advanced theories, much further on. Oh wow, this is why. So they were way ahead of us in the government from the mid-20th century. But that was no longer the case in 2000. And so we started helping the FBI and Secret Service the rest of bad guys at PayPal and my roommate and I at the time got really interested in this. Wow, there's all these investigative stuff we're doing. And in 9-11 happened and the government was spending billions of dollars on stupid, frankly backwards things that were not nearly as advanced. We said, wow, this is really dangerous. We have bad guys attacking our country. We have people violating civil liberties not using the data right. Let's build something that could take the best and brightest in this area and extend it to help all of our allies stop the bad guys. And I mean, what's the genius? What was the genius inside of Palantir? Was it kind of knitting together databases that were and information that was kind of siloed from one another? If you wanna go to the highest level, the genius was first of all, we were ranked number one in Silicon Valley for the talents. There's a lot of very hard engineering problems all combined you had to do to solve these things. So you just didn't really have effective technology cultures being applied to DC. But at the high level for the product, you can think of it as, David Sheum was a big inspiration for us of how reason works, how the mind works. Like what are the ways in which the human mind can grapple with data that's too big to be kept inside of one human mind. So you had tens of billions of dollars being spent gathering all sorts of types of data in thousands of databases. How does a human analyst look at this and connect the dots? And so you had to basically figure out how you'd start with one set of objects and properties and link them in various ways to other things and say, show me everything connected to this by this type of data. Show me everyone this person's flown with. Show me everything that's connected to this where they have similar names basically. They might be the same person. Show me everything, show me everyone they've paid and then show everyone they've paid and watch the cash flows and look at it. And just helping people get their minds into massive data and then monitor it in a way that's intuitive to them so that when some random signal intelligence six months later showed a payment between two suspicious guys, all of a sudden they connect the dots that we could find where the bad guys are. So it's really hard to say who's allowed to see what data, how do you see it? How do you bring it together? Can we talk about that a little bit? From a libertarian perspective, it's like, okay, the engineering and technological feats are fantastic. The idea of following data flows where you can find bad behavior and target that rather than kind of doing large sweeping nets of all sorts of people, that's great. And obviously the successes that you got, Palantir talks about the most is finding the unveiling China's GhostNet program as well as probably taking or helping to locate Osama bin Laden. Palantir is behind thousands of terrorists being targeted and eliminated. So that's all good. And then what are the concerns? Or how do you work with a government that is known for violating civil liberties on a fairly regular basis? How do you build a system so that you're not merely the handmaiden to a kind of surveillance? So the core of Palantir was basically a civil liberties engine from the start. It's what data are you allowed to see and what context and how do we bring that together and show you only we're allowed to see to let you get your job done, right? So the problem is, is I think a lot of these guys, maybe they think they're Jack Bauer in the show 24, I don't know if that's a dated reference now, but these things. I think it might be. Yeah, so someone who's in charge of catching the bad guys and so they're gonna break the rules, they're gonna break the rules to find the bad guys and we don't want you to be able to break the rules if you're not supposed to break, but we want you to get the bad guys anyway. And that's the whole point of this and so it's actually a really hard data problem. Like what are you legally allowed to see and what's the policy? And we don't set the policy, but we would make it so it's very transparent. So if Palantir's installed at a certain part of the FBI or the CIA or anywhere else, the people running that can go back and look, here's the rules, here's what they were done, here's where the rules were changed, here's who changed them. And as you have basically full audit logs, full audit trails and you're doing things within a system, but you do need to, by the way, make it so you can change the rules because there is policy change that happens. But it needs to be transparent, it needs to be clear who did what so someone can't just get in and do something inappropriate. Here's a kind of strange question. Would you, you know, what is your reaction to people like Julian Assange and WikiLeaks or Edward Snowden? I guess first like revealing what they revealed, but then also if the systems were designed better, this William Binney who was a longtime NSA person who ended up blowing the whistle on a couple of things said, what was amazing about Snowden pulling data out was like he never should have been able to do that. Oh yeah, that was incompetent. So I mean, so that partly that reveals an incompetence in government and kind of large scale things. But how do you feel about people like that? Are they good? They're testing the system in a way, right? There's good and bad there. So as a libertarian, as someone who thinks the government wastes tons of money on tons of incompetent things, you want whistleblowers to call out the government, you want to call out waste, you want to call out bad actors. At the same time, we do have, this is what really gets me a lot of times, I think Palantir, along with some really talented people, helped stop a lot of major attacks, right? A lot of major attacks. Can you name one? And I realize it's hard to say, okay, well, we stopped this. I mean, we literally helped eliminate thousands of terrorists that were planning attacks on us that we wouldn't have otherwise many times found or stopped, including as famous ones as you alluded to that I think we don't talk about in public because we don't want crazy people coming for us. But in general, like we were close to people who helped uncover tons of these different rings of people who were clearly planning violent attacks in America, in some cases stopped them only with very little time to spare. And it's very frustrating to me that because you had so much competence in stopping these things, people now assume you don't need anything at all in the intelligence community. So I agree there's abusive abnormalities of the intelligence community. I agree that a lot of times, when something's confidential, they're using that to get away with nonsense, but I disagree with the idea that there's not bad guys in a world we have to fight. And so for me, it's like, let's make the government competent, let's make the system so it watches the watchers. Right, well, one of the other ways that Palantir has been helping, maybe not watch the watchers, but kind of keep government accountable, you guys have helped to track bad payments coming out of the stimulus programs, right? That coming out of the financial crisis. Oh yeah, TARP was a mess. Yeah, talk a little bit about how, you know, kind of data mining or, you know, what you're doing with Palantir showcases where bad payments go. Yeah, I mean, I believe, I think actually to Joe Biden's credit at the time as vice president, I think he was involved in helping bring Palantir in a long time ago and making sure that we were tracking where all this money was going, because there was, there is just generally a lot of fraud around these issues. And so the more you track any kind of government spending well, the more you understand it within a competent level, the more you're gonna find all sorts of bad actors. Unfortunately, this was not always applied to my knowledge of COVID spending. It wasn't always applied as much as I would have liked to. How does that work though? I mean, so like you have systems set up where you can kind of figure out if it's likely that a payment was made an error or went to the wrong person or kind of how does that system work? Yeah, it's like, I mean, if you go back to like even the very simple, not simple, but the complicated fraud problem at PayPal, it's like you're basically mining through the information and you're connecting different analyses and you're finding, you're finding first of all cases of known fraud, which are not that hard to find. And then you're modeling those to search for things that are similar and you're piecing through it and you're flagging a bunch of suspicious things. Then you let someone, you know, a person does not have time to go through millions of these things, but if you flag things that are very suspicious to them and then show all the data in an intuitive way to them, they say, wait, I think this is obviously something that's wrong, right? And it's like, I remember back at PayPal, there'd be like payments, there'd be a bunch of emails that were like clearly all set up by the same person, like Baseball 2000 and Yahoo Football 2000 and Yahoo, whatever it was, and all the money's going to those accounts and going out of the banks right away. You know, it's like clearly like it's coordinated network or something that's been doing it that the computer didn't know for sure, but once you show it to a person, it becomes obvious. So you work together on these things. Do you have a sense of, you know, can you ballpark what percentage of stimulus payments were either wrong or, you know, they shouldn't have been made? I don't have that information myself. I know that, I mean, listen, so Palatiers is a non-parasite company. I don't even run it anymore. I'm close to a lot of people behind it. You know, I remember at the time, even President Obama agreed, for example, there's lots of fraud and Medicaid we should probably go after. He visited us, agreed he was going to do it. His office ended up stopping us from doing it. Every president says, you know, they know 30% is waste, fraud or abuse, but we can never stop. Their office doesn't want us to because they don't want the narrative out there admitting how bad it is, which is frustrating because I think we can actually fix most of it. Yeah, I will. Is there any way to change that political calculus? You need a really strong, really competent president who's willing to do it. I think policy-wise, the previous administration, the Trump administration was willing to, but there was a certain level of confidence that wasn't always there on the follow-through and people would push back and they'd drop it. And he's also, I mean, every president's like this, I'm not going to touch your Medicare and that might mean I'm not going to touch your Medicare even if you're getting it under the wrong circumstances. Well, it's not even for people. I think most of the fraud goes to a lot of like very sketchy doctors and health systems, but I think those places are very powerful, special interests and it just creates a huge headache to go after them and you need a president who wants to focus on the issue. And listen, there's lots of things to focus on. I'm not telling you this is the most important thing. It does bother me as an American that we waste $100 billion or whatever it is a year on this nonsense. Are you going to vote for Obama or for Obama? I sound like Donald Trump now, right? I've not lost in the past Trump or Biden. You know, I spend most of my time on the states because that's where I can make a huge difference. I have teams in 20 states for Cicero. I respect people very much who would never vote for Trump. I respect people who think Trump's policies are much better than Biden's and so it's not something I tend to weigh into. What do you respect people who definitely will vote for Biden? If it's, I generally think there's a lot of failed policies and I generally think that it's, you know, there are some people in this administration I admire but overall I do not admire this administration. You know, I understand why some people morally still think that they prefer Biden to Trump. That's not my point of view right now. Do you, I mean, now, let's, now I'm thinking maybe we should move to Singapore. Is something fundamentally broken where we are looking at a rematch of Joe Biden and Donald Trump and it is like, you know, Muhammad Ali and Joe Frazier if they were 20 years older it seems and going at it again. And they do seem probably slightly too old to be the people we should be electing. I understand why people are really angry at the way Donald Trump's been tweeted. You probably saw, like, Joe Bush and I wrote a piece in the Wall Street Journal talking about how both Elon Musk and Donald Trump had the court weaponized against them and I see people who agree with a lot of the policies Trump did and who are feeling he's treated really badly so I know why that makes them want to fight for him. And so listen, I understand where we are and I don't think the country's broken or anything like that and I think there's, I respect different views on these things. It is interesting though that Trump has run twice and has never gotten more than, he's gotten less than 47% of the popular vote each time and it's, you know, it seems like it's gonna be very close now. So this is just really to buttress your point that if you hang out in elite circles or highly educated circles, it's hard to find people who will say Trump is not the anti-Christ, but in fact, you know, 45% of the voters have said, you know what, I'd take this guy. Yeah, I definitely don't think he's the anti-Christ and I definitely think there are some things I really admire that he's done and some things that I dislike as well. Do you worry that, I mean, are we just gonna, because it's gonna be Trump or Biden, neither of these people, whatever else you can say about them, they plainly are the end of something. They're not the beginning of something new. Are we just gonna be kind of in a holding pattern for at least four years? I don't know if that's actually entirely true. I think there is a lot of new stuff coming, especially on the right right now. We have a lot of new ideas that we don't, like I said, this is just your attitude to over 20 states and a lot of people around the policy orgs on the right who would be running things in this administration. Positive. I hope you're right because the narrative, which may not be right, is that nobody wants to go into the Trump administration because it's gonna be a train wreck. That also kind of, you know, the minute he gets elected, I think people will be like, oh, maybe I wanna do that. I think people generally wanna serve the president of the United States of America, even if they don't necessarily personally always admire him. Yeah. Let's talk about the Cicero Institute. What's its mission statement? So the Cicero Institute is a non-partisan policy think tank. We have a C3, which is education side, and the C4, which is we're working in the state level to basically take accountability, align incentives, and really use the values behind why liberty and why our country works to fix problems we find. I mean, it's named after Cicero. Explain why. You know, Cicero was a Roman statesman. I really admire a lot of the wisdom we have that kind of reignited the Renaissance came from writings of his that were safe. And he really stood in a lot of ways for duty and for wisdom and for how, you know, how a country's supposed to work and how a country's supposed to have. It's, you know, as citizens who are merchants and who are natural aristocrats and getting involved and make things competent and logical. Let's talk about some of your policy focus at Cicero homelessness as one. What is the Cicero Institute's approach to homelessness and how is it different and more effective than what you encountered in California? Yeah, so that's, you know, we're looking for areas where there's, again, where there's giant gaps in our world between how things should have worked and how they worked today. Thanks to bad policy and the homelessness stuff is a really good example of that. Our general policy is that basically it's common sense. The way things are done now in California are just totally insane. You have a billion dollars being given out, not based on data or metrics, but based on political favors to very powerful, very corrupt nonprofit groups whose incentives are completely misaligned. So these cities and these nonprofit groups get more money for doing the wrong things. So what are the, and I know you're a big critic and I think this is capturing everybody in the field of the housing first policy, that like the first thing you do to address homelessness is somehow either build more housing or give more housing to people. Why is that wrong? That 75% of these people in the cities are on drugs who are homeless and 75% of them are mentally ill, it's overlapped. And if you give someone who's on drugs and mentally ill a house, you know, I think in San Francisco, they have more people who died in these homes than who moved on to being self-sufficient. I mean, this is a total mess. And then by the way, who gets the homes? It's a lot of people who are working in the nonprofit groups get the homes and people are close to them, of course. We try to make it so we had to give the homes to the people who are the most vulnerable, which sounds good on paper. It's that idea around equity. And there's a vulnerability index they created which is used by most homeless groups now, most cities, most of the cities around the country are using it in progressive groups. And the index says you get more points towards a home if you're on drugs. You get more points towards a home if you've committed a crime. It's more points towards a violent crime. You get more points if you're not in a drug recovery program because you need it more. And you get more points if your kids are truant or taken away from you. So you go through this and if you're on the very far left and you see everything is just being you're a victim or not and things are just happening to you, they say, oh, these things happen to you, you should get more points. If you understand the world like a person who understands logic and reason is you realize, wow, these are creating incentives, right? And so we actually go into, we follow our nonprofit, we'll follow and try to help people working with the homeless industrial complex. Even here in Austin, they walk into this thing that's been set up by progressive groups and they say, you serve or deserve a home, here's how you can get a tent. And he said, so I don't really need a tent, I'm sleeping on someone's couch. She says, I'm gonna pretend I didn't hear that because if you're more likely to get a home if you're in the tent and here's how you set it up. And then he comes back two months later and he said, and she says, oh, you're not quite there for a home. Yeah, the Republicans haven't given us enough funding. And he says, I hear I would have maybe qualified for home by now if I was on drugs. And she says, well, that might've given you enough points but we don't like to think of it that way. Like this is literally the conversation. It is more, I think a lot of people don't realize our country is like more insane on these things than they assume it's like something more logical than it is, it's not. Do you, you're, the Cicero Institute has model legislation, right? For how to deal with homelessness. It does, we have eight different points. You know, Governor. What are the big ones, yeah. Well, the big ones is you wanna redirect money away from housing first towards mental health treatment and drug treatment. You wanna redirect things towards temporary shelter, not towards, you know, not towards just giving away homes. It's much more efficient and scalable. You wanna realign the incentives. So cities, the band, street sleeping and put people into the shelters and they don't get more money for bringing more homeless people in. You wanna basically, you wanna basically realign things where the dollars given out to the nonprofit groups, you're given out based on metrics and goals. So you have accountability, you audit them, you say, here's your goals and you get the money not based on being politically connected but based on what you're hitting. And by the way, one of the big ones we really like is what is basically called diversion courts. And so you want a court that could actually force treatment for people. So if someone in San Francisco, forgive me, has pooped on the street for like a fifth time in a row, rather than say, oh, we can't do anything about it. Just go out there and do it a sixth time, which is disgusting and bad for everyone. You say, I'm sorry. We're not gonna put you in prison because we're not jerks, but we're gonna put you here on forced treatment, which is kind of like the obvious solution. Which is also kind of like prison, right? It is. So technically they do deserve to go to prison for having broken the law, but that's really mean. Let's send them to somewhere else instead and force treatment because you can't just let people keep pooping on the street. It's like having an adult in the room. It's like these are children in charge. So you can't just let a person keep doing that. You know, we have many reasons as a house with many mansions. So we have lots of differences of opinions. Of course. And within that, I agree. I mean, I think if you're constantly defecating on the street, like there should be real ramifications. You're breaking the law and you're hurting society. But how, in general, with a lot of policies like this, how do you make sure that you are not just creating another power structure that can be used arbitrarily by the state or by whoever is in power to punish people that for whatever reason you don't like? No, 100%. And I think this is like where a lot of our government is broken today. You have to have separation of powers. You have to have checks and balances. You have to have a separate legislative judicial and executive as one of the key things we get wrong with our administrative state today. And so, you know, but you do need rules about this you create and you do need a court system that enforces those rules and you do need a way to appeal to another thing outside of that court system if it's doing something wrong, you know? So let's jump from homeless people and possibly forced diversion to something else that I've heard Cicero is involved in, which is actually pretty interesting is creating kind of nonprofit prisons that would, you know, this is not a private prison it's not a state-run prison but it's something that would be incentivized or it would get money based on getting its inmates not to come back to prison, not to be recidivist. Talk a little bit about that and how that kind of illuminates what Cicero is about. Yeah, so again, we're all about incentives and accountability and really things that create effective functional cultures to get the best results and right now our prisons in America do not have effective functional cultures. They are mostly very negative cultures. They mostly have extremely poor results relative to what's possible and what's amazing is when you wanna look for incompetence in the world, you look for volatility results because actually it turns out there's some programs in some prisons for the same sets of people that have like half or a third of their recidivism rates and so how do we do that? And I think like a not very smart politician but who wants to do the right thing will try to look at that program and wanna say we're gonna just pay money for that program and we're gonna try to copy it. That's like level, that's like one level but the higher level is how do we create a system which is as close as possible to the way the market works where the things that are working get more funding and get rewarded and the things that are not working go away because the problem is once a system might work somewhere it's not gonna work everywhere else. I mean, the people aren't doing it right. Maybe there's lots of reasons why and so you wanna make things echo as close as possible to a market and this actually gets down to one of the core misconceptions about prisons and there's a lot of people generally oh, we have these for-profit prisons and that's what's ruining everything. No, no, we're 10% of the prisons. Yeah, exactly, it's 10% of the prisons and it's not the fact that they're for- by the way these for-profit prisons are not very good in general but it's not because they're for-profit it's because they're profit incentive is the wrong incentive. Imagine if we gave a bunch of the best entrepreneurs the right incentive and say listen you can only make money in prisons by getting your recidivism right down by making sure people when they come out they come out employed by making sure when they come out there's ways of measuring like basically like their success in the community and they're not going to break these communities. Like that's what we should be doing. There's 37 prisons in California. Imagine if we measured all of this really well and every couple of years we placed the bottom three or four and gave rewards the top three or four, right? Like make it so they actually they're all part of this mission but they cared about it. It's like relegates of it. It's like English, British football, right? Yeah, exactly, exactly. So it's like, so how do you do this? This is, because so first of all there's policy we're trying to pass there's a bunch of great policy and unfortunately in Arizona recently like the private prisons which are not the good private prisons they stepped in and they've killed some of it but we're going to get it next year we're going to keep fighting but there's other places where we have passed policy for incentives for probation and parole which work extremely well but here's another thing we want to do exactly, we want to take a for-profit prison we want to buy it into a non-profit so imagine putting it in a non-profit so now it's in a non-profit now we're going to run it inside of that non-profit as if the policy was already there as if our only goal was the people coming out have higher employment as if people we don't want people to come back and I want to do that in order to show what's possible because again it's back to that volatility concept you could show that something could be much better than it is, you kind of inspire people to say wait a second, how do we get more of this because this is possible and no one's doing it. Do you think too many things are crimes? Yeah, you know I'm not for locking up non-violent drug offenders in general, I have people in my life who I've worked with who have spent a lot of time in jail for things like that that I think they shouldn't have done I think our regulatory state is way too big and it's way too easy to get someone in trouble for a lot of nonsense we have nine million wards of regulation per state on average, it's a mess so yeah, I think there's definitely way too many crimes that said, you do need to put the bad guys in jail and if you don't you get really high crime rates and there are people who need to be punished you need to be deterred from doing what they're doing so I think there's a whole thing on the left which is like prison abolitionist, which is insane and I think that hurts our society I think there's a thing on the right which is probably too mean where it's like you lock up everyone and copy Bukele which is probably not what we should do in the U.S. even though maybe it made sense and you know instead of America but I think that both left and the right like we all can agree that we should run these prisons competently I was hoping you were gonna say the right and the left can agree that really should be libertarian but I think it's a libertarian concept from the sense that you're taking the things that work about liberty, work about a free society and you're applying it to get competence in something that we all can win on, right? Another thing and I don't know if this is filtered through the Cicero Institute or not but you are a big supporter of one of the co-creators of the University of Austin what drew you to that project? I mean you're a Stanford grad, you have written you don't want to send your kids to an Ivy League or I guess Stanford, what is the market gap that the University of Austin and you're hoping that it will fill? Well I hope in 15 or 20 years the Ivy League or Stanford might be better, right? I think if you haven't been in these universities the last 10 years you've really missed like the rapid, rapid decline of Emma on a number of vectors you basically have these kind of radical far left ideologues conquer these places there's more administrators than kids at Yale there's almost as many at Harvard and they're to the left of the professors the professors in a lot of these departments are basically really focused on these very, very extreme ideologies and you can't become a professor or even a PhD student anymore if you don't go along with that stuff for most of the time in these places and you know it's really a rot that's kind of core to what's going on our civilization right now which is what Elon calls it the woke mind virus that I think Dawkins came up with that concept so it really is this mind virus that is spreading from there and breaking a lot of things I think a lot of stuff in our society when it doesn't have to it doesn't have to kind of fight for its living or it doesn't have to be accountable it ends up just being taken over by this virus and it's not like, you know one of the arguments used to be that you know kind of going left in college you know you could either be a lug a lesbian until graduation or a leftist until graduation that it's now gotten to a point where it's broken the universities and the people coming out of them don't quite snap back or they're stuck there yeah I mean there's a lot of them go into these like thousands of government funded non-profits all over the country and just like spread ridiculous you know broken ideology a lot of them you know it's you see they've conquered a lot of the marketing departments a lot of corporations they've conquered a lot of human resources departments and they're spreading ideas they're frankly like anti-competence ideas and they're very broken and so I think you see all these cities all around the country blue cities I mean the vulnerability index we talked about for homelessness like it makes no logical sense but they've learned in college you don't argue against things like this it's a virtue signaling thing so you have to go along with it you have to nod you have to like applaud you have to snap whatever the hell they do these days and you're not allowed to say like no this is clearly wrong it's bad incentives like and by the way you learn that if you're a white man you shut up and you nod and go along it's a whole thing's ridiculous so how does the University of Austin you know what's the alternative then well the alternative is not to have insane kind of like CRT Marxist running schools I mean it's like just to have one of them run by like moderate sane people right so it's not like a conservative thing it's not a libertarian thing like you probably still have more moderate Democrats than anything else because it's academia by the way that's generally been how academia works you have people on both sides right and you and you have a school that focuses on pursuit of truth you have a school that focuses on actually educating the kids and teaching them how to speak up teaching intellectual courage right teaching them how to have debates where you know basically the idea of intellectual humility where you might not already have the answer I think the whole idea of the woke mind virus is that you're already have the answer in your job it's like shame and ignore people who don't go along with your pre-conceived set of set of like the solutions like instead let's actually go and let's learn and let's violate what we thought was true and learn from both sides right there's this thing it's just like a culture of a healthy intellectual discourse which is missing unfortunately on these campuses and we've had these seminars where kids come from Stanford and Harvard and Oxford and Yale and these places and they're blown away being the seminar for a week with like with great professors and debating ideas and seeing debates for example on the whole trans issue like being able to get like a like a famous trans economist and a famous feminist to debate the trans issue imagine that and to do so with intellectual humility and respect and they actually ended up hugging each other afterwards despite the kind of a fierce argument for hours nobody was charged with sexual harassment then it's just it's just it's amazing like people people have never even seen these debates model in a healthy way to them their whole lives like our society is not in a great place the way universities work yeah let's talk a little bit getting it to a better place you have a very active sub-stack and a podcast that is called American Optimist that's right what are yeah what what's the controlling idea there obviously it's American optimist you know that says something about it but you know who are you know who are the people that you're talking to though yeah well I've been lucky to be able to found I guess a handful now of multi-billion dollar companies and friends with a lot of people who have done the same and I'm involved with a lot of that I think the most and yet here you are talking to me it's like I've been exposed to a lot of things that make me I think more optimistic because I understand like what a lot of smart people are doing to to change things in health care and to save lives with new breakthroughs there and there's just lots of cool stuff going on around the world and I want to show people here's what's going on here's what the common people are doing here's why we can be optimistic yeah you know and again I mean it might be temperament but it's something more than that because many people in exactly your position are like oh my god the world is totally fucked and you know we got to batten down the hatches or there is no way we're coming out of this or you know everything is on fire why do you think I mean and it's you know why do you think the country really has been in a funk at least for 10 years or so what do you think is driving that because materially we're doing pretty well and we you know we went through a really bad financial crisis mostly mostly caused by government policy but we survived that we went through you know a pandemic you know a lot of dumb policies and acted but we survived that like why are we kind of feeling pretty good about ourselves you know I think there's there listen so what are the challenges there's definitely a civic breakdown there's definitely this weird thing going on with probably cause of social media and because of living our lives more online where we're like these more disembodied people who don't have some of the same like traditional healthy ways of relating to each other relating to our communities there's definitely the algorithms make us far more polarized there's I think Donald Trump's ascendancy was also tied to a lot of people in the working class and you know facing competition from around the world that overall lifted up everyone around the world but that did make things tougher I think for quite a while for some of our working class to have to face that and so you have a lot of different areas of struggle I'm actually quite optimistic there's good solutions teaching these things and I think it's our job to work on those solutions but doesn't mean these aren't real serious challenges for our society you also have a real I don't want to call it no bless oblige because I feel like that's slightly insulting both to the people getting the oblige as well as the nobles but it's a bad quotation these days yeah well you know what you you seem to be different I mean you're you're young and you're already doing this this is the type of stuff that usually people in your situation they wait like 10 or 20 years cash out and then start telling the world how to run itself and that has a long and generally awful lineage people like Henry Ford did that to very strange ends but you know what what drives you to kind of be doing this now while you're still growing your business empire you know there's a couple of things one is there's just a lot around us that's really broken in our society and I I worry that you know if the history of these things when you when you take something that's really broken if you don't fix it that's when populists really come in and really past crazy things so if you don't fix health care then health care gets socialized if you don't if you don't if you don't fix a bad broken regulatory state that's when they come in and they just completely change all the rules and take it over and break everything so so so so in general I'm worried if we just don't do anything for 10 or 20 years things could be broken that's why instead of being like I could burn it down and then whatever rises after that'll be better you're basically saying now I can just keep getting worse yeah I mean America is an exceptional country and it's very rare to get a constitution with the check on powers and then shrines liberty the way that ours did and there's lots of things to fix now regulatory status has obviously grown in such a way that it's no longer really constrained by the same principles of the Constitution so we have to go and put that back in the box and fix it so there's there's big things to fix but yeah if we just start over from scratch if you look at human history like you know nine hundred nine nine times out of a thousand we get a really bad answer and so so I know we definitely don't want to burn it down that's much worse we have something really really precious that we have to have to keep fighting for and improving and and you know the other thing is I do think actually that as an entrepreneur from what I've seen I think your mind can work really well in your 30s 40s 50s still in a way where you can still learn new things in a dynamic way and I think you're going to have to slide down because I'm 60 I know when you start to get really lost you lost me when you start to get into your later 60s and 70s and 80s I think there's something that ossifies where it's a lot harder to like create new concepts for yourself that you can create new expertise for yourself I think you can still be the best in the world what you've been doing your whole life but to do something new I wanted to make sure I was I was really learning these things that in a time when I could be one of the best in the world with them do you worry that you know this is also true of kind of nations or countries and societies where you know they go through a period of they get old and senescent they there's lots of ways that they go and says and that's why it's our job to come in and boldly fix them right so there's you know there's there's all these invisible hand of the market that gets rid of old companies and we don't have stupid companies built a hundred years ago around a three restaurant imagine if you're like local town restaurant failed from 60 years ago and it was still there that's what the government is right now so we basically have to go in and we have to put these same mechanisms in to getting rid of dumb regulations getting rid of dumb parts of government and we haven't done that very well but but the reasons I'm excited about what sister and student could do is we can go into the states we can do it in the states boldly and then we could take those same frameworks and use them in DC and that's what I'm trying to do so I want to close by asking a little bit about kind of your intellectual genealogy or journey or whatnot you had mentioned I think before we were on camera that you you read reason in the 90s when you were in high school and things like that who you know and you used to call yourself a libertarian you famously wrote a piece talking about why you are no longer you no longer consider yourself libertarian or call yourself that and I want to get to that but who you know who growing up what were the what were the sources of the person you became kind of intellectually political so so I mean obviously when I was very young I and Rand was an important influence and really the duty of the businessman to get involved in the fight for these things how did you stumble across her my father actually read some of these books as well so he and I don't always agree on on politics and everything but he but he was into that my younger brother was into Austrian economics and so I got to read other big von Mises and Ray Rothbard to have honest was a very strong influence on me when I was very young I'm not an anarcho capitalist but I think there's just deep wisdom and a lot of the structures and frameworks he came up with that were really fascinating and you know and when I was at Stanford Milton Freeman was there actually he'd been in Chicago before that he was at Hoover and I regularly got lunch with him and his wife Rose often joined us he became a very strong influence did he pay for it or did you get a free lunch for Milton Freeman I think Hoover did have free lunch that was pretty good there are performative contradiction there is a free lunch maybe I was paying tuition so it could have been something like that and so those are really big influences on me just you know and I mean if I'm honest maybe like Isaac Asimov's Harry Selden I thought I don't know if you ever if you ever read the old foundation series but Harry Selden's job was to kind of figure out what was going to happen over the next thousand years and to improve society I thought that was like a really great goal I'm born with a lot of talents I'm lucky to be good at lots of this stuff and so I'm like what's a really hard intellectual thing that's really important well how can we have a positive impact on the future of our civilization and so that to me was very formative as well oh that's interesting I'm more of a Heinleinian if we think about it in those terms because I mean Asimov's more of an engineer right so it's like but so then you stopped calling yourself a libertarian explain why you know I yeah I wrote I wrote that piece that liberty is great but libertarianism is dysfunctional and in my experience with libertarians especially from the generation above mine is it was kind of like that is like you sit on the couch and you yell at the TV and tell the government to stop doing things and you maybe put some money to try to stop the government from doing things and then the government ends up eventually doing it anyway but it ends up being even more dysfunctional and it keeps growing and you're kind of angry and that's not nearly as useful as getting involved and trying to put liberty based frameworks into the government so yes do I think the government should be doing most of these things no if I should the government be really small I agree should it should am I a Narco-Caplus no maybe not a Narco-Caplus but I think it must be really small but there's all these insights that come from liberty and that come from how our society works like we didn't another one just to mention it like vocational education in America do I think the government should have a bunch of vocational programs and training programs probably not I'm pretty pro-liberty but are they going to get rid of them all no they're not okay so given they're not getting rid of them all how about we go and we say how do we apply liberty to these things you know how you apply liberty to them other than deleting them we're going to read it again we're going to go and say listen we're only going to fund you there's 27 technical high-end vocational programs in Texas we only fund them now based on the salaries of the students coming out that's a market signal that you can't game if you fund them based on graduation rates they're just going to graduate people they're going to cheat if you fund them based on the salaries coming out guess what happened when we did that change the salaries doubled over a period of six years double it's completely changed the lives of 50 to 100,000 people so you're taking these liberty and free society frameworks and you're putting them into things and you're fixing and making government competent and frankly that's where the leverage points are these days if you understand liberty let's fight and use those frameworks to actually fix things all right I think we're going to leave it there thank you Joe Wonsale thanks for talking to Reza thanks