Joe Lonsdale: low-end SaaS without moats is in trouble, but AI-forward incumbents with strong tech cultures will thrive

Speaker 13: Hey, guys. How's it going? Good to

Speaker 5: see you.

Speaker 1: It's going fantastically. Is software dead? Wanna start with the SaaS apocalypse. I know I know you have some good, some good takes on the SaaS apocalypse because, someone vibe coded your former company. Right?

Speaker 13: Oh, that's funny. You saw my comments

Speaker 1: on one today. I just Yeah.

Speaker 13: Like, it's like being shared by all these people. Oh, yeah. I've I've coded Palantir. I'm like, come on, guys. It's like it it is

Speaker 16: it's annoying because I'm I'm I'm

Speaker 13: such a pro AI bullish person, but it drives you to apostasy from the whole movement when they're like, we're replacing everything. Palantir is going down. I'm like, no. I think low end SaaS is in trouble the next few years. Like, that's the reality. Right?

Speaker 1: Not not the hard company. So that so so that's narrow point solution, no system of record, no regulatory mode, like, no network effect. Is that what you're thinking when you describe low end SaaS?

Speaker 13: That's where I would start. It's probably some of the stuff that Constellation software used to do. I don't know what they're doing now, but, you back in the day when I studied them, there's a lot of stuff like that. Yep. And and and listen, there's probably, like it probably climbs the stack over time. Right? So there's probably some very simple systems of record that are very basic that you can kinda probably pull in. But listen. There's like, if if if you took more than a $100,000,000 to build your SaaS software with, like, good engineers, that's gonna be that's gonna take a while to replace. And if you have a great SaaS company that spent hundreds of millions or billions of dollars and you still have a great tech culture and you're using AI, you're you're fine. Right? It's it's always as long you have a great tech culture because you're gonna stay ahead. I think but there's a lot of stuff with PE bought. Didn't take that much to build.

Speaker 5: Yep.

Speaker 13: Probably put more money into sales than tech. Yeah. That stuff's in trouble.

Speaker 4: Yeah. What are you advise How how are the conversations going with existing portfolio companies that are now running the calculus on how long it will take to build new products and thinking like, hey, we can go multi product faster than maybe we could before or maybe it's more tempting because this thing that was gonna take us a year could now take, you know, two months or or six weeks or something in that range to ship. Still feels like somewhat of a risk to just say, okay, we're gonna do everything all at once. But how are you thinking about it?

Speaker 13: You know, I my my bias as an entrepreneur has always been to, like, do too much at once. I need to hire people around me to hold me back because I'm like, let's do these 14 things. Then you're like, actually, guys, you know, actually, we should ace this thing first and this thing. So so so, you know, in in in general, this is probably dangerous for me because it empowers

Speaker 12: me to keep working for doing everything at once.

Speaker 13: And it's like, I love Peter Thiel's, like, argument on the board of Facebook twenty years ago, where, like, the Warren Buffet, you know, person, Don Graham, who was tied to him, is, like, don't spend too much money. Get cash flow positive. And Peter's, like, we should be, like, still burning money and, like, just growing faster and taking over the market. He's obviously it

Speaker 5: was correct.

Speaker 17: Right? So, I mean, it's

Speaker 13: just, like, there's a lot to do at our big companies that are growing. You have no excuse to to be making money right now if there's to build. Right? You should you should be spending up more to build within this environment. You know, I and it's it's you know, I think the best engineers really are five to 10 x better with this. I if your engineers are not using it, you should replace them. That's a great way to know how to replace who to replace in your company

Speaker 1: Mhmm.

Speaker 13: Right now. Yeah. And and, you know, I mean, yeah, a lot of our older SaaS companies are still well run. They're building agents on top of it to perform the work for their customers. Does that make sense?

Speaker 1: Yeah.

Speaker 13: So so it's like if you're like dominate I shouldn't say it because he's got too many calls, but like one of our CEOs Yeah. He's like dominates a big part of the financial industry in one particular niche area. And and now he's like rolled out agents and he's adding tens of millions of revenue, with the agents to do to help the customers have to hire less and to be more efficient. So there's a lot of stuff like that we're seeing.

Speaker 1: Yeah. That makes a lot of sense. Well, let's flip it over to Airborne. You're not gonna vibe code a bank charter, at least I don't think you will. But what are the keys to success going forward? You're obviously deeply involved with the company, very excited about it. What does the next couple of years look like? What do you wanna see happen?

Speaker 13: So, you know, I think with a bank, you got a barbell. On one hand, there's, like, all this really exciting stuff you could do with AI and with hopefully, like, convincing the regulators to to to permit new idea like, really great things, and we can talk about that. On the other hand, this is a it's a goddamn bank. Right? So you have to be traditional. You have to be safe. You have to be smart. I'm putting putting my own money in. I'm putting some of my firm's money in. I gotta put like, a lot of my friends are, all my companies are too. I'm on the board of this thing, and your job at a bank board is to is to be conservative as well. Right? And so the whole point is, know, our reputations are all tied into this Palmer's reputation, my reputation, a lot of other people's reputation, and you have to run this thing where you're serving customers better and learning from the best of that and where you're just and we're gonna be extra safe. I don't I don't know what I'm supposed to talk about, but where I think the whole point is that, you know, it's not a narrow bank in the traditional sense that you did, but it is much narrower than other banks. We're gonna keep a lot more in a very, very safe way because I think it's the right way to run these things. It's never it's not take any risk you don't need to take.

Speaker 4: What was the sort of seventy two hours of the SVB crisis like for you personally?

Speaker 13: Oh, gosh. You know, that was actually interesting because I'd worn eight or nine of my companies about six months before, actually, that I was I I didn't know for sure, but I said this looks not not not quite right to me. And my brother had

Speaker 2: talked to

Speaker 13: me about it. He's a macro analyst. And I mean, what's going on? I hadn't known for sure. And I had a bunch of my family money in FRB, and it was really sad because I I loved I mean, FRB guys were nice too, but I loved FRB. They were like our

Speaker 4: And John John and I too.

Speaker 1: Yeah.

Speaker 13: Yeah. And and I was I was at the dinner with the governor here in Texas that night, and I had a bunch of other friends here. I won't mention their names, but, you know, guys who'd moved here are very, you know, multi billionaires who themselves had a bunch of their own money in FRB, actually. Mhmm. And we all felt terribly guilty because when SBB had started to go down, we actually had each withdrawn money from FRB as well because you kinda had to in that situation. It was just too scary. And and so it was like, it was like, I, you know, SBB was a little bit sad. FRB for me was just, I was never really worried for myself. I got my money out. Yeah. My companies didn't have too much exposure. Yeah. But but I felt really sad because it was such a great bank. And I think for me, one of the goals of Arabor would be to try to learn, to to do things as well as as FRB did to serve people.

Speaker 1: I think

Speaker 13: it was a really great bank.

Speaker 1: Yeah. You mentioned Texas. There's a lot of young people that are nervous about the job market in the age of AI. Give me the pitch for University of Austin right now in the age of AI.

Speaker 13: University of Austin, the age of AI? Well, I think in any age, but especially in an age where the world is changing quickly, you need to have a really strong foundation. You need your leaders in your society to have a strong intellectual foundation. So what we're doing is we have, you know, it's one side, really deep intellectual foundations of the West, understanding our civilization, understanding how our world works, why it works the way it does. You wanna talk you know whom I taught people I work with in business? They all understand philosophy. They all understand history, whether it's Peter Thiel, Alice Carr, Charles Koch, Elon Musk. You have to give them that really strong base. On the other hand, you gotta challenge them, push them really hard on the STEM side. We're just finishing our STEM building

Speaker 1: Mhmm.

Speaker 13: Right next to SpaceX and Boring Company. Have a, you know, one of my I was just with my friend who built Palantir with me. He was teaching the AI agents course next quarter. So we have a lot of our probably top 100 friends who built companies as advisers who are helping push the university forward. And we're gonna train courageous young leaders, and a lot of them are gonna work with us and build the future. So it's it's a pretty exciting place to go.

Speaker 1: That's very exciting.

Speaker 4: You guys are setting up dorms for Mac minis, a little space to set them up?

Speaker 13: You know, I we got there's all sorts of crazy AI stuff going on that we're having fun with, but they I think the dorm is a little bit too nice, frankly. I I think the students, I don't know, or anything, but maybe it's, like, too too fancy, but it's it's good. They like it a lot.

Speaker 1: Are you secretly funding the California billionaire tax to punish all everyone that didn't leave like you?

Speaker 13: You know, it it it has it has been something I've commented on that it's, like, probably really good these people in California to wake the heck up and and see what's going on. But, no, I'm actually secretly funding a bunch of the things that now my friends are waking up to kind of reveal the fraud in California and reveal the nonsense in California and hopefully fight back against the real extremes. Because, you know, used to argue with a lot of my friends in college. I'd be more on the moderate right. They'd be on the moderate left, I'd say, you wanna define it. And now most of those smart people who've been successful on the moderate left were, like, complete allies against the crazy far left because that is just so broken in California. I'm excited to see a bunch of them courageously stepping up.

Speaker 1: Well, thank you for taking the time. We'll let you get back to

Speaker 5: your day.

Speaker 1: We'll talk to you soon.

Speaker 4: See you guys.

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