Shyam Sankar - Celebrating Heretics - [Invest Like the Best, EP.462]

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Introduction to Invest Like the Best

1:34Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus along with all of our podcasts at colossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions

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Sham Sankar Interview

2:24My guest today is Sham Sankar, the CTO of Palantir Technologies. I think you'll find by listening to Sham that the business itself, their mission and how they built it, and indeed him and his life, are completely fascinating. We talk about his entire worldview, which I find personally the most interesting. This need to re-industrialize the United States after decades of moving so much of our production, and as he would argue, therefore, our learning of how to innovate and make things off of our own shores.

2:55We talk about the history of heretics, people who have, against the odds, designed solutions that have driven so much of our success around the world. Please enjoy my conversation with Sham Sankar.

3:08Sham, I think the most fun place for me to begin, because it's an area that you're interested in that I'm fascinated by, is a history of people in American military lore who you call heretics. You refer to them as heretics, people like Hyman Rickover and Andrew Higgins, who designed 90% of the boats that landed at Normandy. John Boyd, who invented the OODA loop, which is one of the great biographies of a military figure that I've ever read. Talk to us a little bit about how you would define a heretic in your use of that term, and why you're so interested in that group of people

3:39in U.S. history. Well, I think they're really founders. They're founder figures. They get obsessed with delivering something that it makes no sense, because they're fighting, particularly in the military context, you're like fighting the bureaucracy. You're going to end your career. You pay extreme prices for it. So there's almost like a pathological obsession with winning, which I really relate to both personally, but also that's what I see in great founders. In the present moment, it's really important to encourage the hidden heretics who are in the military today

4:09to recognize your heresy matters. And frankly, if you look back at history, the only shit that ever worked, the things that helped us win all the wars were the things that the heretics actually did. Nothing that went through the machine delivered anything. I think all change comes from these heretics, and they only later become heroes. If you think about Billy Mitchell, who invented the Air Force, he was court-martialed and died penniless and depressed. And only after his death did we invent the Air Force based on his original heresy. I'm just fascinated with what motivates these folks to keep doing this.

4:39And I guess I relish a little bit in their rebellion and the victory that the rebellion brings about. If you could have people study any one heretic story to understand this general idea, is it his story? Is it someone else's? Which one would you pick? I'd probably pick Rickover's. So Hyman Rickover, born in a shuttle in Poland, came to the U.S. when he was six, had one of these near-miss moments where in those days when you landed at Ellis Island, you had 10 days for someone to come pick you up. His mother gave someone money to go send a telegram to the father who'd already been here. And that guy just pocketed the money.

5:11On the 10th day, there was another guy who arrived at Ellis Island who bought them one more day, who knew them. And then he like ran out, got the father. So it's like this near-miss where this guy almost didn't even end up here. He would have been sent back to Poland. But he was this feisty character. I think he was five foot two, very short. He went to the Naval Academy. He was so unlikable that in the yearbook in the Naval Academy, they have torn out his picture. He's just one of these difficult people. In World War II, he drove a coal ship. He was not some exceptionally high-performing senior military officer commanding a destroyer

5:43or a carrier or anything like that. But after the war, he went to Oak Ridge and he observed the vestiges of the Manhattan Project. And he had this idea, we could build nuclear-powered submarines. And he'd had this experience on diesel-powered submarines, which suck. They're basically surface ships that happened to go underwater for like an hour. This became this thing he was obsessed with. Talk about chutzpah. Well, Oppenheimer himself thought this idea was going to fail. So you have Oppie telling you, you're stupid and this isn't going to work and you're just going to go forward. So he started on this project and he built the first nuclear submarine

6:14in seven years, start to finish. The Navy aided him so much that his first office for this project was literally the women's restroom. They're like, what can we do to humiliate this guy into quitting? But he just kept going. And if you actually look at his personal memoirs, you can see that the humiliation got to him, but in a way that he could channel it to be like motivating. It wasn't like he was somehow inured to the pain of it all, but he could push through it. And I think recognizing every major project you do is going to push you in these sorts of ways. How do you dig deep? How do you grind through the pain? And he created a really unique culture

6:45in naval reactors, which is alive today. So I think part of what's really cool is that our nuclear submarine force is one of our last remaining asymmetric advantages against the Chinese. And we built it in the 50s. What a legacy for this guy to have built. And then the engineering culture that he created, he was in this unique role of both being a human who would invent the technology and therefore was qualified to think about how to regulate it. So whereas the Russian submariners, it would spend roughly six months at sea and then six months in Sochi recovering

7:16so their white blood cells could regenerate because the radiation shielding sucked. We've had no deaths due to nuclear incidents in our submarine force. And he designed it to a standard. He's like, I'm designing this thing so my son could be in it. It's a hundred times safer than what we believe the minimum standard to be. And that obsession, it's not a manager's view of the world. It is a founder's view of the world. One of his legacies, he was an admiral for 30 years. And even as an admiral, he was very difficult. Zumwalt, who was the chief of naval operations for a while,

7:47he said, the Navy has three enemies, the Soviet Union, the Air Force, and Hyman Rickover. I remember reading the book about John Boyd, who three times, he was the best fighter pilot. Then he helped develop the F-16. And then he came up with the military strategy concept that was instrumental in some of the U.S. wars in the 90s. And he was sort of a bastard as well. Highly disliked, really bad father, highly disagreeable, but incredibly important in U.S. military history. You don't seem to have that kind of personality.

8:18You seem, by all accounts, very likable within Palantir and outside of Palantir. Say a bit about your own disagreeableness. Where does it surface? It seems like this is a field in which you have to have a very clear view of how things should be, which we'll talk a lot about in a few minutes. And then this disagreeableness and resilience and persistence to like make it happen. And that seems a little bit at odds with your personality from what I can tell. Curious how you think about that. It surfaces in certain ways. As Karp would say, I'm not everyone's cup of tea. Or you can very clearly see it as in the early days of Palantir,

8:49you'd be dealing with the government. And it's easy to think that as a monolith, but you have operators who want to use your software, but are not in charge of buying it. And you have the IT people or the program who's in charge of building what you would be building. So you're a structural threat to them. The advice is to go along and get along. Those guys are the people paying you. Why don't you just do what they want? The problem is if I did what they want, it wouldn't work. And so that's where the disagreeableness comes in. It's being ornery about, no, I'm going to deliver the thing that actually works for the operator. I'm going to piss off literally everyone along the way.

9:20They are knives out, going to try to kill you. We had to sue the army to compete at some point. And I think in that vein of being truly committed to, is the product excellent? What else could it be doing? You can think about the whole OODA loop of forward deployed engineering is that. It's this continuously solving through back propagation of what should the product be? That's like the motor of innovation. If I think about Palantir's story and success and your part of that story, your personal worldview seems really important. And you having a strongly held worldview seems like a key component of being able to do

9:51what you've done over the last 10 plus years. I would love to hear the formative experiences that contributed to that worldview. I'm curious, just like at a high level, what your worldview is. Maybe even more interested in how you came to it because you've got a very unique personal backstory.

Heretics in US History

10:05I think there's no singular event. I think there's a combination of family history, the environment that I grew up in. Starting with the family history part, we fled violence in Nigeria where my father, we frankly almost died to settle in the US. And that happened pretty young in my father's life in his early mid thirties. It's a pretty jarring experience where it gives you a whole new lease on life after that point where you think about, you have a deep amount of gratitude and perspective on the trials and tribulations that may come ahead. But it also grounds you in a profound understanding

10:37of the counterfactual. What makes this country so special? Sometimes it'd be unmooring not to have those experiences actually, because it's easy to take for granted. It's easy to become cynical. But that's a really powerful rooting. And particularly because my father didn't have the classic immigrant story where he came here and became successful, which I think is the great thing if it happens to you, but it's also a facile journey. It's easy to appreciate. Dad started businesses that went bankrupt. It was very hard. But having that rooting experience that created a graciousness and perspective in him,

11:07he was always so thankful for the opportunity. I took a lot away from that over time, especially as I grew up and could understand and that awareness that was happening. The second thing I think is really important is growing up in Orlando in the 80s and 90s, it was this profoundly optimistic period. I mean, you could say it was probably pretty optimistic everywhere, but in the shadow of the space coast, you were bombarded with this idea that technology was going to make the world better, that there was a structural positive sum view of everything. And it was so motivating. People had ambition around these things. So I think that set a frame for me

11:38for how I thought about things and how do I want to spend my life and energy? I think that's really it, is this commitment to building. Part of what's interesting about the heretics that I'm drawn to is that they're all builders of some sort. The conversion from heresy to heroism is a result of an empirical thing they built. John Boyd was alive to see the success of his innovations for Gulf War I, where the U.S. destroyed the fourth largest army in the world. It's hard to think about now because we think about it as almost a foregone conclusion, but leading up to it, there was a lot of uncertainty. That worldview is centered in understanding,

12:08look, I think the U.S. is the greatest force of good that exists in the world, that as a country, we understand that there's something special about founders. There's a reason we called them the founding fathers. If you think about just empirically, Europe has created zero companies worth more than 100 billion euro from scratch in the last 50 years. Almost an astonishingly bad track record. We've created all of our trillion dollar companies from scratch in the last 50 years. The primacy of people and being in a culture and environment that allows that to happen, that doesn't subjugate the human, doesn't snuff out human flourishing,

12:39that allows you to pursue these things. And that may seem trivial, but the heretics are all a version of that. It's not like Pollyannish, where there's no resistance to these creatives. It's like, despite the resistance, you can succeed here, which is really not true, I think, basically anywhere else. What was your dad like, personally? The pieces of his personality that I say had always stuck with me. Every spare moment this man had, even though he was so busy and he was just grinding, he would be on the phone trying to help someone. I had this weird memory of someone who almost,

13:10my dad had this sort of engineering autism that I think a lot of us have, but he met someone who had totally disfigured teeth. And he just had the actually profound kindness to tell him, like, you should get cosmetic surgery. And that guy is so profoundly thankful that no one else had the balls to say that. This actually changed his job prospects. It changed his life. And so he's just one of these people, you clearly can see the positive sum of this in it. Like, hey, I'm just going to keep paying it forward. As your business scales up, everything gets more complex, especially your compliance and security needs.

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14:43that make America the thing that you think is the greatest country in the world, what are the key components? Obviously, maybe democracy is one, but I don't want to take for granted the things given your life experience and your unique perspective that you think most add up to this being a place worth your life's work to extend their interests, protect their interests, et cetera. A belief in exceptionalism and greatness. No army that lost its morale ever won the war. And so believing in yourself, believing that greatness is possible is a precondition

15:14to being able to express it and realize it. And a lot of cultures don't have that. The other thing, which I know sounds really simple, but is a complete plasticity of thought. Culturally, America is a place where people do change their minds. Okay, this isn't working. Let's do something different. Or I observed that thing working, even though it goes against the orthodoxy of everything I've learned. We're moving, we're pivoting. In Europe, people start arguing about shit that happened 300 years ago. And some of these cultures are so rooted in the past that they can't update their priors. And so a culture that's capable of learning, you can call it plasticity,

15:45first derivative of learning, but how can you make progress without that? What does greatness mean to you in general? And also, I'm curious how you think about it. Personally, if you are personally in pursuit of greatness, what has that meant? What does that require? An aspiration that's substantially bigger than oneself. The focus of American greatness is on American prosperity and the American worker. How can we go do things that are actually enriching our civilization, our people, raising their own aspirations, inspiring them to go on

16:15and do great things? There's this unstable equilibrium in civilization that pulls you towards nihilism. And greatness is the antidote. It's the countervailing force to saying, no, actually, it's worth investing in our institutions. It's worth going through this painful journey because what we're going to get on the other end is something better, something that we all aspire for, something that you will be proud to pass down to your children. Is there an example of greatness that you've witnessed in someone else firsthand that most stands out? The obvious one to me

16:46is Alex Karp. His ability to really manage and unlock talent is something like I've never seen before. Those are some of the most profound lessons I've really learned about Palantir. You know, from the very early days, he modeled our entire company as an artist colony. We have more in common with the Hollywood Talent Agency than we do with a typical software company in terms of our approach to looking at humans and this first principled approach to the individual and how do you grow this deep resistance

17:16to a cargo cult-like process in every manner or fashion that corrodes all the things that actually create value. And I think that's important because if you drive that to the extreme, you actually get something that looks more like the Soviet Union. On the other end of this, it's how do you maximize the potential of the people in front of you and you're advocating for their growth and their ability, which also involves a lot of, you have to have a structural personality where you're not threatened by other people's successes. You actually relish in the other people's successes and that's the parallel

17:46between Alex and my father. If I was running an organization where my key goal was to unlock talent in the way you just described, how do you and he do that? What's the practice of unlocking talent? Maybe we could just start with the precept of how we think about the talent to begin with. So really talented people are highly uneven. They're very good at some things, they're okay at another set of things and they're really bad at some other set of things. And usually the trick is where are they in their own journey of understanding what those things are? And particularly for high achieving people

18:17when they're young, they misattribute what their superpower is. They think there's this thing they do that requires a fair amount of effort and therefore they get a dopamine hit when they succeed. It's probably something they're not even bad at, they're just okay at. Superpowers are effortless. In some sense, it's almost like not even rewarding to exercise your superpower. My analogy for this is Superman could fly, he could see through walls, but that wasn't some sort of arduous thing for him to do, it's just something he could do. That's usually something you learn comparatively. You're like, oh, this thing that's lizard brain,

18:47effortless, almost thoughtless for me, other people who are really smart can't seem to do or I do just way better. And embracing that is the first step. Helping them understand like, hey, all of your contributions to the world are going to come from your superpower. Everything else is basically a waste of time. So how do you figure out how to get into that configuration? So there's some releasing of ego around that as well as understanding that, okay, this is what I need to focus on. The other part of this is kryptonite. There are some set of weaknesses you have that aren't just I'm kind of average or I'm maybe

19:18a standard div below average. It's like, you're like six divs below average. It's not like something you're going to work on. The only strategy for Superman around kryptonite was to avoid it. Yeah, and so can you be okay with that as the artist? What is your process of accepting them? How do we help you accept? How do we help you understand actually at the point of acceptance you become more valuable and we're going to be able to unleash you further to be able to do things. And then you have to create an environment that supports them through that because the discovery of kryptonite usually involves you being exposed to it. You're going to make some sort of really bad mistake

19:48that probably will have real consequences. Hopefully you learn from that mistake. It may take more than one time to get there, but you don't want to create a culture which is like, you fucked this up, I got to fire you. Oh, I'm so glad you learned that this is not what you do for them. So glad you fucked this up. Yeah, exactly. I remember doing something that I really screwed up once that had consequences for the company and I sheepishly went and did Alex and was just completely honest and I didn't realize at the time there was no grand strategy behind this other than my commitment to just always being honest. He was very appreciative.

20:19He was also in pain as he internalized what this was going to mean, but he valued the fact that I wouldn't try to hide it and I took away from that how important that environment was going to be and how do I scale that to the organization? What do you think your superpower is? I think there's actually a narrow sliver, if you thought about in the Palantra context, the intersection of forward-deployed engineering and product. There's an interface there. One inch on both sides of that interface, owning that almost as a dictator, that's my superpower. I'm going to come back to forward-deployed engineering, but I want to ask

20:49one or two more questions about the creation of an environment for the discovery of superpower and kryptonite and doing one's best work and unlocking the talent. I heard a story once which maybe I wasn't supposed to hear, so I won't say what the exact story was or who the person was at Palantir, but this person joined Palantir and was very quickly given an extraordinarily difficult project around which this person had no relevant experience and was given relatively limited resources to solve a problem which was truly global in scale, meaning the impact if this person

21:20didn't solve the problem would have been bad and they described it as the most formative and important and most stressful professional experience that they had had. But on the one hand, I loved hearing this story because, wow, you can learn so much when there's high stakes and lots of autonomy, but it also struck me as quite scary that someone with this person's experience was given this high-stakes opportunity slash responsibility and I'm sure that happens all the time in Palantir, so some of it seems like going straight into the deep end

21:50is a key part of this. In such a high-stakes business with militaries and governments and people's lives and things, how do you balance how much leash to give someone like that? Let me start with an analogy. How did Bruce Banner become the Incredible Hulk? It wasn't progressive overload. It's not like he lifted a little bit more weight every week. It was a near-fatal dose of gamma rays. 50% chance he died, 50% chance he turned into a big green monster. And there's absolutely an element

22:20where we're taking people and just irradiating them. Perspectively, you're not sure if they're going to come out the other end, but you have some belief that they have the raw talent and potential. And then you want to create an environment that has enough transparency and flow of information and exhaust that if you see that this thing is really going off the rails without them having to seek you out, you're able to push in and help them. Then a lot of environments don't have that by default, actually. You would have to manage them. You have them do reports or check-ins or whatever. You've got to create an environment where it's okay

22:51to ask for help. The reason this model is really valuable is that I think the alternative model, you've judged by the counterfactual, the alternative model doesn't actually work. So this structured career ladder with progressions, it's perfectly designed to make you feel comfortable that you are growing. It gives you some belief that there's a linear path to follow and to learn these things, but actually, it's all fake. On the other hand, if you're willing to just suspend disbelief, throw yourself off the deep end, the maximal rate of learning will be coincident with your maximum ability to tolerate pain.

23:22So now you're in over your head, you're working on a problem you don't even know, this is the environment that you're going to learn at the fastest possible rate. You're only limited by your motivation and ability to endure through the discomfort of getting there. Then you will find that if you look back retrospectively, you're like, holy shit, I grew in all these ways, I learned all these things, none of which you could have predicted specifically ex-ante. And then if you just are willing to do that serially, just keep jumping off the deep end, go after problems you're frankly not qualified to go after, but there is some belief you have the raw potential to do,

23:52you turn into a superhero. I think that's actually why Pounder is a founder factory. Did you have your own Gamma Ray moment? Was there an original moment like that for you where you discovered your own potential? The article talks about the deployment at the COIC. I think that was a seminal one where it was leading the deployment. It was all on me. And it was never obvious until basically the last second whether it was going to work or not. And it allowed me to learn a lot of the lessons along the way, which is really where I internalized, oh, success looks like a lot of pain.

24:23That instinct to figure out how to reduce the pain, like how do I do this the next time with less pain, is exactly the wrong instinct. If you were giving a commencement speech to a group of people that heard this conversation, how would you urge people to seek that out? Like if someone is pre-Gamma exposure and they're interested in that test for themselves, how can people expose themselves to that test? I think this is the conspiracy of the people around you who give you that chance. I don't know why Kevin Hart has hired me as some Stanford

24:54grad student coming to talk to him. But the fact that he took the bet and just threw me out there, that was the first time I got to jump off the deep end in many ways. So I really think how can you find it? You're assessing the people who are hiring you as much as they're assessing you. Is this an environment that I think is going to bet on me or is this an environment that wants me to be a veal cow? Are they going to be able to tolerate my eccentricities or are they going to try to squash that? How do you know someone's worth betting on? The other side of that equation. New unproven talent.

25:24How do you know? At some point it becomes a lizard brain. You get enough reps in doing it. But early on, I think the early indicators would be first derivative, proof of some sort of sui generis. Did they create anything from zero to one? And then expression of agency and initiative. Here's the simplest way I'd say it. If I give this person an inch, can they turn it into a mile? And the worst sort of bet to make is I gave this person a mile and somehow they turned it into an inch. Yeah, it's an incredibly powerful idea. And it seems like the culture of Palantir obviously there's tons of founders that have come out of this that have

25:54mega agency or something like this. If you think about Palantir's future for the next 10 years, now 19 years in, what do you hope changes most in the next 10? Obviously, it's now a huge company. It's one of the bigger companies by market cap in the country and in the world doing lots of really interesting work with lots of interesting customers. But generally speaking, what are your hopes for it over the next five to 10 years? All value creation is downstream of the culture. Continuing to be an environment where a new person can come in and just have huge responsibility, be in charge of people who've been here 10 years or not. It's like that

26:25org structure. I call it a quantum org structure. I don't think a flat org structure is optimal. That doesn't actually work. I think what you want is an org structure that can crystallize, is the right structure to solve the problem as it exists today and is able to reform as the problem manipulates tomorrow. And you can see the pathology of big companies as they go through some sort of big reorg every five years, even if you just steel man it. Probably most of them are wrong even at inception, but if you just steel man and say, hey, they just reorg, this is the right org structure for this company today, every day the entropy is against them. And every day it's slightly more wrong than it was before.

26:56If you're so ossified and committed to your structure that you have to wait until it's totally broken before you reorganize it again, that's a fundamental weakness. So that plasticity and how your commitment to working backwards from the problems, that is how we generate value and that has to be consistent. And I think if we can protect that and promote that, promulgate that culture in the future generations, we're going to keep winning. What critique of Palantir do you take the most seriously? When you have a structure like this, you don't get to spend

27:26nearly as much time with people as you'd want. The rate of irradiation is very heterogeneous. There's some sort of like bimodal distribution for how long do people stay at Palantir. The probability that you'll stay for a decade plus if you've stayed three years is incredibly high. But roughly around the three-year mark, everyone faces this crucible where they look around and they say, this place is so fucked up and crazy and they have to understand, oh, but that's the future of it and then they'll stay. Sign up for it or not, right? Or they'll say, this is the bug of it and I got to get out of here and it's not

27:57going to work. The critique I take

Palantir's Future

27:59most seriously because I think with a little bit of help, a lot more people