- Startup Archive
- Posts
- Palmer Luckey on the three companies he considered starting after Oculus
Palmer Luckey on the three companies he considered starting after Oculus
After selling Oculus to Facebook for $2 billion when he was 21 years old, Palmer Luckey was fired for his political views.
He then said to himself:
“Okay, I have to do something that proves they shouldn’t have fired me, that I am smart, and that I am not a one-hit wonder because being a one-hit wonder would be so depressing.”
Palmer considered three ideas for his second company:
Working in the national security space (this became Anduril). He saw that cost-plus contracting was a broken contract structure that led to massive cost overruns and misaligned incentives. Palmer explains, “I think that I could start a company that does a lot the things companies like Lockheed and Raytheon and Northrop are bad at doing that I’m good at doing.”
A non-profit private prison company. “I think private prisons are very bad. I think they lead to terrible outcomes. They’re a lobbying machine where all the money that is generated largely goes back into lobbying government officials for stricter sentences on the people who are the cheapest to incarcerate. So not the terrorists. Not the murderers. It’s the nonviolent offenders… Those are the ones that private prisons want to house because they’re not going to kill people… And that’s how you end up with all these mandatory minimum sentencing laws for crimes that don’t matter in my opinion.” After realizing that lobbying wasn’t going to work to solve this problem because there’s too much money in it, Palmer considered starting a non-profit private prison that doesn’t get paid until released prisoners have been out five years without going back. “If they go back, I don’t get paid. It means I’m taking on the risk, and it means my incentives are going to be very aligned with getting people out of prison and not having them come back, whereas current prisons are the opposite. I decided against that because I realized it was not actually a skill set that I had. I’m a technology guy… The legal issues with doing this state by state are very tough.”
Petroleum-based food products. “I think the only way to solve obesity in America is to allow anybody to eat as much as they want of anything with no self control or changes to their physical activity whatsoever. It has to be the Holy Grail or we’re all just going to keep dying of obesity and related problems. And if you’re a food scientist, you generally make things out of foodstuffs, and I think that’s a big mistake. If you’re a chemical or material engineer and you want to make something with a certain texture or property, you start with long-chain hydrocarbons—oil. It’s the perfect building block for everything.. So if you could make synthetic foods out of petroleum derivatives, you could make foods that have largely the same characteristics as real foods but with zero calories because your body’s not going to process them. So I started building paraffin cheese and paraffin cheese totally works. It has no calories. It tastes mostly like cheese. And I think that you could get it to be better than cheese on some time scale because it’s actually easier to adjust it and play with it and iterate on it than with cultured dairy products. Anyway, I decided against that because it turns out the FDA completely bans this idea. It’s completely illegal.”
Ultimately Palmer decided on working in the national security space because building Anduril better fit his strengths as a technologist.