And welcome to the Texas Talks podcast. I'm your host Brad Swale. Today is the first conversation in our future of Texas podcast series with Texas 2036, where we sit down with Texas's preeminent thought leaders on what needs to be done if we plan to have success creating the Texas we want to see in the 100 years past Texas's bicentennial year of 2036. Throughout these discussions, we are putting in the emphasis on actionable insights with a focus on forward-looking decisions rather than commentary or retrospective analysis. Today's episode, Innovation Nation, Texas's next economic boom, focuses on Texas's emerging role as a preeminent incubator of innovation spurred by both an unparalleled entrepreneurism and a regulatory environment set up intentionally to spur development of the next big idea. Today's guests are ideally suited for this conversation. I'm joined by Joe Lonsdale, 8VC general partner, CSIRO Institute founder and Palantir Technologies co-founder, and also John Hollar, senior vice president for policy and advocacy at Texas 2036. Gentlemen, how are you all?
It's a pleasure to be here.
Genuinely probably the two best people to talk to about this, right? So, you know, that was a nice little intro that I just did about innovation in Texas, stuff like that. Mr. Lonsdale, I mean you have a lot of experience in innovative VC, venture capitalist work and everything like that. And you famously, I think, you escaped California for a lot of reasons, right? I guess I want to start the conversation out with where is Texas right now with innovation and how do we make sure that, you know, all those same problems that you left California to come to Texas for, that we don't fall into that same trap?
Yeah, I mean right now Texas is way ahead of most of the rest of the country. In a really strong spot. We've just fixed our business courts. We're going to bring a lot of that here. You know, we started, for example, Saronic four years ago, is delivering, you know, hundreds of autonomous vessels to the Navy built right here. I think if I try to build that in California, I'd still be trying to get my permits versus delivering hundreds of vessels. You know, and there's a lot of really good things. Now, at the same time, there's a bunch of different threats and we could talk about some of them. We were just talking about the trial lawyers who are sneaking in on both sides, left and right, and they're doing all sorts of crazy judgments again that ruined the state in the '90s. We got to crack down on that now and not let that grow again. There's all sorts of things with healthcare where healthcare interests have got healthcare costs going way up here the last 20 years. We have to legalize innovation and competition in healthcare. These are really critical things to work on. So there's a lot of stuff we have to make sure we protect in this state. But overall it's still a lot ahead of everyone else.
I mean just to follow, I mean so legalize innovation in healthcare. What do you mean?
I mean that if you want to use AI right now to build something new with a nurse that is provably safer, the scope of practice laws make it illegal because the AMA is too strong. I mean that you want to compete with a health system and do a clinic that can work with a payer. The health systems use cartel power and they block you from competition and that should be illegal. And I mean there's just lots of ways in which competition and innovation are blocked by state law in most states. But Texas has very powerful, very good health systems, but that means that their lobbyists are so strong that they're going to block competition even better than others. We have to find ways of overcoming that and allowing us to build and compete and show that healthcare could be cheaper, especially with AI.
Yeah. Texas is known for fostering competition, but as we look at like health systems generally, we have very consolidated markets in Texas and consolidation is one of the leading drivers of rising health care costs. As it stands right now, I think it's about $36,000 is the cost of a family premium for health insurance compared to our median wage. When you think about that relatively, it is definitely having a dampening impact on overall wage growth. And at some point is going to, you know, the Texas miracle economy is still doing good, especially relative to the rest of the country. But these pressures grow and they compound.
And there's great policy on the table that we have to fight for. We can get across the line that will bring down the cost of healthcare. This is the type of stuff we got to be working on for the future.
Yeah, for sure. So, you know, Texas, I think, is seen throughout the country and certainly as a Texan as going, we're sort of in an innovation boom, a tech boom.
Yeah. You got a lot of us all coming here investing, building. Really appreciate the state.
Yeah, of course. So, you know, where are we compared to say, you know, Silicon Valley, you know, famously, you know, innovative area. I think still, you know, obviously a lot of tech is still there up in the northeast. There's a lot of tech up there. How does Texas compare?
Well, Texas has a big advantage in the real world. So, if you're going to be manufacturing, advanced manufacturing, the fastest plant built in the world, it's the biggest car manufacturing plant built in 18 months with Tesla's plant here. Like our company, Saronic. So many companies, you know, Boring Company, SpaceX, so many companies are coming here and building. You know, I have a company, for example, that's doing autonomous excavation. A lot of their tests are here in Texas, you know, because it's a lot easier to do that now. Unfortunately, a lot of their AI talent is still back in California. That's not really Texas's fault. There's a network effect that's been there for a very long time in California. They do have an edge in the software talent, but we have to use the engines we have and keep building more things here.
Yeah. So, John, from a policy perspective, you know, we have this tech boom going on. What can Texas do over the next, you know, 1, 3, 5, 10 years up to the bicentennial on 2036 to, you know, talk about to help what Joe's talking about, you know, make it easier for innovation, make sure that we stay on top of it.
Yeah. I think a lot about how blessed we've been as a state to welcome so many domestic migrants. Like when people move here, they're coming with their life experiences, their education, their talents. They're not coming with their water, they're not coming with energy, they're not coming with the infrastructure necessary to sustain the growth. So when we think about the pressures, the massive migration of intellect to Texas has been fueling the Texas miracle, we have to make sure that we have the power plants, the water systems, the roads, or the flying cars if you don't want to deal with the roads.
Yeah, there you go. To make sure that our population growth can continue to thrive. We also need to address our own human capital pipelines. Because as great as it is that we have very smart and capable people moving to Texas, we want to make sure that Texans are prepared to access those jobs of the future as well.
Are we going to get flying cars in Texas in the next 10 years?
Yeah, I invested in Joby 11 years ago. It's a public company. It's supposed to be launching in Texas in the next year. So, and the FAA is just finishing their last year with them. So, yes, we are going to get flying cars. I actually bought some land near my house for a place that other people can use as well just to have a place to land there.
I love this because most places I go where I talk about this people look at me like I'm crazy and I think realistically before 2030 we're going to be seeing these things.
You're definitely, listen, the prototypes work. Toyota is a major investor teaching them how to scale massively and they're literally in their final part of the FAA after many, many years. And these are much safer than helicopters, much cheaper than helicopters, 100 times quieter than helicopters. So the stuff's coming.
Yeah. It's not just that they're coming, but like there are autonomous versions of these that are under development. So, you're not just talking about having a traditional helicopter pilot style of travel. It is fully autonomous vehicles in the skies of Texas over the next 10 years.
I don't know that I want an autonomous flying car, right? I learned how to drive and that's something nice. I know how to do it. Like, okay, so maybe I can have an autonomous car because I know how to drive, but I want to fly. I want to do that.
I'm not sure we want you to fly. That's a good point. Scale in the city. But the bigger thing, and I love Joby Aviation. Archer is a competitor. There's real serious companies there. The bigger one for Texas is probably the tunnels. Even though I said it jokingly, like we're on the one-yard line getting approval to start digging here and these tunnels are digging them in Nashville or in Vegas. You land at the airport, underground hotels. Now, this is a real thing and this is a very affordable thing. And we're going to push it hard in Texas. So the point of tunnels is to, I mean I guess with roads and everything like that there's only so much left and right that you can go.
Three dimensions is really, really helpful especially for the masses. I think Joby could be used by a lot of people, by a middle class person in a rush occasionally, by upper middle class maybe use it all the time, but the tunnels is for moving millions of people.
And actually I think we're going to end up connecting the triangle, right? We're going to connect Dallas and Houston and San Antonio and Austin and you're going to be able to get everywhere much faster with these things down and you can do the whole thing for relatively cheap.
Yeah, so, you know, just to sort of talk more about the future of innovation here in Texas, you know, what sort of Texas-specific factors have sort of underpinned this? Like, you know, is it purely just the regulatory landscape, the no income tax, like what is it that brings people to Texas, like innovators and investors?
You know, there's a combination of things. I think the bold kind of individualist entrepreneurial spirit, I think the type of people that had to come here, the forefathers of Texas. You know, I think we had the 1836 revolution and you read about these guys and you read about those communities. I think in part because it was so dangerous because they had to fight with some very, very aggressive Indian tribes. I was like, these Comanches were very serious. I think it created this culture that really admired kind of independence and like strong-willed, bold characters who would fight for the freedom, protect that freedom. And obviously we're not the same as we were 180 years ago. But I think we still have a lot of that energy here which is really attractive to entrepreneurs.
Yeah. Yeah. I like to think of myself as a cowboy sometimes but I know I don't have the hat. I probably couldn't ride a horse quite as well but I like to feel it sometimes. So, you know, as people come here and again that landscape changes, I want to talk to you, John, about again sort of focusing more on policy. You know, a lot of policy thought and effort went into the past, I don't know, I guess the Texas miracle started in what, 2010, something like that?
I'd say basically from 2000 onward you have seen in the data that Texas has added a significant part of the United States economic growth has been concentrated. A disproportionate amount has been happening in Texas and it continues to go up. It's a great problem. It creates some challenges to our infrastructure, but we have the resources because of our economic growth to solve problems that other places don't. We come from a position of strength when we have our water challenges. We're talking about putting billions of dollars into solving our water infrastructure while California is dealing with deficits. So it's like, you know, we are because of our innovation, because we're welcoming people, because we're able to do these things, we're talking about building tunnels, we're talking about autonomous vehicles, we're talking about all this future stuff that can continue our growth. That's going to generate revenue for the state that's going to be able to then create kind of a virtuous cycle of sorts where we can continue to invest in those things that are going to drive the future growth.
And let's talk about the last 30 years because I actually just had lunch with my friend Dick Weekley who started in the '90s leading TLR, which is one of the groups here. There's a group of people like him who really got involved in politics 30 years ago and again they fought to fix the trial law problem that was a major problem that was destroying Texas in the '90s. They overcame it. They took away the power from those seven kind of billionaire trial lawyers flying around their private jets like basically raping businesses and forcing them to leave. That was a really big deal. They did a lot of stuff with regulation to reduce regulation. There's a lot of like really core kind of pro-liberty values that people had to fight for in Texas. These things don't just happen. It was a group of men. It was a group of leaders who pushed for these things really, really hard and who succeeded. And so I think it takes all of us who are now here who are now the leaders. We also have to fight for these values. If we don't fight for these values, if we don't fight for these policies then things can very easily revert back and we can lose the miracle.
Well, one of the things that I think is so great about Texas culture and you talk about the values. There's this, every Texan kind of has this core sense of being Texan in a way that I don't think is true of people in like Alabama. A lot of Texans think of themselves as Texans before anything else.
Well, yeah, we have our cultural symbols. You know, we're all wearing our boots and hats and all that. And you know, we believe that Texas is awesome and it is.
But that shared belief, Republican, Democrat, whatever, Texas is awesome. Let's continue to make it awesome. Let's do the things necessary. Let's look at our fellow Texans and promote the growth of well-being for Texans. That is unique across the 50 states.
And it's the kind of thing that, you know, people want that in terms of national patriotism, etc. You know, like you want to be proud of your country where you live, your neighbors. It allows for a unity of action that is helpful when you're trying to solve big long-term problems.
This is already public. At the front of my house, we fly the Texas flag the same height as the American flag. It's the way you do it around here.
So, you described, you know, having lunch with TLR, you know, 30 years of work, you know, the Texas Miracle. And so, you know, from a business perspective and from a policy perspective, the 90th Texas Legislature is around the corner. The 91st will be after that and we'll have, you know, all these different sessions that come up leading up to the bicentennial on 2036. You know, from a business perspective and from a policy perspective, how can we protect that and make sure that Texas maintains this? Maybe maintain is the wrong word. Maybe that's not what we want to do. Maybe what we want to do is actually unleash it even more.
Yeah, I think you want to keep, I mean, I think if you hit some of the key things, we got to keep building the infrastructure. We got to stay ahead. I think, you know, I think one of the best signs of how well people are doing is the cost and availability of electricity because that runs into every other part of the economy. We have a lot of work to do there. We've done, I think we've done a good job the last few years to do a lot better job. We have a lot of government waste we can still get rid of. Frankly, a lot of government stuff that doesn't function as well. We got a lot of cities, and this is maybe I don't know if this is too annoying for people, but we have a lot of cities that are kind of getting away with a lot of nonsense right now. And so, if you look at Austin, if you look at Houston, if you look at San Antonio, they've raised taxes a lot. They're spending it on a lot of nonsense. Those cities are actually not allowed to do that. The state doesn't let them. So, we need the state to crack down and say, 'Sorry, this is not how Texas does things. We're going to hold you accountable. We're going to force you to spend accountably based on outcomes. We're going to force you to be transparent. We're going to get rid of your political lobbying where you tax people and use it to lobby.' There's a lot of bold stuff I think we need to see the government and the state do to step up and kind of cut off the stuff that's not Texas.
Yeah. I'd add that there's some like really unsexy things that need to happen in government in order to promote the kind of efficiency that we're talking about. Like state data systems are so antiquated. We have this problem, right? The workforce is changing rapidly. You know, there are articles out of the Wall Street Journal that the Harvard class of 2025 can't find jobs at McKinsey in New York and it's national news. So what happened to the graduating class of the University of Texas at Austin in 2025? We know everyone who graduated in May 2025. Through Texas Workforce Commission data, we know every single person employed in Q3 and Q4 in the state of Texas. We don't know whether or not the graduates of the University of Texas at Austin got jobs because we have bifurcated data systems. Everything operates in its own little silo. Nobody's integrating. Nobody's using this data that's collected for compliance for insights and action.
And the data really should be guiding what our university is doing. It's not purely a vocational university, by the way. There are other reasons you go to university, but we should be aware of this. And just to put my finger in the beehive, there's a lot of things these universities do even in Texas that are completely against Texas values. If you go to a women's studies class right now at UT Austin, you're learning to hate America, to hate markets, to hate capitalism, to be ashamed of Texas history. It's just completely brainwashing and you're not getting good jobs out of that. And then we should get the data. We should show what jobs are and we should be turning off the nonsense at our taxpayer-funded places because there shouldn't be all this nonsense there.
Yeah, I think there's a real opportunity as we look at what we've done in terms of our Texas State Technical Colleges and how to align those to workforce needs. The recent community college reforms have started doing behavioral shifts so that they're a lot more focused on the local labor markets. And there's a current effort going on right now at the Higher Education Coordinating Board to look into how our university systems can have a little bit more tailored outcome-based funding as a component of their...
I love it that we work in Cisco with, you know, nationwide a bunch of different states and everyone's learning from the Texas results from the technical schools here because we funded them based on outcome funding and it just all of a sudden they start teaching the skills that mattered. It really, really worked for those 27 schools. I'm pushing us to try to think about this more for community colleges too. We didn't actually do the outcome funding, kind of encourage them. I really feel like you need the outcome funding if you really want the best results because then it actually changes behavior more.
Yeah. So, a lot of this boom that we're seeing, you know, obviously a lot of it has to do with AI. AI is different today than it was, I think, ChatGPT, OpenAI just released a brand new version today. It's supposedly better than the version that got released a couple months ago. I'm sure it is better. It's just it's changing so rapidly and all the different ones, Claude and Grok and everything. So, you know, that's going to change how we interact just as regular people and I'm sure even at high levels for business how people interact with innovation. You know, how can we tackle the AI? Is it a problem? I don't know. An AI problem or opportunity?
Sure. That's an opportunity. There's opportunities and problems I think with this new technology.
How do we tackle that as Texans to make sure that we stay innovative and it lifts people up rather than leaves people behind?
Well, first of all, we should be using it more in our government, right? Because what this does is it adds new types of agency and intelligence to watch everything going on. Governments in general, as we all know, tend to be very wasteful. They tend to be funding things that don't work that no one even thinks about for 20 years. And you come back and you say, 'What is this?' You know, tens of millions of dollars here. What is this here? By this, this allows us to watch everything. Allows us to make things more accountable. Allows us to make things smarter. Allows us to make it more like easier to interact with government. Like every interaction with government, we could be watching now, probably be figuring out, we can be measuring, we can be improving using this extra intelligence. There's just a lot we could do first of all to make our government better, which I think is one of the first things you should do as Texas.
I think about how the cloud co-work updates have changed just how we do our work at Texas 2036 in recent weeks. We are able to turn data into insight at a speed that was impossible weeks ago. And that's allowing us to process through questions that are far more complex. Iterate, fail, try again, and advance in a way that's going to shape how we are able to then inform our recommendations to the Texas legislature. What if our agencies were doing that, too? What if they were able to find solutions to problems that have for entire careers been perceived as unsolvable? Think about the government performance elements of using your taxpayer dollars more efficiently to solve concrete problems that improve people's lives. That's viable.
Yeah. So, you know, to support all the AI growth that we're seeing, you know, data centers is a big issue here in Texas today and has been for I would say maybe the past year or so. As those grow, push back in rural communities for water, energy usage, maybe noise complaints, that sort of thing. But a lot of people describe it as essential infrastructure.
Well, make that case for me.
I mean, this is how you compete in the 21st century. Without the data centers, you're not going to be able to have the businesses that are on the cutting edge. Like a lot of people have come here, and by the way the people who have come here overall, people should know this, tend to be more pro-liberty than people born here. So just as an example, I'm not trying to be too political here but like for example Ted Cruz's race against Beto O'Rourke, he would have lost if only people born in Texas were voting. So you actually have more liberty-driven people coming here who are building businesses, a lot of businesses coming here. This infrastructure allows these businesses to compete and win in the global economy. Like if I cannot use those data centers, I have to build my business somewhere else. So this is key infrastructure that's letting us win. And what this does is it adds intelligence, it adds output. So this is not, I mean, listen, I realize every industrial revolution, you get a lot of fear. You get a lot of in the 19th century. But like 1870 and 1900, the median working-class person was well over twice as wealthy after the 30 years. Well over twice as wealthy in real terms. So this completely transforms things. And people think, oh, well, this time you destroy everything. It's not true. You don't destroy everything. You're going to have productivity go up. It might not even go up as much as that revolution. I hope it does. When productivity goes up, it creates more output. It creates disinflation. It makes us all wealthier. And we want that to happen here in Texas, not somewhere else.
Yeah. Yeah. I guess when the horse and buggy makers didn't like it when the car was invented, right?
My wife had an ancestor on the Federal Reserve Board from the South and he actually owned one of the buggy whip factories and he just was convinced the cars were the worst thing for the economy. It's like, and you can't help it, I think, when you're like so against your own personal interest. Like I get it that it's like, but it's very clearly like all the signs we're seeing, this is really, really good for output and for the economy and there's so many things we could do to make our government better, to make our businesses better.
