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Playing the Long Game on Big Industries and Deep Tech

At a time when consumer apps can generate instant buzz and skyrocket to millions of users rapidly, Joe Lonsdale likes businesses with much higher barriers to entry—and gestation periods.

The 31-year-old, who co-founded the big data company Palantir in 2004, is on a mission to take on incumbents in areas like finance, government and healthcare with software that usually takes five to seven years to prove that it works. A computer science major who started working at PayPal before he graduated from Stanford, Mr. Lonsdale worked full-time at Palantir in his early 20s and has since helped start five other companies.

The only other one he has worked at full-time is Addepar, a fast-growing big data company that wants to reinvent the financial system and is currently applying its technology to software for wealth managers. He also co-founded OpenGov to help local governments manage their data; Zanbato to make institutional investing more efficient; Backplane, a social media site with connections to Lady Gaga; and a stealth company called Esper that wants to make executives more productive.

Now a full-time investor at his $448 million fund Formation 8, he and his team are placing early-stage bets in the U.S., South Korea and Israel. A new area of interest: genomic IT and cancer. Mr. Lonsdale started Formation 8 two and a half years ago with Brian Koo, whose family built the LG Group conglomerate in South Korea, and Jim Kim, a veteran Silicon Valley energy investor.

Like his friend Peter Thiel, whom he met through Stanford and worked for at PayPal and the hedge fund Clarium Capital, Mr. Lonsdale wants to steer the Valley away from consumer apps and towards giant “broken” industries that comprise the bulk of the country’s GDP.

During an interview at Formation 8’s Palo Alto offices off University Avenue, Mr. Lonsdale discussed how to build top technology cultures, the ways the Chinese are “still learning” Silicon Valley culture, why Formation 8-backed Oculus VR sold and much more. Excerpts below.

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