Investing Billions - E367: The Family Office Betting on Humanity’s Future

Episode Date: May 12, 2026

What if the highest-return investments are the ones that reshape the future—not just the ones that fit today’s market? In this episode, I sit down with L.R. Fox, Managing Director of NEXT Global Capital, to discuss why he rejected the traditional path of “build wealth first, give later” and instead built a strategy around impact from day one. Fox explains why capital is a vote for the future, how the best investments often sit outside crowded sectors, and why frontier technologies with real-world impact can outperform conventional venture. We also explore his “buy, build, invest” framework, how he creates entirely new markets, and why resilience—not IQ—is the strongest predictor of success.

Fox, you had a major liquidity event, started a family office. You talked to a few mentors, and they advised you focus on building your wealth further, and then at some point you'll be able to give impact. You categorically disregarded their advice. Why? It's very natural to think about life in those seasons, first season of learning, then season of growing capital, and then season of deploying it in a philanthropic way. And what I think people miss in that is really the impact that every dollar has.

Every dollar is a vote. It's a vote for the future that you want to create. And for me, this was something that was so core to what I believed. And then I came to the point where I ended up in the hospital with my limbs stopped working. And it was steering COVID. There was a lot of craziness in the world. I had a really bad reaction to the COVID vaccine to the point where I was paralyzed. And it was this moment where they told me that my organs were starting to shut down less than six months left to live. And I realized that if everything that I did only was to build up capital, so one day I could have the greatest enjoyment of actually seeing the impact of that capital, then what's the point?

Right? And so I want to live in the world and I want to create the world that is ultimately benefiting humans, right? Not just one in trying to maximize gains so that someday there's a big pot of money to give away. Inherent in this advice is that there's a way to maximize wealth. There's a way to maximize impact. There's this implicit disbelief in this double bottom line that you could both have huge impact. and also have huge returns. Why is that not true?

It's a great point. And I'm going to share a secret that's going to hurt me by sharing it, which is, I think, the best investments are those that are impact investments, partially because people have this belief. And so there's a lot of opportunity. And so I hope that I create more competition in investing in the impact space by sharing this. And that secret is that the traditional thought around impact investing has largely been this kind of box checking of ESG, of like, how do we look good as an investment firm,

by checking these boxes or allocate a certain amount of capital towards this. And what you end up doing is clustering investment towards things that are inherently, maybe not even investable, right? And so then it becomes almost of a write-off. And I think that as we look at like real impact investing and challenge ourselves to say, what are the things that fundamentally change the course of human history, right? And so for us, you know, that's a wide variety of things, things that maybe would fall, or that often fall out of the ESG box checking.

And so you think of like the non-ESG things, the ESG things, and then the things that really matter. And that's where we put our focus. I was speaking to a famous public investor, and he told me back in the days of ESG and box checking, some of the biggest receivers of ESG Capital in the world were Facebook and Exxon. Yes. It's sometimes the reality is more absurd than a joke in that when you just go with this box checking exercise, you end up in. almost absurd. When institutions have put so much focused on this ESG approach, it really lacks the heart of what is it that the world that we want to create. And what I think is important we think about impact investing is that I think each investor, especially family offices with a lot

of flexibility in how they deploy capital, but even institutions should really like form that mission for the world that they want, right? And that world that they want, I believe, can be incredibly financially lucrative in creating that. But I think that's a big difference than we're going to maximize simply, you know, the shareholder returns and or with this like dichotomy of just checking boxes and doing good or bifurcating some of our investment thesis to things that we don't expect to actually return any capital. When we raise the bar and say no actually impact investing can have substantial returns. Part of this is hopefully growing out of people's realization that SaaS companies, as great as they are and nothing wrong with them,

like this kind of B2B SaaS world really dehumanizes the real consumer, right, the human that's behind it. And so when we have companies that are built purely to serve other businesses, of which those businesses are built to serve other businesses, that you get so far abstracted away from the real human. I think this is where ChatGPT, as an example, really was a breakthrough and why it opened up the floodgates with AI technology, because it was the first AI platform that was directly built for humans, right, for people to be able to interact

and receive immediate benefit. People confuse two things. Things that are easy and low-hanging fruit like SaaS, although today, certainly not easy and certainly not low-hanging fruit, and things that are hard, but could be much more lucrative. I think about a bunch of example,

Eric Anderson, who just jumped on for a second time, one of my long-term mentors, He's actually created more drug therapies than anyone in the history of mankind. In this pursuit, he's started all these billion-dollar companies to become magnificently successful and magnificently wealthy. Same with Blake Scholl from Boom Supersonic. He went after a supersonic jet. He's become very wealthy, at least on paper today. He mentioned Open AI, Sam Altman.

He started out, whether where he ended up is slightly different than when he started out, but he started out wanting to change the world, wanting to bring AI in abundance into the universe. So I think there's this misconception that. that some things are easy and some things are harder, but could be far more financially rewarding. I completely agree. And this is where I think people miss that. Like you go back 10 years, I remember when I was raising money for my drone defense

company, right? The sentiment from investors at the time was that SaaS companies, they grow faster, they take less capital to grow, and they have higher returns. And there was this expectation that anything that involved hardware was, like the black plague. Like you want to avoid it. Hardware is hard. Hardware's hard and the expectation that had lower returns. We have finally, I think, as an investment community, shifted away from that and grown in our appreciation that hardware is hard, which means higher returns because there's much more significant barriers to entry. There's much more

specialty that's required. I think that's where, you know, we're betting on and predicting in one of our, one of our core requirements is that there's incredible barrier to entry and moat that would prevent somebody from easily crossing, which most often means there's a hardware element. Tell me about your buy, hold, invest framework. When we look across the investment landscape, most of the time it's seeing what are the opportunities they're coming through the door, evaluating them against each other. We flip that on its head.

We say, what is the world that we want in the future? My primary framework with that is what is the future that my children, my grandchildren will live in that they can take for granted? that to them would feel absolutely inevitable. Like how does this not always exist? And then we say, now, why does that not exist today? And I want them to look at me and be like in 2026, you guys didn't have male birth control as an example, right?

Like they just can't even imagine living a world out. And so our approach is then, well, what company can we invest in to be able to make that happen? And we go through a process to evaluate. We have scouts that go out, evaluate the whole market, see what's out there. And if it aligns with our thesis, then we'll back them. and we're not afraid of backing multiple companies that, you know, on the surface would be seen as competitive.

I'm a big believer that, you know, outside of like SaaS, there's very few direct competitors in most businesses, right? There's different niches. There's different areas of focus. And often there's one player doesn't eat up and absorb the entire market. And so we'll invest when needed. And oftentimes because we're at, you know, the frontier technology focus, there's not something to invest in. And so we say, what can we buy? whether it's an asset like a company or intellectual property from university or even a plateaued

startup that's done well but hasn't hit it yet or a thesis that we've recently started, which is buying large companies, in some cases, a couple cases now household names helping to purchase those companies that have grown are profitable by all accounts, amazing companies. But we see that this is private equity level risk with the potential for venture level upside. And so that's a thesis that we've been deploying recently, which is been incorrect. Because again, it's seeing that potential when others don't. People look at these companies and say, oh, yeah, it's obviously a great company, but they don't see that this company can easily 10 to 20X with the right thesis.

And then finally, if we can't invest and we can't buy, then we just build. And so we assemble a team around that core problem we're trying to solve and action against it. The key there is really thinking about the future is something that we intentionally create, not just something that inevitably happens. Last time we chatted, you gave the example of nuclear fusion. Obviously, is there something done? How do you go about solving a problem like nuclear fusion? For us, it was that process of, is there something we can invest, buy, or build?

On the investment side, there's always the best, right? If there's people that are already doing it in a way that you believe in, and you can behind them as a team, their technology thesis, and so we identified two companies that we found took totally different approaches, and we believe that both, you know, there's a future where both of them are incredibly successful. And nuclear fusion is important because, again, this is some, if it works, right, which we're betting and believing that it will, but there is some technical risk still there. Like, your future children will look back and be like, dad, what do you mean? Like, you lived in a world without abundant energy,

right? Like, you had to pay an energy bill? Like, you guys were so primitive. And so we say, okay, that is what we want to lean into. A lot of these are memetic. Elon Mosque has been talking about solar energy for the last two months, so now everything else is seen as second tier. The reality is, even in the most optimistic timelines, it's going to take a while for us to be able to harness the sun's solar power at the scale that's needed to kind of clear these energy hurdles. As a family office, we're most often not just passively investing. We're very active in the companies to a wide variety of varying degrees, but still really helping to take something that seems as like, okay, when you think about it, yeah, this seems like a good idea to really like,

how do you make this undeniable that people recognize that the future will include this? That's our core approach. There's to the point where then others can join in and invest and be a part of that upside, right? But there's a huge barrier that has to be overcome in frontier technology to ensure that it's not a question of, is it possible, right? Which fusion energy is an example of one of those where it hasn't hit that threshold yet. There's still we can debate whether it's possible. You came from a very humble means. Tell me about your background.

So I grew up in the foster care system. And one of the things that I think, you know, as that shaped me as I was going through high school, I remember my high school librarian, she gave me advice, which is, you know, she knew of the things in my childhood, of the abuse. and ultimately my, you know, a family situation and eventually led to the death of two of my family members. So, you know, some really horrific, complicated childhood. But I remember she gave me this advice, which is, she said, you know, you have gone through so much.

And she said, because of that, you have every excuse to live a miserable life. And that really, like, you know, hit me. a brick in the face, like, wow, what does she mean? Is he said, you have every excuse to live a miserable life, but you also have a choice. And you have a choice to be able to lean in and embrace the difficulties of your childhood and the pain that you've gone through, and that can be your greatest superpower.

And she gave the example, she's, you know, her own story and her own past. And she's, and she shared how, because of that, she had the ability to connect with people who had gone through similar things in a way that others can't, right? And she said, this is your superpower, your ability to be able to empathize. And it was really a powerful moment for me because I realized I had a choice. Right. So much of my childhood was, I was the victim, to put it simply.

Right. But I could choose, do I live a life of victimhood or do I live a life where I get to be the hero? And I was thinking about this recently as with her, the irony of this, you know, her being my high school librarian and me realizing I have a choice, that led me to drop out of high school, which is probably not her intention. But I realize, like, I have a choice and I can use my experiences in a way that ultimately benefits the world.

So I dropped out of high school and then at 15, at 16, got into college, 17 started my first company, which was an aerospace company, that then sold at 19, and then started my defense company, which then is where everything really snowballed and grew out from.

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Learn more at alpha-sense.com slash how I invest. It's fascinating because if you think about low agency and high agency, you think about the ultimate low agency is victim mode, which I agree you have every right to feel like a victim. And it's powerful when you're told you have that right. Right. Like, to me, that was the powerful things being told, like, you have the right. You can be a victim, right? Instead of, like, I feel like people often, like, try to convince people not to be victim.

It's like you're being punished. You're given that option. Yes. Yeah. So you have victimhood, then probably controversial, I would say, 80, 90 percentile of employment. You work, you could be a PhD. You could be working as a professor. You could be working at Costco and many things in between.

and then you have what I would just call Elon, which is it doesn't break the laws of physics, so therefore I'm going to create it. You are arguably the closest to Elon of almost anybody that I've interviewed in that you're not even looking for opportunities where there's an opportunity, where the customers are there,

and then they need this product, you're talking to customers. You're literally creating new industries or helping to germinate new industries. How do you go from somebody with that kind of background to that level of agency? It's a good question.

A few things really helped me. And I think these, again, are, like, my superpowers that I was able to gain, which is one, there was no safety net. There was no failure. Like, you know, for a time, I was homeless. And so I'll give an example. When my very first, like, lesson in delegation was I delegated dumpster diving to my friend who was homeless as well.

And I said, I'm building a company here. Like, you dumpster dive, like, and then we'll cook together. and this will be good. And so that's when I learned to delegate, right? And I think that process of, also about don't eat seafood from the dumpster, even if it's still cold. I learned that less than the hard way. They freeze it before they throw it out.

But they can still be bad before they freeze it. Okay, so all that being said is that I think that realization that, like, you can fail epically. Like, I'm not afraid of anything. Like, I can be homelessness and I can lose everything. and I know I'll be able to build it back up and build it up 10 times bigger. And so I think because of that, I'm willing to take bigger bets

than I think other people. And not that it's a competition by any means, but I think as I look back, I think that gives, has opened the door to things where other people have ran away or have not been willing to take that risk. Like when I started my defense company, I got laughed out of every room, right?

I said, hey, you know, there's going to be a future where drones become exponentially more capable and accessible, easier to buy, easier to fly, could do more things. And that means that we're going to have both malicious use of them in an asymmetric warfare

and we're going to have people recklessly using them, just doing whatever they want, maybe not even with malicious intent. And I took that to the White House, to the Secret Service when I was 19, and I thought, like, they're going to like applaud me and say, oh, you're such a genius. But they laughed me out of the room,

thought it was the most ridiculous thing they never heard. They literally said, boy, we can see every bird that even thinks about flying near the White House being figurative. And I walked away, I thought, and I literally remember shaking my head and like, they have no idea what's coming.

And because of that, I could have easily just given up and said, you know, screw them. But I said, because they're not seeing this, it gives me even more reason why I know it needs to be done, right? One of my principles in life is, if not me, than who?

And if the answer is, there's a whole lot of people that are doing, I don't need to do it. But if no one else is going to do it I firmly believe this needs to exist, then I'm willing to sacrifice to make that happen. And if sacrifice means losing everything, then so be it. Luckily, you know, I built up a war chest now where, you know, I'm no longer playing those odds. But there's a reality when you're willing to face darkness in the face. Perhaps a dumb question, but being homeless, being on the streets, is it really that bad?

Is that what you learn about that it's really not that bad? Being homeless? Well, I think what people miss about being homeless, and I'll say one, there's a lot of different types of being homeless, right? And there's a lot of added complexity with different people's circumstances. I was very fortunate in that I was young. I didn't have drug addictions or anything that complicated the process for me. But it was more recognizing like you're missing the stability. Like you don't know for sure where you're going, what that looks like. It makes everything more complicated. right like even just how you're going to shower what what that looks like just like not having stable footing yes yeah and at the same time for many people are homeless you know you have added complexities on top and you started a business while being homeless technically started before i mean it was unstable housing and then homeless for a bit and then uh ended up in the attic of a fraternity and does that still make you a better entrepreneur today absolutely

What we look for in entrepreneurs is the one thing that you can measure in somebody that predicts success more than anything else. There's one quality. Can you guess what it is? Put you on the spot. You can measure a child, for example. One quality.

Grit? Grit, yes. Okay, you didn't know that. I'm impressed. I'll put you right on the spot. So grit. Grit is actually 10 times more predictive of success than IQ. You can measure that in a child.

Now, what people get wrong about grit, also knows resilience, is the think you're just born as it. There's just some that are more or less, No, grit is a muscle. It's a muscle that's built over time from adversity, the strain and pressure of adversity. Because when you go through hard things, that adversity, now you know, I can take on anything, right? Like, do you know where I come from? You know what I've had to do? You know what I've seen? And so when you have that, like, that reality that you're living through,

you can take on the world. And so that's what we look for in entrepreneurs is that demonstrated resilience, which comes from great, because when you go through, or excuse me, that comes from adversity. Because when you go through adversity, you have that choice. Do I become a victim? Do I use this as my excuse? Or is it become my greatest asset? And an asset that's incredibly unique to that person. My family came here as refugees from Russia. Came here with $600. And I was thrown into this private school network where talk about the wealth inequality. And I always saw it as a superpower. And it came through for me. When I was in eighth grade, I told the story several times. I had a barbecue at my place and we ran out of hamburger buns.

So now everybody had to use hot dog buns for hamburgers. And the other students couldn't deal with that. Their brain broke and they couldn't deal with that. And I was just looking around and I'm like, holy crap, I'm going to run circles around these guys. And if they're so fragile that they can't take the shape of a bread, they get basically thrown off and their brain is broken by the shape of a bread. But how lucky am I to have grown up in Section 8 housing and all these experiences?

And how much of a gift is that? Truly. And it stays with you. And those experiences then shape you. And ultimately, it becomes your superpower. I don't think it's a coincidence. I read a stat a couple of years ago. 50% of venture-back startups are started by first or second generation immigrants.

And that's considering how much difficulty first and second generation immigrants have, including just their mere access. The moment they're speaking, they're already being judged for, for incompetency or being a foreigner. Absolutely. When you abstract out what success is, it comes down to a simple formula,

which is you have resilience plus opportunity. You need to have some level of opportunity, some level of resilience. For some people, they can have a very low amount of resilience, but incredible massive opportunity, right? Morning pouring in on them. And they'll often, like, eventually figure out

and make something work, right? But to really get the massive outcome, you need high levels of resilience and a minimal amount, at least, of opportunity. Right. And so this is the thing that I think is really important for people to realize as we talk about resilience and the gift of going through pain and hardship, we also need to as a society and especially people with wealth and other resources find the ways to give those people the opportunity. Because without the opportunity, it's a waste. me and my business partner Curtis, we have this thought experiment, the NEPO baby, which is if you take a very privileged woman or man in their early 20s and have them pitch to the top venture capitalists with the worst idea,

let's just assume it's a terrible idea, with venture capitalists that maybe want their check as an LP at some point, and they just start giving them feedback. If you do enough of these meetings, you will have a great business. I'm totally convinced that this NEPO baby with enough access, you could actually get through that right idea. Now, the problem is the idea is 1% of the business. Yes. But I do think that there's something about you have the access and you have the resources, but also obviously the resilience is really, the resilience is really 90%. And that's the opportunity, right? With enough massive opportunity, the opportunity comes in resources and network and financial capability, like a lot of things are possible. But if you think about the amount of resources that are required to invest in somebody that has a high level of resilience, it's substantially less and will lead to significantly higher returns. And this is, you know, our theory.

on our philanthropic side as well. You talk to a lot of your family office peers, and they're saying 60% publics, 40% privates, and then you show them in your portfolio. They probably think you're crazy. What do you say to that? I'd say the people who absolutely don't know me think I'm crazy, the people who know that it works are often jealous.

Tell me more. We're doing deals that people wish they could do. Even in the family office circles, there's, you know, people are comfortable, and they have families and multi-generations that they're trying to support. And so, you know, I think the family offices that I think are going to do the most interesting things that I personally find the most fascinating are multigenerational family offices that somehow survived past like the whole, you know, gin three, you know, the issue.

Very rare. Yes, very rare. Less than 5%. But when they do do that, it's because they have an amount of empowerment. Or either one, they just don't give anybody any money. and they retain and have a very organized professional management team, or they empower their family and do things like saying they're going to anchor a VC fund that the, you know, Gen 3 or Gen 4 starts.

And those are, I think, where things become really interesting. Of course, we could say, oh, it's not fair. We quine, plain, you know, be victims to it. But like some of those people are my best friends. And I think that they had every opportunity to be lazy and just, you know, live a simple life. But they took the resources they had and said, now how can I do things differently? And I think those are words the most interesting innovations just in the financial world will come out from family offices. The family offices that are built around, you know, a patriarch and matriarch who want to ensure that their great grandkids have money.

Those are the ones that are most susceptible to the boom and bust of our financial system, even with the diversification that you laid out. I got to interview the CIA of Mark Andrewson, Ben Horowitz, his family office, Michelle. And I basically had therapy on the podcast. and he went through my portfolio and I'm in over 500 startups and my whole understanding always, since I started making this investment, I want to

build a baby's S&P 500 where I have access, where I have leverage, sometimes I'm anchoring a position, I'm getting leverage on that and that if it was not all in one vertical, if it wasn't all consumer or SaaS or defense deck, then it in theory was not more risky than SEP 500

portfolio. Obviously, much more illiquid, which is another thing as I get married, we're expecting our child. That's definitely a consideration that that's changed. He actually agreed with me, which was surprising to me. I was waiting for him to criticize me. And he said that the modern endowment portfolio or modern portfolio theory, a lot of it is just hyper-optimized on capital preservation. And a lot of it is, in some ways, arbitrary or dogmatic. And I started to remember I had in business school, professor Ken French from the Fama French three-factor model. His partner in Fama French got the Nobel Prize. And we had an entire class on this, which I had forgotten about the value of diversification. And essentially, you get 90% of diversification when you're in 10 assets. Why? Because it's just 10 divided by one. It's a very simple math. You get 95% of the diversification and you have 20 assets. That's where this 22.5% meme comes. So you want 22.5% assets. Why? Because it's roughly, I think, like 96, 97%.

But there's nothing fundamentally wrong with being a lot of startups, given that you're able to deal with the liquidity, given that they're not correlated to each other. There's a whole other question and not easy question to answer. It's just, are you diversified? It's like the simplest, difficult question to answer. But I was surprised to that. It sounds like your portfolio is closer to mine than the typical endowment portfolio. Completely. I think when people think about diversification, they think of, again, box checking.

When we think about diversification, we think about what are the futures that we want to exist and are any of those mutually exclusive? And if there's any level of mutually exclusive, like if this happens, then that, then we say, okay, these are things that we want to hedge against. And so as an example, when we think about, like on the crypto front, right, if energy is practically free and, like, our modern cryptographic systems fail, then what does that mean for our crypto investments? right? On the other side, we say, well, if the world becomes increasingly complex and wars break out and continue to grow an increasing rate, what does that mean for some of our investments? Do those die out and then do other ones become more successful in that? And so it's really designing the future and recognizing that as much as you want to build that future, there are multiple scenarios. And you want to make sure that you're winning in all this.

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Run your business smartos Square. Get started today. Support for today's episode comes from Square, the all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this other day when I stopped by a local cafe here.

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Get started today. People just have such a hard time not understanding that the future is not determined. It's probabilistic. Yes. Mostly by actors such as yourself that are, you know, these great men in theory that are creating industries. It's very hard to think about these second order effects, most popularized by the butterfly effect of a butterfly in the Amazon could change the course of history.

certainly many other things could change history as well. I think the point there that I really hark on is if you look back at like in history books, it's really easy for us to get cocky to be like, people are so dumb. What were they thinking back then? Like they did X, Y, Z that way. Like obviously it should be done this way. It just feels inevitable. And we realize is when you take step back, future generations are going to think that like

that we are so backwards, so insane, right? When you think of like open like, you know, people having open sewage, right? How could they not have known of germ theory, obviously, right? But actually there's like most of the things about the universe we still don't know, right? Things that are extremely consequential. Like when you think about just we don't even understand our brain, how our brain works, right? It's like these very simple things that, to your point, I think the future that we get to create is one in which ultimately we want it to benefit everybody, right? And so what I think is interesting about AI right now is that I, from my perspective, it's the first time where humans have in our modern world have took a step back.

and said, we don't know what the future looks like. It's not this like a linear progression. This is going to be earth shattering. And nobody knows exactly in what way. And that's because AI itself is solving itself and everything. Truly. And like when we think about like job replacement, this is an area when you talk about like diversification, we think diversification, I think is actually the wrong thing to think about. I think it's really about risk management, right? And diversification is one potential way to solve for portfolio's risk management. And so going into that a step further,

one of the areas that we look for from a risk standpoint is what are the jobs that will be replaced by AI? What are their jobs that will be stable? And then what are the predictions others are making that are completely wrong in that space? And so, for example, there's a lot of talk about the idea of even, obviously, most people accept that many white-collar positions could easily be replaced.

but which ones are not going to be, right? What are the exact duties that aren't going to be replaced? And then what are the jobs that are created, such as an oversight layer for AI that don't exist today? And then when we talk about, like, non-white-collar jobs, there's a lot of discussion around that houses will be able to be maintained by robots, as an example.

Like, we're betting heavily against that. This is part of also coming from, you know, difficult background. Like, I've crawled underneath houses, like, you know, and try to repair, like, plumbing. Like, anybody who's done that will tell. you that there's no robot that's going to be created that's going to be able to have the dexterity, be able to sense a little bit of humidity, a little, like, be able to do and make these fine-tune adjustments. Like, that's an innately human action. Like, the world was built

for humans by humans. That's Chevin's paradox, which is the things that are very easy for humans will be very difficult for AI and things that are very easy for AI will be very difficult for humans. Yes. And right now we're not in a place yet where we see that bifurcation. But I believe that, but I know that we will. And I think people are going to be really surprised. And So we've been looking at how do we in actively investing in these like kind of boring industries. And so like our two, and I think people get really shocked and when they see this and they think it's about diversification, but it's really not. But we invest in like cutting edge, frontier, deep tech and then boring industries and industrial presses from banks, hospitals to these, you know, service providers. And they say, oh, well, we're just trying to diversify.

The simple thing that I think is people are like, oh, you know, you're diversifying in a world of, you know, super future world. and then a world that falls back into decline. And it's no, actually, this is, like, these invisible systems that we depend on are always going to be there. They might look fundamentally different. But also, I want to bet on the ones, I'm going to intentionally bet on the ones that aren't going to change dramatically. And then in, like, banks and hospitals, bet on those, but in a way where I'm the one guiding that process by layering in this side of the house all of the frontier and deep-taker. You're the one that's providing the value and growing the value in these old school industries. Because presumably there's also some of those industries like hospitals,

for example, and banks, really, aren't going to be pushing the envelope when it comes to these techniques. And they won't be able to keep up. And again, I'm sharing my secrets, right? They won't be able to keep up and we'll be able to... Is there a principal agent issue there

where the people that end up running hospitals and ran out banks are not the same risk tolerance that would take big bets on technology? Completely. And that's our entire thesis. But our approach there is, like, there will be a huge consolidation opportunity as we build these kind of traditional industrial systems

in a way that, that the people who've been in the business long time and know better, they won't be able to keep up. And when you buy a bank or you buy a hospital, are you investing all your money yourself? Are you anchoring and bringing in co-investors? Talk to me about that process. This is something that drives my finance team crazy.

Because they're like, look, Fox, if you're so confident in this idea, then we should just like gobble it up, you know, fully ourselves. And what really pisses them off is that when we make those big bets and then when they work really well, then they're like, okay, now we, like, forget all these other crazy, like, things you're doing, just, like, double down on the ones that are working. And that's just not how we work.

Because my approach is, like, I want to take the biggest bets because others aren't willing to. Like, we're doing this because others. You're optimizing on impact. Yes, exactly. And it just happens that it just, you know, I'm lucky enough that it works out that keeps, you know, producing really great returns.

And also there's this, there's an effect of being able to be across these different spaces. that you have more pieces that you're able to then plug into each other rather than diving deep into, you know, a single focused area. Again, not to compare you to Elon, but when he started SpaceX, I believe his probability was that 10% chance that he would succeed. But Tesla, I don't know, but similar idea. He didn't think that he would succeed. But he thought that if he could progress the ball down the field and also show that as an industry, credentialize the space and have other people compete, he would get the same outcome, which is impact. He wasn't actually optimizing on Tesla or SpaceX. He was optimizing on why aren't we going to Mars at the time?

Why don't we have electric vehicles? He just happened to succeed, which was not something he expected. One of the things that I think he did really well is he opened up a lot of the patents, right, for others to be able to use freely. Recognizing that was ultimately going to help accomplish the mission. And this is a very simple thing when people really take a step back is like, what are you optimizing for? If you're trying to optimize for a mission versus are you trying to optimize for the greatest cash returns? And it's nothing wrong. This isn't like, oh, everything needs to be philanthropic.

We're very intentional and a strong bifurcation between our family office side and our philanthropic side. We expect returns, but we're not engineering towards returns. But when you do the right things and do things that others aren't willing to do, it turns out you get great returns. It might not be optimizing on returns, but you're not. making it inevitable by going early on in creating industries, how do you not make money? As long as you do. Yes. That's exactly it.

And you're essentially taking majority control or big chunks of companies, but you still are subscribed to the power law aspect. Or do you expect every single one of those industries to hit a big? What do you expect in terms of your loss ratio? We expect every single company to work. Like, we're not. It's not as great. And most do.

The biggest question that we have is there are some things that, um, You know, like, I will tell, most things I will tell you with confidence, it will happen, right? There's some things that it's like, I don't know. Like nuclear fusion, I don't know. I'm betting that it will, but that's, you know, in all humility, and I don't think anybody can tell you with 1,000%. But there's other areas like male, like male birth control, like being able to control fertility, right? Like areas of being able to eradicate genetic diseases. Like, these are areas that are 100% going to happen.

The only question is when. And so it's not a question like do our bets work out? It's can we bet at the right time? And I'd rather be too early than too late is the key is then it's just a matter of capital. If you're too late, that's boring. I'm never going to be too late. But if you're too early, then it's a question of,

is it going to cost you $10 million to prove that this is like not a hairbrained idea or is it going to cost you $50 million? And at the end of the day, my goal is to ensure that there's enough successes across our portfolio. that that becomes a rounding error. How do you know when to cut your losers? I don't see this cutting losers, partially because our approach is, I think inherently accomplishes this.

Our approach is to sustain something long enough to the point where it's undeniable that this could happen. And then after that, allow others to be able to come in. I think of businesses a lot as like children, right? You raise up your child, you get them to a place where they're in school, in high school, that's kind of like the high school years, right? Like, you're still there supporting them. If they need you, you're obviously, you're there on a daily basis. And at the same time,

if they want to like go sideways, like, that's on them at this point. And then at some point, the kid gets to college, right? And it's like, okay, they're out, right? If they ever need something, of course, you're there. You're their parent. You love them. And at the same time, they are completely their own entity. And you're not only letting your kids go and flourish. you're oftentimes selling at the very time that the business is de-risk, which I'm sure also drives your finance team crazy. Our secondary strategy definitely, yes, everything I do drives them crazy. But it works out.

So part of our process is doing secondaries on them because, like, the difference between recently, like we did 25x, there was clear belief that that could easily do another 2x, so 50x, right? But at the end of the day, like a 20, like that extra 2x isn't one. worth it for us. I'd rather create or either give it to somebody who we work with often or to a new relationship where it's like, hey, like I have high confidence. It's going to do another 2x. Will it do a 4x? Meaning go from that to like 100, right? I don't know, but you're definitely have a 2x in here. So I'd rather get out in those moments. And we often don't, we don't pull all the cards out.

We want to, we're still committed and stay in. But I would rather take that capital and redeploy it because there's so many, so many problems in the world that ultimately are opportunities. so many things that our future generations will get to enjoy because we intentionally created them today. And I have a long list and we're working through it. There's all these hokey sayings like problems are the opposite side of problems are opportunities and all these proverbs. But in reality, doesn't get tiring to always be dealing with new technologies that are difficult and does not wear you out? I'm a curious mind. And I always have been.

That's what, like, I was a bad student. My grades were horrible. but everything one of my teachers will tell you is I was curious. And they still, like, when I talk to them, they'll still tell me that. Because I'd like ask them like, well, why is it this way? Or what is the background of that? And they would often say, you know, and I realize now they were just trying to get me shut up. But they would say, you know, why don't you figure it out and write an essay and bring it in?

And I always took them seriously. Looking back, I'm like, oh, that's embarrassing. But I really was curious. Like, why do these things exist? Who decided this? And so when we look at like all of these different fundamental problems, what I realized is they're from like pretty much everything in the frontier tech space there's so much overlap even in things like that are completely on the surface separate topic

areas from biosciences to defense technology to like insurance regulations they all on the surface are very different what I focus on is I partner and bring in our like our advisory board are some of the world's foremost leaders in this right they have PhDs they've spent decades building either research labs or companies in the space or some of them have already had multi-billion dollar exits. And they're the experts, right? What my approach is and what the commonality of all of them is that they're most often in highly regulated or spaces that aren't yet regulated but need to be or I should say

and they have a public perception either issue or will have a public perception issue that we need to intentionally manage. And they're most often in industries that don't exist but need to exist. or if that have existed for millennia, that need to be completely flipped on their head. That exists across the entire portfolio. And so it becomes this very unexpected, you know, essentially template that you can take.

And your thesis is that impact is downstream of science. So really new scientific discoveries, new scientific application of scientific discoveries, directly flows into impact. Therefore, that's why you have these PhD advisors. Yes, but not naturally. That's the problem, right? Scientists are really great at asking questions.

And the entire business model, I've seen so many companies, especially ones that we get involved with, that kind of tried, dated some really interesting things, but then they ultimately panned out, is that people forget the scientists, they're great, they're brilliant, but their entire business model of science is to ask a question, solve the question, and in doing so, ask another question to get more grant funding to then answer that, right?

That's the entire cycle. It's not actually solving anything. It's not actually producing anything. And so that's one of, I think, the magic of what we do is we have, help reorient scientists and help steer them towards a definite conclusion, not this perpetual questions. Which sound, I mean, it might sound simple, but that's, it's an entire different way of thinking, right? It's like being, it's them accepting, like, this is what we're trying to accomplish and put them in an environment that rewards that, not that rewards an additional question so you can

get another million dollar grant. Everyone's heard incentives drive behaviors, but not many people think, at least on a macro level, all the different incentives of different industries. Incentives you mentioned in the scientific community, I just sat at earlier today with Nico, who's at a general catalyst for 15 years. And he started a fund with his partner to go after unloved sectors or sectors are not hot today, essentially no Vod coding, no AI. And the reason for that is something like 75% of all venture capital LP dollars have gone into five funds, and 75% of all VC funding have gotten to five companies. This happens to be the same number. And one of the reasons for that is that capital tends to amalgamate into these industries only after there's been a big outcome, a Deca Unicorn or a big exit.

But obviously, companies are able to get the Decacorn status or the big exit without a bunch of venture funding. Yes. So one is downstream of the other one, but the other one doesn't need to be downstream of the other one. So then the next natural question is, how many more of these Deca unicorns can we build in order to create these new industries? And nobody wants to do that job. It's a very difficult job. It doesn't scale. You're going to be wrong for five to ten years, which is three fund cycles by the time

your LPs are going to abandon you or move on to the next fund. So talk about incentives. Yes. You would think, why doesn't everybody invest into scientific projects that could 100 X or 1,000 X? Because the incentives for VCs is not actually to once in a while get 100X on new industry. It's how do you deploy in a portfolio optimized way, a consistent two and a half to three X, vintage after vintage, raise more assets.

And that's actually the answer why so many of these industries are not birthed. And it's kind of crazy until you understand how the game is played. Truly. And it's a piece of advice that was given to me when I was young was you can't play the game if you don't know how it's played,

if you don't know the rules, right? You got to know the rules in order to win the game. And I think it's one of the things that I share with a lot of my entrepreneurs that I mentor is like VCs are not the end-all-be-all. are, and I think people just don't understand, it's like the whole idea of like an LP. It's like the VCs are optimizing for their LPs. Their customers.

Their customers. And so this is, and there's a lot of benefit, like strategic benefit, like strategic things that you can do when you understand that. For example, like one of our companies, they, they had this amazing VC fund that really wanted to invest in them. But they, that VC fund was raising their next, their next round. And so they didn't have enough capital. They legitimately just didn't have the capital to deploy. And so what I told the entrepreneur is like, okay, you know, you don't need the money. Like, we'll backstop you.

So, like, you aren't like going to run out of money. So what you need to understand is that VC has customers that they need to, and bosses. And those are the LPs. And so you want them to look good. And this is a great named fund, right? It's not like a tier one, but in this niche. It's a very like known fund. And so I said, you can give them their stamp of approval by getting them to sign docs.

tell them you will warehouse their investment and you'll give them six months to actually write the check. And then you get to have their stamp of approval saying that they're in this round. You get to go to the other VCs and tell them that this fund is in the round, right? And now this fund then gets to use your announcement

and they had a big announcement that was coming out like two weeks later. They get to use that announcement to then go to their VCs and say, look, we got a sweetheart deal into this, into this, and now they look good, right? And so it's like, you need to understand the dynamics here

and not just think that like a VC is not just somebody who's like just throwing out capital. They have fund cycles. They have LPs that they're managing. And they have dynamics of what their previous funds. Like how successful or not successful were they? It goes back to this whole victim versus agency mindset, which is it's that meme where it's on the boss looking at the sun

and looking at dark, which is like VCs are driven by incentives, but VCs are also driven by incentives. Yes. Two sides of the same coin. I think about a couple of the same. other analogies, which is these are all recurred. A lot of this is recursive in that 75% of the money is going in the same five companies. And that means that they're getting that capital from LPs. That means that the 25% is actually not going into that. But by the mere nature of them not going into those companies is why they don't raise the capital.

Yes. So it's not just one side. And it's not just like, here's the history of venture capital. It's driving itself. Yes. But that's also where the opportunity is, right? By leaning into that on our side from investing, that's why, you know, I share a playbook openly. because I don't think me sharing this, everyone's going to wake up and say, oh, we need to, you know, deploy more capital into underappreciated sectors. And so that's why, for example, you know, when we invest in biotech, people ask what we invest in biotech. I say, I'll tell you what we don't invest in. We don't invest in heart disease, in cancer, and obesity or diabetes. If we were funded. Yes, because they have so much money that those are entire industries built around raising money in those spaces.

And when we think about the basic things like, you know, we're big and reproductive and sexual health, less than 1% of 1% of all VC capital in health care goes towards reproductive or sexual health, right? A tiny smidgen. And yet, it affects every single human on earth. Everybody's trying to decide and be able to choose when it if to have a child or when enough to have sex. Simple as that. And yet, because it's not these big sexy, you know, of those big four that I mentioned, it gets neglected. And yet it's something that impacts every single person.

So that's where we focus on in biotech. Same with defense. People come to me and pitch me all the time on drone technology. Like, they did that previously great. They're like, you're the drone guy. Yeah, like you helped create the drone industry. You wrote the drone laws. Like, this is your thing.

And it's like, yes, but there's so much noise and, you know, just ridiculousness in the space now. It's no longer frontier tech, right? It's been commoditized. It's amazing. I'm glad people are still doing that. And like, we need, you know, advances in drone technology. But it's iterative rather than, you know, these quantum leaps. and that's where my capital is best deployed.

Does this help you recruit like-minded people or our analysts and other employees? Are you just competing head-on with other venture and other family offices? Yeah, we don't compete when we hire because we're hiring people that everyone else assumes are unhirable, right? People who've had enormous success,

people who've been the CFO of one of the largest companies in the world. As an example, we have another one of our executives. He was built a product, healthcare product that was selling over a billion years in revenue, excuse me, a billion dollars in revenue per year. And he retired. And everybody thought he was, you know, sailing off in the sunset, which he was, as is often the case. Literally. Yeah. He realized that he's got something more in him. He wanted to be able to contribute. Got another app that. And at the same time, he didn't want to start from scratch. And he also didn't want to get plugged into, you know, some big corporate company.

And so that's, you know, part of our secret sauce. Is that part of your pitch is that you're optimizing on impact? Yes. But, but The pitch is more we are optimizing on creating the world that we believe needs to exist. And if you want to be a part of creating that world, then people are welcome to join the team. You've obviously been extremely successful. Why do you think other family offices don't follow this model? Most family offices are managed by like a professional CEO. Or if it's a family member, like they're investing in areas that they've worked, they've done well in.

Right. And so like a real estate family, they're investing in prop tech, right? That's what they know. I don't think that's a problem. but it's very risky when you go outside of your lane. There's a lot of incentives as well. Going back to the CIA of Mark Andrews and Ben Horowitz, his family, also is Michelle Del Buerno.

He mentioned, he just said it's dogma. Why do people have 60% here at 30%? It's not necessarily bad or good, but it's just one model that's been repeated so many times. There's entire industries from it. There's marketing. There's memes. There's even studies being commissioned by people

trying to prove these concepts, which, by the way, oftentimes are right, but it's just one view of how things can be done. And also, I would argue if 95% of family offices don't make it to third generation, maybe it's not the best model. This is also where, I think, for some family offices that I really respect and that have figured that out, that multigenerational model, it's because they're focusing on impact, right? It's not just on capital preservation. It's how do we as, how do we as a family, not, sustain our family wealth, but how do we sustain a world that we want to live in, in a world that is, that's healthy and people are happy. And that is, like, when you create your family values around that, you invest in things, and I think kids see their parents focused on those things, rather than being stressed out about the markets up and down in companies that you don't even know. Right. And I think that's one of the things that's interesting about, like, on the public market side is like how much people actually even know some of these companies what they're doing. Right. And sometimes it's not to say that the companies are doing something bad,

but it's looking at purely as abstracted out as like, I think this company is going to go up. We have a loose idea of what they're doing, but to really have an intimate understanding of is that company actually like moving forward your vision of what the world should look like. How do you think about raising your kits? Yeah. I'll put it this way. So as you know, my my childhood was very complicated, and my wife, she was a refugee and came to the U.S. with nothing, and we've built an incredible life together.

And so we think, you know, those are some of the things that make us, you know, who we are. And so we often think, how do we ensure that our kids are facing these difficult, uncomfortable, uncertain situations in a way that's ultimately safe, but productive, right?

And for us, part of our philanthropic work is going to incorporate our kids and have them very much front and center in that so that they have this broad spectrum view of the world. I think everybody can do this. It's not a new concept, but there's this realization of this like overcoddling of our children. Like kids, you know, should kids should like do difficult things. They should learn that they can figure things out. My friend's dad growing up, it was, I remember that we were, um, we were, um, um, we were, um, on the little drive with them, and the car broke down. And he said, like, how do you think, what do you think we should do?

I remember, I'm like, why are you asking me? Like, I'm like, you know, I remember I was like, I don't know, nine years old at the time. And, and I remember, and he said, like, we don't have any place to go. We were driving back to their house. He's like, you know, let's figure this out together. Like, you tell me what you think we should do and we'll do it and we'll see if it works. And it's something that has like really stuck with me because, and it's something that I'm excited to do. with our kids is to be able to give them those opportunities to realize, like, you get to figure it out.

And it doesn't mean you're going to get it right and it's okay to be wrong. Me and my wife are also expecting. So I've been asking this question of a lot of very successful people. And obviously, some have grandkids, some haven't had their first kids. And two real hacks that I found. One is you referenced a day, which is essentially create these almost simulated but not quite contrived situations where you're going to Honduras for six weeks in the summer and you're building ditches. It is very difficult.

you have a shock, you don't have your phone, all these truly difficult situations are not permanent. And two is, and this is something I've known for a while, is send your kids to boot camp, which is investment banking. Investment banking will beat the entitlement out of a kid after two to three years. It's just so brutal for any kids, and there's a lot of other entitled kids there, and there's a lot of very successful kids, so they're not treated. Those are kind of the two solutions I've heard so far. It's a great approach. Putting them in those difficult situations where they're by themselves. You know, and then on our side, I think it's helping these kids, our future kids, be able to see, like, the reality is the world.

So, like, on our philanthropic side, we started the Oasis Academy, bringing in these kids from around the world and excited for our kids to see, like, that, you know, they're not special, right? That there's, like, a lot of amazing people out there that are worth investing in. And just because they happen to be born to us isn't the, doesn't give them in your mid-30s? Yeah, 31. 31. It's amazing. So I guess my final question, which doesn't take you back that far, but if you could go back to high school, sitting with your guidance counselor, and after that meeting, you could whisper in your ear, a younger fox, one piece of timeless advice. What would that be? It would be the advice that I would give to myself and that I give to everyone is to understand the things that you can control and the things you can't control. surrender to the things you can't control. The things you can control, the choices you have

are much more than you think, right? And focus on those things. Again, you have the agency to choose, do you become a victim? You have the agency to choose do you use the pain and tribulations as something that gives you insights that others don't.

These are the choices we have. We don't always get to choose what happens to us, but we get to choose what we do with what's happened to us. And ultimately, those, the hardest things that have happened to us, can be, if we choose to be your greatest superpowers, that then can change the world. Jocco Willings talks about this in his book, and he talks about when he was in the army and when he was actually in Afghanistan,

and there are parts where you're running and the enemies are firing at you. And talk about probabilistic. It's completely probabilistic. You could have the best, train, smartest, most dedicated warrior that gets shot and the laziest, slowest, that somehow the bullets miss. And by his summation, roughly 90% of the factors are uncontrollable. But you have the 10%, which is you're supposed to zigzag. You're supposed to stay low to the ground. There's a lot of best practices that control 10%.

In that case, you focus all your energy on that 10%. And if Jocko Willings could do that literally in times of war when being shot at, certainly we could all learn to do that when we have a bad day at work or we get an email that we don't like or somebody's arguing with us about something that we feel entitled to. Truly. And that's the beauty is that level of empathy of recognizing everybody's figuring out their own stuff has gone through their own, you know, their own things.

And everybody's doing the best they can. Might not be good as you wish they could do, but they're doing the best they can. And what you can do is the best you can. And that's by making those additional choices to seize those opportunities that you can dictate your future. Well, Fox, you're already a legend. And looking forward to doing this many times in the future. Thanks for jumping on.

Thanks for having me.