The Pomp Podcast - 293: Josh Wolfe On Investing In Frontier Technology

Episode Date: May 13, 2020

Josh Wolfe is a cofounder of Lux Capital. His goal is to support scientists and entrepreneurs who pursue counter-conventional solutions to the most vexing puzzles of our time in order to lead us into a brighter future. In this conversation, we discuss finding the outcasts that build valuable companies, why science is not based on consensus, deflation vs inflation, how censorship can stop innovation, Elon Musk & Tesla, Ray Dalio, space travel & aliens, and Bitcoin. ===============================  Pomp writes a daily letter to over 45,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at www.pompletter.com

This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Josh Wolf is a co-founder of Lux Capital. His goal is to support scientists and entrepreneurs who pursue counter-conventional solutions to the most vexing puzzles of our time in order to lead us into a brighter future. In this conversation, we discuss finding the outcasts that build valuable companies, why science is not based on consensus, deflation versus inflation, how censorship can stop innovation, Elon Musk and Tesla, Ray Dalio, space travel and aliens, and Bitcoin. I really enjoyed this conversation with Josh and I hope

you guys do as well. Don't forget, I write a daily letter to over 50,000 investors about business technology and finance. I break down complex topics into easy to understand language while sharing opinions on various aspects of each industry, you can subscribe at Pompletter.com. Again, Pompletter.com or go in the description and click on the link there. All right, let's get into this episode with Josh. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a

particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Josh here. We've got a whole bunch of stuff to talk about, so thanks for doing this. Thanks for having me, man. Good to see you. Yeah, for sure. For those that don't know you, let's just start background, kind of where you grew up and then we'll get into the founding story of Lux. Born in Cali, parents split when I was three, moved to Coney Island, Brooklyn, which I consider home and grew up there. Sort of a mix between a science nerd and a lover of all things basketball and hip hop. Went to Cornell, graduated, went to investment banking, wasn't even smart enough to

collect my first year bonus, started Lux and man, it's almost two decades. So yeah, that's the story. Yeah. So one of the things is you post music on Twitter all the time, which I appreciate because I think there's an entire generation of kids that grew up, you know, relatively in the same age group. We all listen to hip hop. Everyone loved the NBA, Allen Iverson, right? There's just like this whole generation. And then when you get in the professional world, like nobody really talks about it, but you still post all the music and everything. And it's just like, look, like that's who he is that's literally the generation he grew up in right either that's a nice way of saying you're old or uh no it's true it's it's i actually think for you know what we do when we do venture

capital is um is very akin to trying to find you know the next new band or artist you're you're looking on the outskirts i've always been drawn to to both you know art and music that was slightly off the beaten path and so my wife is totally you know casey casem top 40 you know all the pop hits and I've always been drawn towards weirder stuff that you would never hear on the radio. And so it's the same sort of thing in venture capital. I'm typically never drawn towards the stuff that everybody else is focused on.

I want to understand what everybody else is focused on. So I will listen to, you know, all the top hits in music, but I like the weirder fringe stuff. And there's a virtue of that because when you discover it, there's sort of a, you know, a future status that you get when you're like, oh, I knew this, you know, I was listening to this before everybody else. So I think that's sort of the hit that, you know,

you keep getting, but it happens to be that the music in my mind is just better. The tones, the discordance, it's sort of more emotionally resonant with my own psychology than, you know, Beatles pop music. How much of that do you think is like personal preference, right? So, hey, I just tend to like this type of music versus you actually actively made a decision to go seek out maybe music that other people didn't like. I think it was emotional resonance. So I've always had a chip on my shoulder. You know, I was like the short kid. I was the kid, you know, that would get beat up in Coney Island. And, you know, I just sort of always distrusting my family was split and broken.

And so I just always gravitated towards like darker hip hop, hard, heavy metal, New York, hardcore, you know, and there's like this emotional crescendo. You know, I love music. In fact, I just posted on Twitter, like I think it was Deftones and it was Rage Against the Machine. Maybe it was Helmet. You know, now I get to indoctrinate my kids with this, which is really funny. now they don't share the same emotional you know discordance that I had my whole life was geared towards making them grow up you know in a pop music kind of world but I love when you know just gets like super mellow mellow mellow and it just explodes with like rage and emotion so whether that's a you know crazy riff and heavy metal or you know just dropping an insane beat and hip-hop it's the same sort of thing for sure and then obviously you went into investment

banking kind of start your career and at some point um you know you've said a number of times that you wanted to find that intersection between science and finance uh and venture capital uh it feels like wall street was i want to say late to the game but but it was definitely more of a west coast kind of silicon valley type uh business and maybe some in boston as well uh what was kind of the thought process for you guys i know people probably thought you were crazy to some degree but but kind of what was the really the genesis of wanting to jump into a venture Well, part of it is probably intellectual ADD. I mean, the beautiful thing about venture is you get to focus on a million different

things. And usually it's driven by the brilliant people who are constantly pursuing something new and cutting edge out of their own either greed or quest for status or fame or money or whatever it might be. So that was sort of the driving impetus. Science for me is interesting because it's the endless frontier. So no matter what we discover, every time that you expand the circumference of what's known, it just basically also expands the circumference of what's unknown as it touches

the darkness. And so even the derivation of the word Lux, Latin for light, you know, was looking where other people weren't looking and shining a spotlight so that we can try to find interesting things that we thought the mainstream wasn't focused on. So at the time when we started Lux, everybody was focused on dot coms and optical networking. And those were the things which were front page news and had, you know, dozens of top tier firms, which we could never hope to compete with and hundreds of also rounds. You had all kinds of incubators that were existing around the time for like dot coms

and e-commerce businesses. And all of that would go on, you know, in like any field, 99% of these things would fail, 1% would go on and change the world and make fortunes, a priority, very hard to pick who that would be. But we said, let's focus on an area where other people weren't. And we basically looked at the cascading S-curves throughout the history of venture capital, where every 10 or 15 years, some secular wave in a technology field, 1970s PCs, 1980s biotech, 90s telecom and TMT. And we said the next wave might be the physical and material sciences. So let's go to the universities, the government labs, the corporate labs, where those breakthroughs were happening.

And it happened to be at the time, mostly because everybody was focused over here, that most people were not focused on physics, chemistry, material science. And so that allowed us to carve out a niche in this sort of emerging technology. And over time, you know, the rubric would change. It went from nanotech to emerging tech to, you know, now people call it deep tech. But it's basically just like hard science. The average entrepreneur's age is typically 25 to 35, as opposed to 15 to 25. You typically have to have a PhD in some of these fields. The average starting pay for a biotech exec is an order of magnitude higher than your traditional IT exec. and one of the really interesting things I think is that the range of what we do because it's very interdisciplinary multidisciplinary means that we might be working on you know something for telescopes and astronomy on one day and then it turns out that the guy who won a Nobel Prize for something in taking a technique like that is creating a new tool to be able to do real-time imaging inside of cells in biology and so you're sort of constantly flipping between these fields And I just think that it's at these interstices between these different disciplines where the amazing breakthroughs happen.

And it's just, you know, it's like a smorgasbord of intellectual excitement. Now, economically, it doesn't always work, but intellectually, it's, you know, it's an endless game. For sure. And when you guys started, did you or your partners, did anyone have kind of deep tech background or science background? Or were you guys coming at this and really having to immerse yourself and learn from scratch? So I had a background in molecular bio. I was a published scientist doing immunopathology. I had watched a movie quite literally in the early 90s. I was an early teenager called Then the Band Played On,

and it had this huge formative impact on me. It was about the AIDS crisis. And I was like, I'm going to go be a scientist. I'm going to literally cure AIDS. And this was the naive, absurd thinking. I ended up doing my Westinghouse in a small protein called urokinase and how it evolves in the progression of HIV into full-blown AIDS, particularly in children.

And I just banged on the door of a scientist in downstate Brooklyn to let me work in the lab, which I did for four or five years. And it was actually him who turned me on to finance because we would be spinning down a centrifuge of blood and he'd be making tens of thousands of dollars trading futures and options. And I knew nothing, literally nothing. He gave me a Wall Street Journal guide to money and investing that I think he got sort of like a football phone that they used to give you with Sports Illustrated when you got your subscription. And that was like my first foray into understanding markets. And I also remember I lost every dollar I had saved up, which was about like, I don't know, $1,800 over the

course of a summer and a half of working at like tji fridays and um you know shoveling snow during the winter and delivering uh menus and chips at bay brooklyn because i bet it all on a company called iomega uh and iomega was like a a hard disk drive i think it might have been involved in fraud uh but it was just you know absolute disaster uh but anyway so i had a little bit of a scientific background just more on the biological science side and peter uh was journalist background coming out of Syracuse. I went to Cornell. He was at Lehman Brothers in equity research, and I was at Solly in investment banking. We knew each other through a mutual friend that I'd grown up with. And yeah, then we started Lux and then just surrounded ourselves with

really smart people. Yeah. One of the concepts that Paul Graham recently talked about is like this whole idea of like learning to unlearn. And I think that you guys specifically, given how multi-disciplinary, the types of companies you look at, right? It's not like most of these companies that are on that frontier are only using one piece of technology. Many times it's multiple pieces. How do you actually think about getting up to speed on a piece of technology or an industry that either you don't know a lot about, or you just haven't had the time really to spend, to be able to ask the right questions, to diligence the right things. And do you guys do that or do you actually go to outside sources to help on that diligence most of it is outside

sources in the forms of both what you can read you know somebody else is publishing something synthesizing what they may know or may have learned and you know i mean the internet is amazing right the ability for you to learn something today versus you know 20 years ago is just insane um so the synthesis of what other people are putting together and you know obviously there's you know every degree from like deep science that's being published to journalists to lay people that might you know tweet something or put something on medium but nobody really has a monopoly on really interesting insights and ideas and truths and frameworks. So you can get those from anywhere. It sort of gives me information anxiety, which is why I'm constantly

reading every source I can. And we can talk about that too, just sort of where I read and what I read. And in the same way as looking for bands or music or startups, I think you have to find information that is off the beaten path. And then the other piece is talking to people. And so over time, you build a network, obviously. And we went from talking to pretty crappy startups to more serious startups to Nobel prize winning scientists and heads of academic departments. And so most of the time now we're able to triangulate and understand as somebody for real or full of it. And in pretty cutting edge new areas, you know, we could do a six month deep dive and we can have a whole set of views. I mean, I'll give you a perfect example.

We started up a company around this crazy thesis that sort of bordered on science fiction for X-Men, which was finding genetic mutants, people that have really rare phenotypes that exist in the real world. And there's some genetic basis for that. And so there were a whole set of people when I first started looking at this, was there an opportunity for a new company to focus on that, that I thought were like the people. And over time you triangulate and you start talking to, you know, five other people, and then you get some negative references about this guy. And then she's not really, you know, legitimate. And so you sort of build your own mosaic of like, whose advice or information or insights you're going to weight more heavily and who you think

is just, you know, utterly, you know, full of it. And that takes time, you know, particularly if you're totally ignorant. So most areas, both by preference and almost by definition, we enter with a very high degree of ignorance. And then our job is to reduce that ignorance, get as smart as we can, ultimately develop a confidence that we think we're smarter than somebody else, because either we found something that they haven't found yet, or we know more than them. And then when we feel advantaged, we write a pretty big check. Yeah. And I think that you're really talking about kind of the collision of a couple of trends here. So recently I saw on Twitter that you were talking about this idea that like science is not consensus driven right that's kind of the whole point of

science uh but then how do you balance that in your mind with um things like content moderation and censorship where uh there are accepted norms there's accepted pieces of information and sometimes actually the people who end up having the breakthrough are coming from a place that was previously thought to be taboo or false even and like how do you sift through that as taking all this input of information and trying to really kind of come up with a, maybe not a conclusion, but actually like a thesis as to how you think the world will move in the future. So a few different things. So on the sort of institution of science itself, where there's actually a lot of negative things about institutionalization, but science as a

process does not depend on a consensus. It just depends on a conjecture. There's evidence, you know, based on observations from a hypothesis conjecture, and then you can make a reasonable conclusion, basically tentatively held. Nobody ever says with certitude, this is what is. And oftentimes, old ideas get replaced by better explanations, or bad explanations get replaced by good explanations. And that's how science progresses. You know, I think it was Linus Pauling, I may be messing up the attribution, who said that science proceeds one funeral at a time. And so a lot of the old guard who gets famous, and you know, gets a chair department and has all the postdocs that want to work for them and gets the fame and gets the appointments and gets

the board of directors at engineering companies, got famous in many cases for, you know, flawed or bad explanations that were widely accepted until some young hotshot, you know, full of piss and vinegar basically is like, no, I don't think that's the way it works. And then, you know, they upturn it and this process repeats. So there's a predictability to the unpredictability of how science itself advances. When it comes to, you know, policy, whether it's, you know, for a city or for a company or for how somebody runs their family or the choices that you make of what you put in your body, you know, that is less about science itself as a process and more about prescriptions and advice and risk management. When it comes to, you know, sorting through

everything that you might read online and, you know, recommendations and, you know, criticisms, you know, that's just all sort of analysis based on, you know, what everybody's putting out there. But science itself, I feel, you know, just sort of absolutist about it is a process that is just constantly trying to come up with better and better questions and better and better explanations. But it's an endless process because whatever we hold to be tentatively true today is very likely to be overturned in some point in the future by somebody that's just come up with a better explanation. Yeah. And I guess part of this is the science community is pretty aware of this, right? It's part of the process. They're almost trained and have the experience and those around them that have gone through that. The rest of society doesn't have that mindset, right? It's kind of like there is a truth and that truth will forever be true. How, when there's things like coronavirus, for example, right? Where at the time, given the information that somebody has, there are certain

conclusions or beliefs that are held, they get either disproven or proven over time. How do we kind of navigate that as a society, understanding that the majority of people don't have that scientific type bent or, you know, thought process as they're ingesting information? Broadly, to me, this falls under sort of two pieces, one of which is leadership, and there's all kinds of techniques of leadership and persuasion. And the other one is psychology and network effects. You know, why some ideas catch on and spread just like a contagion, why they're believed and why, you know, some are outright rejected. You know, so whether you look at it in coronavirus, which you could say, you know, we'll have the post-facto

explanations of this. We're all easy, you know, Monday morning quarterbacks in armchair. But, you know, I consider Gates an authority on this, not because he's an expert in infectious disease, but it's a topic that he cares deeply about. And he has said, look, I think it was January, February, he published in the New England Journal of Medicine saying this is more serious than the flu and the signs are alarming. Five years ago, he called for sort of a coordinated global effort and making sure that we had the capacity to deal with something like this. And it sort of fell on deaf ears, or maybe people thought that he had the money and the willpower and would sort of handle it himself or something. But these kinds of debates, they've existed for

everything from global warming and climate change. There's, quote unquote, a scientific consensus On the one hand, there are actual scientific facts about what's changing. There's other things that you would say directionally lend itself towards a natural decarbonization of the economy. And you have things like the vaccine movement and the anti-vaxxers. And so there's clear evidence, which would suggest that there is a prudent course of action. And there's always a minority or majority of people that will ignore that evidence and choose not to take that behavior. I am, you know, outspoken in my non religiosity. I'm an atheist, I don't believe. But, you know, there are billions of people that believe in an invisible man in the sky that, you know, directs things and no amount of evidence, you know, to the contrary, or the absence of evidence of a presence would would sway them. That has to do with, you know, early indoctrination, inheritance, psychology, you know, and leadership. Um, and so I think it's the same thing. Any, any, um, any topic where, you know, you can't look at something with an absolute truth, um, and people have sort of varying opinions is going to be a function of, you know, group things, psychology, leadership, or the absence thereof. Yeah, and I guess going on that leadership thread for a second, there's probably an overhype narrative that we've got lots of really, really smart people that are going into fields that don't produce lots of materials, you know, products and services, or aren't hard science driven, right? So it's kind of the whole like, hey, everyone's going to build photo apps, why do we keep funding this stuff? There's probably some grain of truth there, but also some exaggeration.

How do you think about solving, getting the smartest people in the country from an education basis into more hard sciences and more kind of production type roles rather than either wealth redistribution or things that are more nice to have than need to have? Okay, so let's take this maybe three ways. One is economic incentives. And this is a raging debate that my wife and I have. The second is the sort of moral prescription of what people ought to be doing. And then the third is sort of the unintended consequence. And so these will sound sort of mutually exclusive because, you know, like Fitzgerald said, the test of first rate intellect is the ability to hold two opposing ideas in your head at the same time and still retain the ability to function. So I have opposing ideas about this.

So let me give you one idea, which is the moral prescription, right? We ought to have more people pursuing more serious things. You know, we even talk about in sort of a, you know, self-righteous way that we like to fund matter that matters. And we're not funding trivial video games. But the reality is, a lot of the investment in what we consider frivolous or trivial ends up becoming critical. I mean, there is no doubt in my mind that the reason that we are able to do real-time protocol right now over video conferencing is in part because of frivolous stuff that people did for video gaming and Twitch streaming and all that kind of stuff that we would mock and be like, oh my God, what are these people doing? but, you know, proverbially, thank God that all this stuff was invented. Same thing, you know, video compression, codex, you know, people wasting away like couch potatoes on Netflix, you know, it is enabling this at the moment. And a priori, none of that was predicted. So I always like to say that, you know, the detritus from one former wave becomes the combinatorial fraud for the next.

And, you know, until we look at it post facto, it's not predictable. So a lot of the silly, seemingly trivial or absurd or wasteful things that people are doing today end up being useful later on. You know, a few years ago, I talked about how the most dangerous words in markets often are considered, you know, this time is different. And I think that the most valuable words in my markets can be, it will rot your brain. Because every time that that phrase was uttered, you know, if you look through the decades, it basically presaged the next $10 billion industry. So you had rock and roll music, literally, you know, generation of older parents saying this is devil's music, you know, Elvis shaping his shaking his head. You had the same

thing with with jazz, you had it with TV in the 60s and 70s. You had it with online chat rooms in the 80s and video games in the 90s and 2000s. And so anytime a parent says it will rot your brain, you know, when you see it now, right, my generation of parents with kids that are sort of tweens or younger, we all amassed screen time, you know, you got to do this digital detox, And you have to be in the moment and present. But again, look at our current absurd situation. And these kids are digital natives. They're fluent. They're teaching parents how to connect, you know. And I actually think that the mediums that they use today, whether it's, you know, TikTok or Marco Polo or whatever, actually very creative artistic mediums that, you know, we're going to express genius through. So that's the argument for why we ought not try to redirect and just let the frivolous happen because the geniuses will end up repurposing the frivolous for the useful over time naturally. The raging debate economically that my wife and I have is I always say, you know, do we really need another marketing major, you know, going to school, taking on debt and just coming out with no expertise? Don't we need more computer scientists and engineers and people?

Well, the market already sort of sets a price because your graduating salary, if you were going into nuclear engineering, or you were going into hardcore material science, or you were going into CRISPR for biotech, you know, would be much higher than if you were coming out with like just a liberal arts degree or some, you know, marketing degree. And so you're already sort of a subprime credit if you're pursuing the latter. And so I've made the argument, why not lend just like we used to, you know, during the last housing crisis, there was prime credits based on, you know, your likelihood to pay and subprime credits. Why not, based on the major that you're electing to choose to pursue, have lower borrowing rates? So you might be a better credit if you were pursuing computer science over the past 10 years and you should borrow one or 2%. Well, that would lower the cost of access of capital, it would increase the number of people that were potentially applying for it. And over time, it would end up increasing the supply of labor, which would then bring down the price and wages in the marketplace. And so you'd have a natural sort of, you know, filtering function, just letting the market based on salaries dictate where there was need. you know, five years ago, four years ago, insane demand for artificial intelligence researchers, you know, people that had come out of the nuclear winter and deep learning and convolutional neural nets were suddenly the hottest in demand. And somebody that was making $50,000 or less as a postdoc was suddenly being offered half a million to a million dollars at Google and Facebook. And,

and so that was just insane. And it created a scarcity of labor, which was a signal to the market. And now, you know, every computer science program is like, you know, flooding the zone with, future AI researchers at a time when it will probably bring down all the wages. And then, you know, the next area that's totally scarce will become, you know, the hot demand. Same thing in an area, you know, where you're an expert in crypto, right? Anytime there's this sort of information arbitrage and ignorance, and that's reflected in the prices of wages of labor, I think it's a signal. And so if you want to redirect where useful resources of humanity goes, you know, prices today are still the best way that we have to signal that to the masses.

Yeah. And I guess part of this is, um, how much of that is driven by the individual, right? Understanding that, like I always joke whenever I talk to a college kid and I literally say, you know, why do you want to go do X? And they'll give me some, you know, usually, uh, non-financial driven reason. Uh, and I say, do you know how much that person earns? Have you talked to anybody in that industry? And there's just a lack of, um, I think education information, and it's more of like, I want to go do what makes me happy type situation. And so do you think that that disconnect is when you're younger, they care less about the financial outcomes. And so there might be some dislocation there, or do you think ultimately it all falls back to the financial

incentives? Well, there's definitely an ignorance about income. I mean, if, you know, my oldest is my daughter's 10 years old. Sorry, one sec. The oldest of my kids is 10 years old. And, you know, if I ask her, oh, what do you think, you know, that person makes or, you know, no idea, you know, I don't know, like $100 a year, you know, it's like, not quite that absurd. But so there's a general ignorance, where it's just, you know, what's more interesting. Over time, of course, you have a signal of like, what are other people valuing with their attention. And so a lot of people, you know, take where I grew up in Coney Island, most people wanted to be ballers or rappers, because that's what was being celebrated in the community. As a culture, you get what you

celebrate, you know, both in a local community, in a small ethnic or demographic group, and as a country writ large. So if we were to celebrate engineers, and entrepreneurs, and people that were scientists, and not, you know, just celebrities, you would get more of that. And so I think there is a virtue of a culture celebrating something so as to give status to it and to elevate it. And, and, you know, you're starting to see that I think, you know, whether it's in the fictional world, when you had movies like The Martian or Gravity, or in the real world, as you know, I'm very critical about what I consider to be the ethics and the mendacity, but Elon Musk is a tremendous boon for an entire generation of people that look to both the stars and a brighter future

and say, I want to be like that. And so to the extent that figures like him can encourage people to want to pursue science and engineering, it's a beautiful thing. Yeah. So obviously I want to to spend some time talking about him. But I guess part of this is you are probably one of the more outspoken people who I believe separates what I'll call the promotion and marketing and kind of the outward message from the science that's being done there. And just so people understand, I think your position is a big believer in the science and kind of the ultimate visions of those companies, but the way it's being executed is the best way to describe it might be there's better ways to do it? Is that fair? That's diplomatic. I mean, I've been blunter online. So, you know,

let's list the things, you know, sort of in intellectual honesty, the things that I would admire. I think the pursuit of going to another planet, you know, or to the moon, again, is a brilliant thing. What we will discover and learn as the sort of entropic exhaust from that, that will be useful for society will be huge. It gives people both a sense of purpose and meaning and society generally needs that. So that's a virtue. The talent that has flooded into places like SpaceX and Tesla and Boring and others are brilliant engineers. And they're motivated by somebody who speaks to them, you know, as a good leader of this is a future and I want to take you there. And so I think all of those are very virtuous things. I think the design is brilliant.

I think the renderings, I think there's an artistic aesthetic ethos to all the companies that are quite brilliant. And a lot of people say, well, you're really critical about the stock or the valuation. And I'm actually not so critical about stock. I mean, people can, you know, it's a free market. You can own something, you make money or lose it if it goes up or down. And if you think it's fairly valued or undervalued. My main criticism is the, again, what I would call the mendacity, the relationship with

the truth. this is something that you know people can't understand they say why do you hate elon i don't hate elon it's not a personal thing uh it's it's a feeling that there's a knowing manipulation of the masses in the same way that i would look at a sunday preacher and there are some people that would look at a joel austin or a creflo dollar or jim baker back in the day and say this guy's amazing and i'd be sitting there being like are you serious like you don't see this guy is literally trying to fleece you for your money and bullshitting you. And so there's elements of that where I understand why it has to be done. The show has to go on and the showman must do sort

of like the Simpsons monorail man to get people to part with their money. But I also truly believe if you ran the counterfactual, that he would have absolutely been able to raise tens of billions of dollars necessary in a loss making enterprise and do it honestly by saying, we are going to do some of the most ambitious thing that man's I've ever seen. And we're going to lose money for a really long time. And if you don't want to be part of that journey, you should not invest. But if you do, you know, I promise it's going to be a wild ride. People would part with their cash. They'd be part of it. And maybe some people have already rationalized that that's what it is. But when you're saying like, we're going to be cashflow positive and we're profitable and you're playing

with the numbers and you're trying to induce, you know, certain institutional investors and retirement money when the stock's going up and everybody's fine, it's great. But you know, when things get revealed, and it may take a long time for that to happen, it's, I think, going to be tragic. Yeah, and I guess part of this is like, there's a separation almost from setting the vision and the ambition on the science and engineering side, and really having to motivate people, right, to want to work on something that's really hard, and it almost seems impossible when you talk about, hey, I want to go launch a rocket and re-land it, or I want to build this, you know, super sexy sports car on the electric vehicle side, that can actually be a huge benefit in

science and engineering. When you then turn to financials, it's almost like the gift on one side is the curse on the other to some degree. Yeah, I think that's right. But I think that there are other models of people who, you know, do amazing things that are worth celebrating. I mean, I truly believe that Bezos, you know, and he's not without his moral transgressions and and labor mispractices. And there's lots to, you know, nobody is infallible, but I truly think that his kind of thinking and building an enterprise, it goes beyond just commerce and pricing. It goes deep into technology. I mean, he's somebody that says, you know, I can't predict five years out what technology is going to matter, but I can predict with very high certainty, people are

going to want more convenience. They're going to want more choice. They're going to want their stuff faster and they're going to want lower prices. And so all the technology investments that he makes from robots and automation to inevitably self-driving cars for 24-hour delivery are just very systematic and thoughtful. And I find frankly inspiring. Now, of course, he's going to space also, but he's finding it out of his own pocket from profits and cashflow that have been generated from a business that has never raised equity capital since their IPO in the case of Amazon. So I admire that much more because I feel like it's rooted in sort of a a grounded ethics and execution that is really rare. Yeah. And so one of the questions somebody

sent me that I thought was fantastic was if you took over as CEO of Tesla, what would you do differently? I would hire Elon, but I would put a ring around him of controls. One of the things that's interesting is you can name a lot of great people at Microsoft. You can name a lot of great people at Amazon. You can name a lot of great people at Apple. It's very difficult for you to name a lot of people at Tesla. And the turnover has been, you know, pretty insane and well documented. But I think Tesla needs Elon to be able to be a visionary. You know, and I wrote this letter, which he sort of, you know, semi-famously farted at right on Twitter, which was, were I on your board, this is what I would do. And it was mostly give him the permission to

fail. Meaning let him restructure, get rid of the debt, raise the capital that he needs, take a breath, be honest. And I think that would just be a wonderful reset. And I said, you know, in that letter, then I would be table poundingly long Tesla. You know, it was such a weird thing to say. So I think it's just really restore integrity and honesty and stop the magician show. It's just not necessary. Yeah. It's a super nuanced view. And the reason why I think it's so interesting to kind of hear you talk through this is it's not like you haven't invested and spent a lot of time with people who are doing other really ambitious things in science and engineering, right? No way. Look, every one of our entrepreneurs is basically telling us a story

when they come in, right? I mean, they're telling us something that doesn't yet exist. And then we have to hold them to task and accountable. How much capital is going to accomplish what in what period of time, and then we put more money in. And the ambitions of what some of these guys are doing is just, you know, insane, right? I mean, we have people that are launching rockets, we have satellites up in space, we've got autonomous systems that are outed, rogue 100 foot waves in the ocean, I mean, people are doing crazy stuff. But most importantly, they're doing it honestly. And the day that they lie to us about something, to try to induce us to part with our cash is the day that they're dead to us. And so I just think that the quality of the investor,

You know, companies get, I think Buffett famously said it, that companies get the shareholders they deserve. And when you have a largely retail investor base, over time, I think it says something about the quality of your company. So I want to switch gears for another possibly showman in another industry, which is Ray Dalio and kind of the thought process there where it's less about science and engineering and it's much more kind of the let me impart my knowledge and I've got this great, you know, financial returns and and we've kind of seen some similarities, both that ended up being fraudulent and some that actually ended up being perfectly fine. uh kind of how do you think through um you know evaluating a situation like that where there's tons of rumors but nothing that's necessarily concrete uh data or proven um and it's unlikely that anyone will ever see uh the actual return date or anything like that until it either is an issue or it isn't right it's kind of like we're all guessing until there's some big event and it's either revealed that it's what it says it is or it's not right um well look the positive thing here again is that I think there's 1500 plus brilliant people who work there producing

research. And I think that they're all extremely highly pedigreed, really smart people. I think they understand everything that they're writing about, whether it's global macro currencies or relationships between fixed income and a variety of different asset classes, portfolio construction, risk. I think they understand all of that and they publish it brilliantly. I think the vast majority of them, if close to all of them, have never seen a P&L and are involved in any thing in actual execution of trades. My basic view is it has been a levered long bond scheme that has benefited from a generational decline of interest rates. And I think the cult of personality and a little bit of red velvet rope and high minimums created this. And so I think that you have sort

of a McKinsey-like front end and a very questionable back end. And, you know, people, again, are free to invest. And if they get great returns, then, you know, more power to them and people are free to raise eyebrows and questions. Jim Grant came very close, you know, a year and a half or so ago. He ended up with a foot fault, you know, stepping over the line on a few things and they went after pretty hard. My view generally is when somebody is criticizing you, you know, being open kimono or just, you know, putting up the numbers, you know, generally shuts up the critics. And that's true of Elon. It might be true of Ray. I don't know. But when you attack critics, you know, it's generally a red flag. Yeah. And so I guess part of this is going back to this idea of like

science not being consensus. A lot of what you do is you're basically finding people who believe in a vision of the world that is not popular or a lot of people don't agree with. And then you make an investment and over time that becomes kind of the consensus view. How much of that do you guys worry about? Hey, we are getting sold a vision that just isn't possible, right? Or is that an understood risk as you're investing because you're able to triangulate with a lot of that diligence process that you went through? Well, you know, the fringe outlier reject who has a view that is different from the consensus, to me is like super attractive, right? I mean, it's, it's, again, going back to art and music. It's, it's the underdog, it's the person that nobody's

really listening to. And we like to say that we like to believe before others understand. Now, that doesn't mean unconditionally, you know, credulity is a great master that leads to fraud. And so, you know, we're all washing our hands, you know, wearing masks because of a madman or somebody that was deemed to be a madman in the 1800s in Vienna, which was Ignaz Semmelweis, who said, you know, I actually think that when doctors are going from opening and teaching in a rectory with cadavers and then going and delivering babies, that they're spreading disease. And people were like, this guy's insane. He was actually committed to an insane asylum and was beaten to death by guards, basically because of severe depression and that. But that theory of hygiene was correct. And we all know that this part of the germ theory and being able to wash our hands to stop the spread of disease was absolutely correct. But this guy nearly 200 years ago, 150 years ago, was committed to an insane asylum and beaten to death. So we like the outsiders because when they are right, now, of course, there's tons of crazy people, right? And they're just wrong. But if you're an outsider, and you're rejected by the mainstream, and particularly if the mainstream has something to lose that they're threatened by, that's a really valuable proposition. So we're constantly looking for that. Now, sometimes we've made bets on people who are a little bit fringe, and they're a little bit out there, and they're just wrong. So how do we protect ourselves from that? It's, of course, funding to milestones. If we fully fund a company, you know, then all of our incentive is to believe that they're right and not want to lose our money. And that is how you get into situations like Theranos and some of these other frauds where people never stop to ask a very simple question, does it work? So you fund how much money, accomplishes what, in what period of time, you turn over the next card, you know, you ante up again, just like in poker, and then you flip the next card. we we like to say that these sort of two intersecting arrows for us are the perfect situation one is where you have a directional arrow of progress that feels like it's inevitable

and there's lots of examples of this whether you know you think about lighting that we went from you know fire on torches to incandescent bulbs to leds we are not going back to offices with sconces and torches we're not going from horses to horse-drawn carriages to cars to electric vehicles to autonomous vehicles to have horseshit in the streets again. It's just not going to happen. So there's an inevitable directional arrow of progress. Same thing in computing, going from mechanical spinning drives to solid state drives. And when you can identify those secular arrows of progress that leads to the inevitable, it doesn't tell you who the company is. It doesn't tell you the entrepreneurs. It doesn't tell you the specific person. It doesn't

tell you there's going to be a hundred of them, but it leads you in a direction. So I like finding those directional arrows of progress. And I can share one that like I'm obsessed with at the moment. But the other arrow is this perception of impossibility. And that's not our perception of impossibility. If we believe and everybody else is like, there's no way that that thing will ever work, then it's perfect. Because what it's basically saying is the market doesn't believe. And whereas you pay a high price for a cheery consensus, you also get a very great deal when nobody else believes. And so if you take a company like Control Labs, you know, this was something that to us felt like a directional arrow of progress where you had what I call this

half-life of technology intimacy. 50 years ago, you interacted with a giant mainframe, you physically went up to it. 25 years ago, you had a laptop or rather a desktop and you tickled the keys and you touched the button on the front monitor and you flipped the back beige box to turn it on. 12 and a quarter years ago, you had a laptop and you're tickling the keys and you replace your mouse with a trackpad six and a half years ago, you know, it's your iPhone. And then three and a quarter years ago, it's your Apple watch and then AirPods with compute and voice recognition inside. And so that directional arrow of progress is more and more information density and access, and it's becoming more invisible and it's getting more intimate with you. So what's the next logical

thing? Well, voice, of course, and we have Siri and we have Google now, and we have Alexa, but gesture is the next thing. You know, I'm sitting here and I'm talking, I'm wildly gesticulating as I speak. Most of what is capturing gesture today are three-dimensional cameras, which going back to part of the things we discussed earlier, came out of the video game movement with Microsoft Connect and Dance Dance Revolution. And so when I got introduced to Reardon, who was the founder of Control Labs, here's a guy that's building a brain machine interface without any implantables, and was going to detect from the surface of your skin what the roughly 15 muscles in your hand

innervated by roughly 15,000 neurons were doing and could detect every single neuron down to what it was being triggered in the spine. And so I was sitting there typing on a computer and he pushes the laptop away and I'm still typing in thin air and the words are popping up on screen and I'm like, this is magic.

Like the Arthur Clarke quote, insufficiently advanced technology is indistinguishable from magic. This was magic. And so I was convinced that I had seen the future, that there was an arrow of inevitability, that the way that we would be interacting with our computers would be first by gesture that I would be able to swipe in free space like a sorcerer's apprentice. And then soon without

even having to actually make a gesture, just by thinking of moving, I could be able to control my devices. Well, most of the people we spoke to said, oh, that's got to be like 20 years out. Like there's no way that'll work. And then once you see that this thing is working, you know, ah, I've got information arbitrage. I know something that the rest of the world doesn't know and they won't know until we tell them kind of thing is the perfect setup. So you have inevitability with a perception of impossibility. And when those meet, it's perfection. A lot of investors talk about betting on a product, a team, a market, and everyone has kind of a different kind of viewpoint as to what works. But there's definitely a subset of

investors who believe just betting on the right market, even an okay team or average team will still be successful. Do you subscribe to that? Or are you more the team regardless of the market, if it's the right team can end up being successful. I would say that the number one thing that I've changed my mind over time and I give total credit to my co-founder and partner, Peter Hebert, is people. I always thought the primacy of technology,

which to me is the interesting thing, like can you do something or purport to do something? Have you invented something that is like the secret sauce that has the castle with a moat around it with knives and sharks and bombs that nobody else can attack? Because if you've got this thing, everybody else is like oh it's so not fair they've got that thing but the thing that i've learned

over you know nearly two decades now is it's people because if you don't have the thing if it's not working the people are able to find the thing that is working they're able to we ban the word pivot at lux but pirouette into the next thing and so peter was always about the primacy of the people the two-legged mammals that we are betting on who are the ones that really i mean technology doesn't move itself. You need a person to be able to raise capital, convince people to part with their jobs and join you on a mission, convince their spouses to let them do that, to move across country and start anew, to convince investors to part with their capital, to convince journalists that their scarce ink is deserved to be spent on you, to convince

a big company who's going to take a risk on a no-name, no-reputation startup to become a contracted partner. That all comes down to the people. Yeah, it's super fascinating. You guys were very early, obviously, to nanotechnology, deep tech, whatever you want to call it now. What do you think are the next areas? So that next generation of investors that are coming up, that are sitting there saying, I think that I know something that the mainstream doesn't. Where do you think they're looking right now? Well, I can tell you where I think smart people are moving to, because again, it's like, you know, we all read voraciously and we come up with interesting ideas and we kick it around our partnership. But most of the time it's somebody coming in and us being like, wow, like we never thought about that. So over the past few years, we have definitely seen a big thrust of really smart people at the intersection between biotech and computer science, sort of computational bio.

And so whether that is modeling in silico and then being able to produce drugs or design proteins or shorten a drug discovery cycle, the tools that you have computationally developed mostly for other IT purposes, reaching into the biotech realm is just absolutely accelerating that in a really interesting way. And it turns me on because you have some proprietary technologies and the markets happen to be huge because if you can repurpose an old drug more quickly or get something through FDA trials more quickly or better target a potential patient, you know, all of that is really accretive. So that one's a little obvious and it's been done over the past few years. An area that I happen to be personally obsessed with right now is, and this sort of fits with a broad theme across Lux, is the gap between science fiction and science fact that keeps shrinking, is the gap between simulation and reality. And so when I look across our portfolio companies, often what happens is I start to see a pattern amongst a bunch of companies.

I'm like, huh, you know, if you sort of extrapolate amongst these companies, there's some interesting pattern that has emerged. And the interesting pattern, when I look at a company like Matterport, Matterport was taking 3D scans, cameras from Microsoft Connect, basically assembling them into a module, doing a rapid scan of a physical space, and then using software on the back end to stitch these things together so that you could basically have a video game, you know, Doom-like walkthrough of a three-dimensional space and then extrapolate into a dollhouse view. And it was just like this beautiful, cool thing. Okay, what's the big deal? Useful for real estate, static images, you know,

not dynamic. Combine that with Unity, the gaming engines that are letting you to render, you know, in virtually real time with ever higher precision and resolution. And so I am seeing across our companies, you look at Zoox and Ava that are doing autonomous vehicles or solid state LIDAR to be able to look at the environment and capture with ever higher resolution what is actually happening. You look at some of our companies that are doing this in biotech to be able to image inside of a cell. On the one hand, the ability to capture reality with technology and tools is getting better and better than ever before with higher resolution, higher speed. So that is sort of point number one. Point number two is the ability to model and simulate

what you have captured. Now, when you have these two layers, the capture and then the model and simulate, then you have a computational layer between these two things that are talking to each other. And this turns me on because it's this basic idea of consciousness and how we navigate the daily world. You have a memory prediction framework. If I see you and you're wearing a Yankee hat or, okay. So if I see you and you're always wearing the Yankee hat, or if you know me, I'm always wearing my skull vans. When you see those vans the next time, or I see your Yankee hat the next time, and then, you know, I didn't see your face. If you look up, I'd be like, oh, that's pump. Or you might be like, oh, that's Josh. You're making a prediction based on a part

of the whole from memory. If suddenly you were wearing a Boston Red Sox hat, I would have emotional surprise. I'd be like, oh, I wasn't expecting that. And so I update my priors in like this Bayesian inference. And so a lot of our computers in the machines from autonomous vehicles to sail drones, to drones in the sky, to defense systems are doing that. They have a model of the world based on capture. They're making predictions when they're interacting with the world based on sensors and then constantly iterating between these two things. That feedback between the hardware of capture, the software of simulation and the compute layer between them is seeing a flood of really interesting talent. And so there will be people pulled from experiments that went

into augmented reality and virtual reality, which in a form is that it's capturing what you see in the real world, putting a layer on top of it, making predictions that will go into all kinds of new industries that we never anticipated. So that at the moment is something that I'm really excited about. Yeah. And it goes back to, I think a lot of the AR initial applications were thought up as games are kind of frivolous to some degree, right? And obviously you're talking about much more what people would consider important. One area of biotech that's super interesting to me is genetic editing. What are you guys seeing there? What kind of work have you done or found that smart people are working on? So two things that we've done, there's a new code that my

partner, Adam Goldburn, who's a PhD stem cell biologist, has stood up with one of our venture partners, Ian Paycon. Ian was a founding scientist of a company in the Lux portfolio called Calliope, which is focused on the gut-brain axis. And he built an incredible team and then wanted to go off and start more companies. We said, come in-house to Lux and do it with us. And so together, they started a company that at the moment is called VNV. It's virus, non-virus. But the key thing about CRISPR is there's no effective mechanism for delivery to a very specific part of the body. And so what they've done is teamed with a bunch of scientists who are working on that, having the vector in part from viral delivery to be able to deliver to a very specific

organ or cell segment inside the body. So that's one area that I think is very interesting in genetic engineering, because even if you can prove that you can use CRISPR or a variant of it in the lab or in petri dishes or in mice, it doesn't really extend to humans. And you're going to need the delivery vehicles and vectors to be able to do that. Second area, which I alluded to before, which again was really inspired by science fiction, is going to the outlier regions of the world and trying to find outlier individuals, quite literally mutants, people who have very rare traits. You're not just, in this case, looking for the genes. You're not looking at large-scale databases and trying to find some interesting statistical variant. You're quite

looking for the variant in something that they physically can do. It might be acute eyesight in very dark conditions, the ability to hold your breath underwater for long periods of time, people get into an accident and their bones don't break, people whose hair just grows very thick or long for a long period of time, the nails grow, people who never get facial hair, people who have very low cholesterol, even though they eat a very high fat diet, people who only need one or two hours of sleep of metabolism, people who have very high oxygen saturation rates, but a very high altitudes like the Sherpas. And so we put together a team in a company called Variant that is focused on going to these outlier regions, particularly people that are not pale, male, stale, white

Europeans. So not people that have been sequenced by 23andMe and Regeneron and Genentech and Roche. And they're going to Pakistan, they're going to New Zealand with the Maori, they're going to Nepal with the Sherpas, all these weird regions to find these really interesting traits with the idea that if there's a monogenic condition, meaning a single gene might make the protein that leads to that trait, then that gene might be a target for a drug for the masses. And that is really inspiring because it's right out of Professor X in X-Men. Yeah. And so on that specific example, how do you go from, hey, those Sherpas have incredible oxygen capabilities that others can't? Is it something where you're actually taking DNA sequencing and trying to come back

to a lab and then the thought process is how do we now scale this to bring to other humans? Or is it something where you actually start with, no, let's go find people who have very low oxygen capabilities and like, let's solve healthcare issues before we get into things that would be considered more like nice to have, like almost cosmetic type applications of genetics. Yeah. Well, I think the moral underpinning is how do you reduce human suffering? And so the bias ought to be, you know, how do you take something from some sort of superhuman and apply to people that are suffering. Inevitably, it will raise moral and ethical questions about people doing genetic enhancement and people doing the equivalent of genetic doping for sports and

more trivial things if you put a moral value on it. So in this case, it's really a combination of genetics, population genetics, computational genetics, looking at family histories. Then you're looking at ethics and partnering with some of these local communities. So the thing about this particular company that I really admire is the first two people were computational geneticists that were founders. They came out of Cold Spring Harbor. And the CEO, which is going to be announced pretty imminently, has actually come from the Bill and Melinda Gates Foundation, ran a huge program there. And the second and third person that they hired after that was a cultural ethicist, a cultural anthropologist, and an ethicist. So the

cultural anthropologist, because when you approach all these different, very diverse populations, you have to be really considered. Some of them might care about financial remuneration. Some of them might just want better health access. Some of them might want to be partnered. Some of them might not want blood drawn. And so there's all kinds of unique, very idiosyncratic situations at each of these that you need cultural anthropologists. And then the ethicists to understand what is the right thing to do here. And so many of these indigenous populations have been exploited over time that their default um the stance when when approached is you know no thank you so i think these guys will end up

with a competitive advantage because of just the approach of how thoughtful and considered they are in approaching all of these indigenous populations yeah and then something like that like how much of it is uh i'll call it simple but that's frankly uh not fair to uh to the team there hey people in nepal that are strippers have high oxygen capabilities most people would guess that's probably true versus uh there's somebody somewhere in the world who has great eye vision uh in dark circumstances and they don't even realize that that's actually a mutant or an advantage right they just have grown up their whole life knowing that they can see in the dark right and do you guys have to um kind of go to both types of populations places where it's a known fact that

hey there's an advantage this human has over others and then also do something to kind of get the serendipity or the exploration to figure out the unknowns to some degree? Yes. Most of it starts with the former of trying to find the really interesting phenotype where somebody is advantaged, but it really is critical to understand genotype, phenotype, and understand whether something is because of a monogenic condition or because of some interaction between nature and nurture, between the environment and the genetics. In many cases, it may be that something that exists in a particular region really is turned on because of the epigenetics, the gene makes for some proteins that are expressed because of something in the environment

that doesn't occur, you know, if you were deported somewhere else. I mean, you see this kind of thing, for example, very naturally sickle cell anemia, you know, many believe it was a adaptation to protect against malaria. But when you move people out of a particular region to a different continent, in this case, because of the atrocities of slavery, then you have all of these people that suffer from sickle cell anemia. Same kind of thing if you take people who genetically were adapted to a particular latitude of the earth and you move them further north where they're getting less sun, you know, you have, you know, higher incidences of vitamin D deficiencies and all kinds of issues. So the interaction between, you know, biology, environment, where we are on

the planet, the specific geography, it's so complex. The reason that some of these quote unquote island populations are interesting, when I say island populations, obviously the immediate thing that pops into your head is, well, these people are on like Polynesia or on an island. But in Pakistan, for example, there are island populations, not because of geography, but because of close interrelatedness where cousins are marrying cousins. You have a higher probability of a monogenic condition, which is single gene makes a protein, makes the trait. And that's really the needle in the haystack that you're looking for. Yeah. The best example, as you were talking there about kind of environment is, I know you were on Eric Weinstein's podcast recently,

And I listened to the episode with him and his brother and this whole idea of like the rats and the telomeres and actually science had it backwards simply because of where the rats were coming from and the environment they were basically being, you know, held captive in until those tests were being done. You know, and Eric's, I mean, Eric's absolutely right, because he is lovingly angry at his brother for not saying, dude, like, why are you not pounding the table, saying, like, I was wrong, I was completely screwed by a Nobel Prize winner who had the clout and the status and basically took an idea that I had, and sort of, you know, just just hit it. And, you know, I mean, it has profound implications for nearly two or three decades of scientific research. You know, we've cured all kinds of things in mice, from cancer to, you know, repairing vertebrae to let them walk again. And the kinds of mice that we're working on have been genetically, you know, engineered almost inadvertently. Yeah. I want to switch gears and talk a little bit about crypto, just so people understand, like, what have you guys done there, if anything, and kind of how does Lux think about that space, you know, in general? So two or three of the partners focus on it a little bit more intensively. We've made probably five investments, including in one fund, which was trading in cryptocurrencies, mostly for sort of information and intel. Blockstack is one that is right above us in New York. Some of these were bets on people and philosophy.

Like in the case of Blockstack, Muneeb and Ali, we just thought were sort of intellectually honest. They were critical of a lot of other projects. They weren't sort of part of a hype train. We had some good co-investors, and we just thought that the way that they were thinking about distributed controls and access was rational. My general stance has been one of true believer

in the merits of distributed ledgers, of the mathematics behind it, and much more skeptical of the particular currencies, over time, it would take a intersubjective belief, which Bitcoin, I think, has now become sort of runaway leader, whether it's, you know, 10x or 20x, you know, the number two. And I think that that will exacerbate, right? I mean, I think it'll be sort of a runaway leader, you know, for some period of time between Ethereum and Ripple, three years ago or two years ago, you know, I mean, anything went. But, you know, what the killer app is going to be or how long, I think that this is one of those things sort of like, you know, science proceeds funeral by funeral. I think it's going to be a generational thing.

I had thought pre-COVID that we were likely to see a 2020 fall uprising in an election year, driven by Trump, pointing a finger at Powell in the Fed, and basically blaming him for a market led recession. And so I had just hypothesized, speculated with low probability, but high magnitude consequence, that the market would tank, that Trump in an election year would point the finger at the Fed, and basically people not really understanding the Fed and what they do, but seeing all of the symbolic markings of an institution and Washington, you know, columns and bankers and banksters, it would reignite and occupy Wall Street of 2009. But this time, instead of having, you know, sort of libertarians on one side wanting low government, and, you know,

anti banksters, you know, sort of Seattle who protesters, you know, on the other side, that you would basically have the young and the old, the old basically rejecting fiat currency and going for gold and the young basically saying, no, our medium is going to be crypto and Bitcoin. Both would be a rejection of the dollar. All of that was pre-COVID and pre the fiscal and monetary stimulus of unprecedented proportions. And I think, you know, I still happen to believe at the moment as a measure of derivative belief that gold is still the world's sort of, you know, protection against fiat currency being debased, which it has been for a century. But there's nothing that stops that from shifting to a generational view that crypto and

particularly Bitcoin, you know, is a better alternative. So a couple of things in there. One, I'm actually of the same belief that like gold and Bitcoin are both going to end up doing well. And it's almost like you don't actually need the inflation to happen. It's more of like the fear of the inflation, right? People just say, hey, tons of printing. Of course, I've got to protect myself, right? And they kind of run into these other assets. And I definitely agree that there's this generational divide. You know, if you talk to kind of the gold bugs, like, I mean, they literally hate Bitcoin, right? They're just like, you guys are all idiots. How could you give up on the 2,500 years of gold? And also vice versa, right? I mean, you know, you kind of play

into it from the Bitcoin perspective with gold being for old people, right? Or the boomer rocks is kind of what the terminology on Twitter. How has your opinion on that stuff changed with COVID happening and kind of all the Fed action, interest rates going to zero, all the quantitative easing that we've seen? Has it been materially changed? Does it accelerate that happening?

Like, how are you thinking about it now? So, you know, in dollar terms, you've not seen a huge run in gold in other, you know, currencies you have. And so as it relates to Bitcoin, you know, I forget whether it was a year and a half ago or two years ago when Korea had banned it. And you would have expected this sort of big thrust into it. You would have expected in COVID when news of the first phase or second phase or third

phase that started to approach $4 trillion that you would have had this huge buying. And some people were saying, well, the sell-off happened because you had liquidation and people needed to sell what they could. And this sort of stopgap between bid and ask in a relatively still illiquid market meant that there was a big sell-off, you know, that is relatively recovered. Today, it's at what? 10, 11? It's actually just dropped recently. It's about 8,500, but it was at 10 a week ago. Okay. So, you know, the volatility obviously is a measure of just belief, right? I mean, and, you know, I have admired actually a deep value investor who I think presented the most cogent argument for the ownership of crypto and Bitcoin, particularly in open, you know,

several hundred million dollar, I think, mining operation, which was Murray Stahl of Horizon Kinetics. I mean, this is a stalwart, you know, value guy who rightly and is in total resonant criticism with me of passive indexation in equity markets and sees a variety of vulnerabilities. And, you know, he's put out from the simplistic of, well, you know, I don't know, 16 million millionaires if everybody owned, you know, one or two Bitcoin, you know, that's the entire thing to a more complex, you know, if the entire world of fiat currency shifted over, you know, what would be the value of a Bitcoin? And so, you know, I'm generally of the view that it would be idiotic to say this is, you know, a scam. The math is real. The logic is real. It still depends on

the intersubjective belief and more and more people, you know, basically owning it. I think that you're having a growing number of people, particularly of a wealthy institutional investor class that say, you know, whether it's idiot insurance or whatever, why not 1% or 2%? Now, you know, 1% becomes a pretty big deal, you know, as more and more institutions do it and look to each other. And before you know it, that can become sort of a foundational basis for widespread ownership for no other reason than, you know, again, intersubjective, you know, ad infinitum, you have it and I have it and so on and so on until everybody has some meaningful portion of it. Yeah. What you're highlighting is almost this idea of like money is a belief system, right? And

the thing that I don't know yet is like what breaks the belief in fiat currency. And if you take the US dollar, for example, that is a very, very strongly held belief. It's backed by everything from kind of the full faith and credit of the US government to the military might and global reserve status and there's a lot that goes into a very complex system uh for that currency belief to break uh it's not gonna just be you and i wake up and we read a headline right now all of a sudden hey i'm gonna go move all my wealth out of u.s uh denominated uh assets um other currencies obviously we've seen them kind of fail very rapidly um and so i think that's the one piece of the analysis where uh if i understood that better or had a very strong thesis i'd go put

100% of my assets, right? Because you'd say, hey, when this happens, everyone's going to kind of shift over, I believe before everybody else. And therefore, when it's consensus, you know, I benefit. But to me, like that is the one component here. And I was talking to a an investor who recently said, it's all relative as well, right? Just as much as the liquidity injection in the US is happening. Internationally, you're getting tons of liquidity injected in other markets as well. Could you see a world where, you know, the US dollar actually strengthens all other currencies, either suffer or fail. And those economies or populations start to opt into something like Bitcoin. And as you get a dollar and Bitcoin environment, where both of those strengthened.

And like, it's interesting, I don't know if that's actually going to happen. But I do think that that belief is a key piece. And what it really does, then it says, hey, it might not be a technology problem, right? Like money might not have a true technology problem, maybe a monetary policy problem. And you know, that's where you've got to start to educate people and understand the benefits of Bitcoin versus fiat. Right. And so on top of that, you've got coordinated debasement. You have an entire camp of people that had a once fringe theory that is growing steam both. And it's interesting because the more that people criticize it, the more it becomes sort of normalized, this possibility, which is MMT, that a government that prints its

own currency can't default and can just keep printing and printing even though it's debasing it. By any measure, the amount of indebtedness that a country has, the best way out of that indebtedness is to inflate the debt away, basically stealing from savers and bringing wealth to borrowers. And so you have the MMT camp, you have the gold camp, you have the crypto camp, you have international monetary policy as both a tool and a weapon. You have the US, which I believe is less sovereign stultifying than China, because I believe that China will be probably the earliest adoption of widespread nationwide digital currency, not to say Bitcoin, but I think that they will do it because they want to surveil. So it is super complicated. And I think, you know,

sort of the reasonable, rational thing now is just a very small allocation. But, you know, on a speculative basis, what you're really betting on is, again, the intersubjective belief that people will adopt this. Now, there's still debate, you know, will we see a deflationary environment or an inflationary environment? The case for a deflationary environment is you have mass amount of people that are out of work. You have spending that has gone down significantly. You have, you know, technology that if accurately counted in GDP really would show deflation in everything except where things are highly regulated in, you know, education and healthcare and, you know, housing prices and others. Or you have an inflationary environment where

our supply chains have been constricted, our ability to produce has been hampered, pent up demand leads to an explosion in prices, people say, holy shit, in the same way that I never, you know, thought that toilet paper would be out, you know, in the in the grocery store, and people were bartering for paying, you know, $8 a roll or paying $25 for, you know, a pack of Lysol or whatever, you could see that that is all inflation. And so if you saw that happening writ large, we've been warned about or talking about meat shortages. And suddenly you were able to buy a lot more because Bitcoin, for example, or gold was holding its value while the dollar on a purchasing parity basis was losing it. You know, that would be a big shift to where,

you know, you could sort of see a crowd like phenomenon of people shifting. But again, you like you said, there's so many variables. It's so hard. It's much easier for me as an investor to be able to look at an entrepreneur, even though we normally do it in a very multi-dimensional analysis. And right now we're doing it often in a two-dimensional analysis on a flat screen void of all of the psychological aspects that you can intuit when you're with somebody. But it's much easier for me to look at that person and look at the technology that they're building and see truth where it is independent of what everybody else believes ad infinitum. Yeah, I mean, look, I've been very fortunate to talk to a lot of these, these macro investors who they spend all day thinking about all that complexity. And somebody asked me, what's the number one debate right now? And it is that deflationary versus inflationary environment. And I think that once that is determined, or there's some consensus view as to where that's going, kind of all of the other investment decisions will cascade off of it.

And by the way, I think it will be not quite as a mirror or as a proxy of the market, but whether you think the market today is cheap or not, the equity public markets, some companies are rightly being punished. I mean, they're being destroyed down 40, 50%, and their likelihood of prospects in the future might be accurately accounted for. The market itself, obviously, is very market cap weighted. And so, you know, the Apple, Google, Facebook, Amazon, et cetera, which are beneficiaries today, maybe rightly so. And so you could see the same sort of thing where certain companies

will have inflationary outcomes and others will have mass deflationary outcomes. And it's not going to be a universal correlation of one. Yeah. The other thing is somebody sent me a chart yesterday that basically denominates the S&P in Bitcoin. And as you would expect, it's basically a directionally 45 degree angle down into the right. And it's one of these things where you also have to balance that's a cute chart to float around on Twitter and kind of get all of that attention. But is that something that is sustainable? And how do you think about that moving forward? So I think it's really interesting. The last thing I want to talk to you about before we finish up, I usually ask everyone whether they believe in aliens or not. And so we'll get to that

in a second. But you've obviously done a lot of work on space and a lot of the science and engineering needed to both do transportation, manufacturing, space travel, etc. Just maybe just talk a little bit at a high level of how you think about space exploration, where we are currently in our ambition to do certain things in space, and what you think maybe the next 10 years of space technology looks like. Okay, so do you want to save the aliens for after or do you want to include that in here? Let's get to the aliens last because I think that the technology in space will help inform how you view aliens. Okay. So let me give you my own moral prescription, which is if I had a limited set of resources to invest for sort of the

world, space would be on the list, but I don't know that it would be top five. And this was sort of a debate that I would have with people about climate change and global warming, all of which is real. I have no debate about anthropogenic causes of global warming. My quip has always been that there are more important things to prioritize that are 10-year problems that should be solved in the next 10 years versus 100-year problems that can be solved in 50 years. Things like Alzheimer's, cancer, heart disease, where people today are suffering and deserve to be, you know, sort of moral thrust of invention, creativity, talent, capital should flow to that first. So space to me is not one of those top five things. Now, it's inevitable, if you accept

what I said before, that there's so much randomness and optionality of things in the pursuit of one thing that in the sort of exhaust of it fall off and, you know, end up being created that I think, you know, you have all kinds of unintended positive effects. You know, missions to Mars or beyond, you know, to me feel like self-aggrandizing, more ego-driven stuff. Rather than trying to get us off the planet, I'd rather figure out ways to, you know, keep us healthy on the planet. On technologies in space, you know, we do have people that are doing launches, we have people that are launching satellites, we have people that are doing imagery from satellites, we have communication antennas that are beaming to and from satellites. In the

near term, we will have constellations of low Earth orbiting satellites, and there will be a slew of companies that produce that. So you will have SpaceX, you will have some version of OneWeb reincarnated its assets and vision adopted, whether that ends up being by Intelsat, some offshoot of SoftBank or somebody else. You will have Facebook and Google and some of the big primes also trying to rain down internet bandwidth to be able to connect the world. So that to me feels very likely. Positioning technologies for the satellites themselves is something that's quite interesting. So today you launch something, you try to do it at a certain frequency and sequence, but the ability to discreetly position is very interesting.

you saw for the first time a robotic apparatus actually go and do a refuel and repair of the satellite. So that's something that I've been personally obsessed with. I think it's a little bit early and premature. We've met with a lot of entrepreneurs and I find it quite interesting where, for example, on the ground, what they're doing is saying, let me raise some money to do a computer vision problem to prove that I can lock onto something that looks like a particular satellite. So entirely robotically, you know, basically with a black backdrop that mirror space. And let me show that I can perform a function on a physical object, whether that's adjusting a solar tile or removing a piece of debris. And so that to me is actually very

inspiring. I think we will have autonomous systems with communication systems that are reporting and both repairing and whatnot in space. Of course, I think the biggest opportunity where the most money is going to flow is ultimately going to be in defense. And so quite literally, um, you know, uh, the new space commander, uh, for our space fleet, uh, two or three weeks ago was mocking, uh, Iran for launching effectively a webcam into space. Um, but, you know, anytime you mock somebody, obviously, you know, strengthens their resolve, you know, and just look at, you know, Obama and Trump at the, you know, press dinner. But, um, I, I think that, uh, when China blew up a weather satellite years ago to remove it, you know, it was not demonstrating that it

could blow up a weather satellite. It was demonstrating that it could blow up anything in space. And so, uh, offense and defense in space for critical systems, as we launch more and more things off the planet, uh, off the surface of this planet, uh, I think are going to be very critical. So, um, so I, I think a lot of things are going to revolve basically around satellites and robots in space, repairing, connecting, you know, uh, suites of satellites and all the sensor payload packages that are able to image and communicate back down. So anything in like the manufacturing space that you guys have seen that you think is interesting, or maybe not even a company, just as you guys think through it. I know there's some people who think there's certain

things around manufacturing in space that are even more cost effective, can't be done here, whatever it is. No, I mean, we've looked on the fringes, you know, from everything from like mining to manufacturing. And I think that will be inevitability, but I think it's a really far off period. I mean, I think the most important thing will be finding ways to capture or generate fuel beyond solar. So, you know, today, probably the most promising thing would be some sort of satellite that was a solar battery that could actually store it, turn it from a solid state fuel into something that approximated a liquid fuel or a battery that could be transported onto a satellite and basically refuel or repower it. You know, that would be magical today. And we

can't really quite do that. Um, so no, that, that would be sort of the near term practical extent. Um, but, uh, but yeah, no, there's going to be, you know, tremendous. I mean, if you think about all of our assets up there now, they're unmanned and there's going to be an insane amount of unmanned assets that are launched by competitors, you know, sovereign competitors, corporate competitors, and there will be accidents and there will be a technology intended to both prevent and police and, um, investigate those accidents. And, um, I think it'll, it'll be a rich economy in space. Do we get autonomous space aircraft or do we get autonomous cars first and driving on us highways? Well, technically we have autonomous space aircraft today. If you count

satellites, you know, in the gravitational pull of the earth, um, you know, locked in geostationary orbit, um, and then low earth orbit, you know, is going to, you know, effectively be on, um, on its own autonomous path. Um, but, uh, no, I'm, I'm more optimistic about, um, autonomy, you know, uh, terrestrially. I truly believe that you will see, um, you know, in the next few weeks, uh, several big announcements, uh, Waymo will announce, you know, several billion dollars, uh, may have already happened today, but, but this week it'll be announced, you know, probably $3 billion plus for, uh, Waymo. Um, you know, Zoox is a company that we have a significant an investment in. They will need to raise a lot of money and their biggest risk is capital,

but incredible technology. Aurora, GM Cruise, a handful of others. Tesla is not one that I'm optimistic on for all that they purport about robo-taxis and autopilot. That to me feels just like a really misleading grab of people's cash, but that'll get sorted out over time. But I'm absolutely convinced that before we see robo-taxis, we will see 24-7 delivery of autonomous vehicles, where in the same way that New York ultimately put in a bike lane, certain parts of the city will have right-hand turn lanes. Right-hand turns are easier than left-hand turns because you don't have oncoming traffic, that are basically running a physical world algorithm the way that our routers run digital world bit algorithms. And shuttling

goods 24-7, groceries, pharmaceuticals, packages, FedEx deliveries. And a place like New York would probably be amazing for it, particularly in these times. So I think you'll see that a big OEM partnered with a big autonomous vehicle company and somebody like an Amazon doing 24-7 autonomous delivery vehicles with basically a human to do the last mile delivery. Because even though people are making robots for that, there's still too many edge cases that are hard for a robot to do homogeneously. Is that like a two, three-year thing or is that more like a 10-year thing? What does that feel like on a timeline basis? I think the technology is there within the next year. I think the rest of it is going to be, you know, policy and economics. So, you know,

if somebody wanted to put down a billion dollars, if New York city wanted to give a billion dollar concession, I mean, most cities are not going to be in any financial, you know, situation to be able to do something speculative and long-term like that right now, it's, it'll be neither politically popular or palatable, or in some cases, will they actually have the capital to do it? But if you had, you know, a billion dollars from the city and, you know, a company that was able to put in a billion dollars, $2 billion for a city to create right-hand turn lanes and autonomous delivery you know uh you know you can do that now got it uh aliens believer or non-believer well believer in the sense that um you know we watch with our kids um you know the

uh attenborough you know planet life series in this and and what they have been able to capture a subsurface you know the depths of the ocean the alien forms of life that exist there which exist, they're documented, are just insane. These bioluminescent fish that have a little dongle that basically captures something that swims by it. I mean, these are the strangest things that you could possibly imagine, and we've documented them. So in that sense, these things are aliens, right? I mean, by definition, they exist at the subsurface of the sea in the most harsh living conditions that no other life was ever believed to exist. So, so the prospect of something existing in space, you know, sure.

Do I think that, you know, we have Rick and Morty like aliens, you know, that no, is there sentient life? I have no idea. Is it possible? Sure. Is it improbable? Yes. Do I think that there's, you know, microbes or microorganisms or things that from the very basis of chemists, chemistry and chemical life and how life itself is a fight against entropy, you know, could that have evolved through basic physics and chemistry in some small

form? Yes. You know, would I be shocked if there was some form of sentient energy acquiring autonomous organism that, you know, no. But do I believe in, you know, Rick and Morty, three eyed aliens that, you know, we've imagined for a hundred plus years? No. Yeah. There's, I forget the gentleman's name, so I apologize, but I think he's a Brazilian billionaire and his goal, if I remember correctly, is to go to the depths of all of the oceans. And he's built basically a

one man submarine. And he's got I think he's gone to two of them. I think it's the Indian Ocean and one other. And it's just to me, that'd be fascinating. Like, what did he see? Right? Because he's literally gone where no other humans gone. Yeah, no, I mean, and then, you know, there was a movie again, sci fi sci fact, right? The Abyss back in the day. The Abyss was just a brilliant movie. But you know, James Cameron, the Mariana Trench, Bob Ballard, you know, is doing deep sea diving i mean super deep sea and and the stuff that they're discovering you know is insane and so um i find that there's just so much on this planet on our surface subsurface in our bodies that is just this great frontier i mean quite literally fantastic voyage you know or um uh

inner space you know if you ever saw either of those two old school sci-fi movies um that there's a much greater calling here you know before ad astra so i i hope that we solve alzheimer's cancer heart disease you know and the things afflicting our planet and the people on it before we start worrying about you know intergalactic civilizations for sure last question for you um i know that you read a lot what is the most important book that you've ever read it's not your favorite but the actual most important um well the thing like i'm reframing that to say what what i want my kids to read i'm going to give you two or three and they're sort of all the same vein um poor charlie's almanac i thought was just brilliant um charlie munger

i think is um one of the most rational people and a true synthesizer and polymath renaissance thinker of all these different disciplines and i think you know it's difficult if you read his speeches uh particularly the 94 95 usc speech on worldly wisdom and you come away with that with not being a subscriber to this view of the world um you know i'm uh like i can't connect with you you know um second would be a variant of that which i think is a great compendium um seeking wisdom from darwin to munger which uh i think just has a lot of great you know interesting mental models um and and then the other one which played a huge role in my life in appreciating psychology was uh cialdini's book on influence uh the psychology of persuasion um and it was really

a marketing book intended as a at least frame as the defensive guide you know against predatory marketers but i think it was adopted by many as an offensive guide but all the principles from you know liking scarcity authority um uh it just um it it was to me the early foray into behavioral science and our cognitive biases. And I've been very lucky to spend a lot of time with Danny Kahneman. And the one thing that Danny will tell you is you can document all of these biases and you can know every one of them, but it's like an illusion. You know, even though you know, it's an illusion, you still see it or still fall for it. And so the fallibility of us as individuals, as a species is, um, is both scary and inspiring. I have a friend who always says

people love magic even though they know it's not real oh i love magic love magic awesome listen i really appreciate you taking so much time to do this where where can we send people uh to find you on the internet or uh or learn more about lux well definitely go to lux uh you know lux capital.com and then we've got you know cool web series future which we've been doing where uh we take you inside uh some of the cutting edge engineers and scientists and founders a lot of them in the lux portfolio showing you everything from defense to space to sail drone to brain machine interfaces and that's on youtube so i love what you're doing thanks for having me man yeah for sure i i will uh i'll give you guys a big uh big boost on a futura um i think you just

did the andro one and i haven't watched it yet but uh but i actually haven't pulled up so uh we'll link to that as well and we'll do this again sometime cool man thanks good to see you all right guys i really appreciate you listening to that episode i loved it hopefully you found it valuable before i let you go don't forget to go and subscribe on your favorite podcast channel to this podcast leave a review leave five stars help me get more people listening to all this great information if you also want we publish these on youtube in video format you can just search my name anthony pompliano on youtube and find the channel subscribe there i hope you guys are enjoying all this i'm loving making it and so we will see you on the next episode