The Prof G Pod with Scott Galloway - Conversation with Josh Wolfe — Where to be Bearish and Bullish in 2024

Episode Date: May 2, 2024

Josh Wolfe, the co-founder of Lux Capital, joins Scott to discuss the sectors he’s most excited about and those he thinks are overhyped. We also hear his thoughts on the Magnificent Seven and where the crypto market is seeing new life. Follow Josh on X, @wolfejosh.  Scott opens by giving his thoughts on the protests on college campuses, specifically UCLA.  Algebra of Happiness: the circles of masculinity.  Follow our podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Go, go, go! Welcome to the 298th episode of the Prop G Pod. In today's episode, we speak with Josh Wolfe, the co-founder of Lux Capital, a venture capital firm that focuses on investments and emerging technologies. We discuss with Josh the current state of venture capital, the crypto market, and whether AI is a net destroyer or creator of jobs. This guy has such serious candle power. I feel like I'm on, remember how, I think it was Intel, had the 286 and the 386.

This guy's like Pentium. I'm literally, I don't know, I am navigating by starlight, and this guy has GPS. It's incredible. I have a difficult time keeping up with him, and he definitely has the ability to see around corners. He saw this venture capital firm or started a venture capital firm that invests in the craziest shit, which usually spells disaster financially. And he's done really well.

Anyways, this guy's the closest person I know to sort of a, I don't know, a fortune teller. He definitely can see around corners. Okay, what's happening? The dog is in Miami. It's the South Beach dog. That's right. Not in North Dakota. Not some depraved fucking weirdo is going to take me out back and shoot me and bury me in a gravel pit just because I'm poorly trained.

I pee on everything. I literally, I'm looking at some curtains. The fine has all these colors, this kind of Argentinian cool vibe. And I just see those luscious curtains and I'm going to go over there and raise my leg and pee all over that thing and as long as they're not Jewish. So essentially, they're restricting access. This is where you literally want to grab these kids by the lapels. Let's assume they're not bad people, that somehow along the lines they got so caught up in an ideology around, I don't know what it is, being woke, trying to be good people, that they've gone on the hunt for fake oppressors or for fake enemies and have just totally lost the script. And I'm

not sure any of these students are listening to this podcast, but what I can tell you is, especially the kids that did anything but stand up for the rights of people of all special interest groups to have unfettered access, whether it's a six-year-old black girl trying to get into an elementary school in the South that needs the National Guard to escort her in, your kids and your grandkids are going to be so fucking ashamed of you. You're going to be that guy or that gal that's played back on video where your kids and your grandkids are just horrified at what you did. Look at the arc of history. This type of bigotry never wins. It never comes out, oh, that was a good idea.

Oh, it made sense. We're scared that our enemy, Japan, is going to invade the country. We're scared they're spies. So we come up with this hysteria and we figure out a way to put them in what were essentially concentration camps. We intern them. Okay. Was that a proud moment for us? We're going to sequester people from housing opportunities with redlining. Was that a good look? I mean, this is just such an easy one. And my immediate reaction, I've given some money to UCLA and Berkeley for the funding of vocational programs, something I'm passionate about, providing more I'm going to pull that donation. This is just outrageous. And I kind of slowed my thinking and thought, you know what? I know the faculty and the leadership at these universities, and distinct of a few fucking idiots that have

decided to defend an ideology that if it registered traction in the United States, it would end up in the execution of the majority of our students who are Christian or gay, despite those individuals who, by the way, should be summarily fired. There is sharp relief between some 19-year-old exploring the boundaries of intellectual freedom and free speech, which has turned to hate speech, unfortunately. You got to cut a pretty wide berth for those kids. But faculty, we pay you. The students are paying us for a college experience. And part of that college experience, quite frankly, is making mistakes in a safe place. When it ventures into hate speech, that should be a life lesson and they

should be expelled. Keep in mind, keep in mind at UCLA, we expel 91% of the students. It's a public university. Everyone should have the right to study there. But we expel 91% during something called the admissions process. Oh, but you can restrict access to people based on their religious identity. Guess what? You should join the 91%. We expel. They didn't have perfect SATs. You should not get in retroactively to UCLA. At what point do the faculty, administration, and leadership in California recognize that attending these organizations, enrolling in these organizations is not a birthright? And where it really loses the script is any faculty member who we pay for that mold to be removed. We pay you. Anyone who is not helping bring the temperature down, anyone who adopts this perverted, deeply violent, depraved agents of chaos, this ideology, anyone who defends it, then we as your colleagues at these universities and we as donors and people who supported this university, we fucked up. And guess what? We can fire you. You absolutely have the rights to free

speech. You absolutely have the right to protest. And we as an organization have the right to fire your ass. Go into the lobby of any corporation and start screaming, save the whales. Whatever the issue is, start screaming it at the top of your lungs and restricting people from different office spaces and becoming obnoxious and holding hands and holding up signs. Good for you. The First Amendment of free speech means we can't criminally prosecute you, but we can fire you.

And this is what is not getting enough attention. And that is faculty who are not taking down the temperature and who have adopted a perverted, strange ideology and find any empathy for it. That means you do not have the critical thinking to be at a higher ed institution, free speech, first amendment, rights to protest. Give me a fucking break. We're paying you. Go to a public square. Speak out. Do it on evenings and weekends. In the meantime, if you want us to continue to sign the front of your check, you have an obligation to create a civil learning environment

where people can peacefully protest, the students, the students, and you can do your fucking job, which is make this a healthy, accepting environment for all of the students, and you can do your fucking job, which is make this a healthy, accepting environment for all of the students. It is your job to be the adults in the room, for God's sakes. Anyways, go Bruins. Go Bruins. I should add that. I am confident they are going to address this issue. I know a lot of people at UCLA, good people, good people. I think they've been caught flat-footed by what's going on today, and that's a problem. But I just can't imagine, I can't imagine they are not going to move swiftly and crisply against the bigotry that has haunted this nation, that is the stain on this nation.

Who thought we were going to be back here? I sure as hell didn't. But here we are. This is a moment in history. UCLA leadership, I believe in you. I know you are going to do the right thing. We'll be right back for our conversation with Josh Wolfe. Welcome back. Here's our conversation with Josh Wolfe, the co-founder of Lux Capital,

a venture capital firm that focuses on investments and emerging technologies. Josh, where does this podcast find you? I'm in New York. Are you London or whereabouts? Yeah, London. Go figure. Cherry ho.

There you go. Didn't you have an accent? Yeah. I'm hoping, I wish I'd got my kids here a little bit longer. I'd love to give at least my youngest a bit of a Scottish twang. I was, my dad, this was fascinating. People find my dad so charming and I figured out at a young age it was more the accent than anything I was saying. But anyways, let's buzz right into it.

I think of you as this like very forward-looking, big vision, kind of blue flame thinker. Give me a sense for where your head is the same thing as being wrong, but it's increasingly evident. You've got pullback from general partners who raise the funds, limited partners who over-allocate it to the asset class, startups with an increasing number of down rounds. I think it's like 15 or 20% of all rounds being raised right now are down. So valuations are lower from the last round that they raised at. And you're going to have a lot of shutdowns. That's also becoming increasing evidence. So venture world, I would say is generally becoming more realistic, but there's still a whole contingent of VCs that raised capital in the Zerp environment. I would say that low interest rates are like a tractor beam for the future. And so people that are looking at low rates basically are like, hey, we can fund these crazy 20 year things,

these Elon things, whether it's like Neuralink or Hyperloop or, youloop or things that basically don't make sense in a short period of time when rates are high. And now that rates are high and your tractor beam comes in and you're basically looking two feet in front of you instead of 20 years out, I still think that there's a whole cohort of venture investors that are going into crazy speculative sci-fi stuff. And we love closing that gap between sci-fi and sci-fact, but some people I think are just going to end up losing a fortune going after all kinds of nonsensical stuff in quantum computing is something I'm very skeptical about. Fusion is something I'm very skeptical about. And then there's the reality and the hype, which is what makes markets messy and beautiful in things like AI. I would say that there's a

five-year psychological bias where you want to be invested today where you should have been five years ago. The investments that we were making five years ago in companies like Mosaic, which we sold to Databricks and Hugging Face and others, those are doing really well right now. The incremental investment that people are making today at very high prices, capturing the sentiment and demand for AI makes it really hard because you might be right about the technology, but your expected return paying some crazy prices is going to mean pretty significant investment losses. So that's sort of the purview from venture with large AI, we can go into some of the details in AI, where I think that there are segments. And then the other wave, that is, at first,

people felt very uncomfortable with. And now it has become undeniable. And I think we're probably three, four, five years away from it being bubble like is aerospace and defense. And there you had tailwinds where there were basically no cutting edge companies. You had SpaceX on the one hand, you had Palantir on the other. We were early investors in Andoril, which has become a hardware kinetic. It was actually the first company that we as a partnership had to decide, hey, are we comfortable being part of a kill chain where you know that you are funding technology that is not killing the cancer cell, but might kill an enemy combatant. And that was a difficult partnership discussion. But that became exhibit A for the wave in aerospace and defense. And now

people are coming out of that company and role and starting new companies. You're getting capital formation, dedicated funds, whether it's firms calling it American dynamism or global resilience, packaging these things. And then you're getting fund to funds that are investing in the space. That's actually really interesting because a CIO friend of mine said, this space is really interesting for fund to funds. Because if you invest in a fund to funds that invests in a venture fund that invests in a company like Anderle, you're at least two or three layers morally removed. So it's a little bit easier from an investment committee to say, hey, like we're funding this stuff, but we're not directly involved. So I know, I know enough about venture to be dangerous. I want to put

forward a thesis and you tell me, you know, validate or nullify it. My sense is the opportunity when I talk to VCs is in follow-on rounds of good companies where the valuations have been rationalized. Is that where the opportunity is? There definitely is opportunity there. You have to consider the thing that I think you're really brilliant at considering, which is the human condition. Yes, the rounds might be lower valuations, but you've got people that were there five, six, seven years, their options are underwater, they need to be restructured or repriced, maybe they're looking at greener pasture somewhere else. And so how do you retain talent in these down rounds is a pretty hard thing when you get this sort of spiral of negative

psychology. I will say that one adjacent area, and we sort of come up with this framework, this tri-party framework of what I call bubble, anti-bubble, and consolidation. So bubble is not actually hope that there's a bubble, like the old bumper sticker following the last of assisted-to-do markets, whatever happens with Trump and Biden, wars, et cetera. They just focus on their technology. They can do it in a bubble, protected by enough capital when they go out and actually prove that they did what they said they could do and raise their next round. The second is anti-bubble, which is sort of what you're talking about, which is how do you get a later stage asset, less risky, but at an early stage price so that you can get higher returns. And I think actually the one interesting niche in this are corporate spinouts. Corporates are always on one hand, a little bit late to the game, you know, as venture investors. But in the

past 10 years, you had Meta, Alphabet, Microsoft, but particularly the former two, funding all these other projects. And about a year ago, there was a whistle that I heard. And the whistle was Chris Hohn from Children's Investment Fund. He's an activist investor, a very successful one. And he wrote a public letter to Google and said, you got to cut all these other projects. There's 20% time that people are doing these fanciful things where you're trying to retain talent. You got to focus on contribution margins. You got to stop wasting money. And they and others have listened. Budgets have been cut for some of these programs and they're legitimately good as standalone ventures, but not as divisions of these big tech companies. So we did two spin outs in the past year, and I predict we'll probably do another

two or three over the next 12 months. We took one group out of Google, which basically created a Shazam for smell. So the ability to walk into a room and using cutting edge AI with sensors, be able to detect what is that smell? What is that odor? And that can be used for healthcare from everything from like detecting COVID, Parkinson's, Alzheimer's, all of which have a disease stated chemical signature that gives off. We know that dogs can be trained to sense that. So why can't machines?

So that was one, it's called Osmo, Osmo.ai, run by a brilliant PhD. And they just weren't going to get the funding at Google. And we said, spin out, we'll give you some residual common equity, did a $60 million founding round, and that's a good playbook. So let's talk a little bit about AI. There's a general sense, or there's a fear or a risk that it'll destroy jobs and consolidate power. It does feel as if the biggest players are the guys we know already, that the majority of the market cap is accreted or market capping has accreted to you know the microsoft's of the world what do you believe that it's going to be a net destroyer or creator of jobs uh it net destroyer of existing jobs but it's going to

create new jobs that's always been the case so the jobs that people have done over the past 15 years with the advent of the IT revolution going back 30 years, nobody ever forecast like HTML designer or JavaScript programmer or web coder or social media marketing influencer or guru. So all these things, I think, in a sense, democratize the ability for people to express their genius. It makes it harder when everybody can do it because you have a supply of talent. The interesting people that are getting hit now because of technology are actually the white collar workers. I mean, the people that are doing, frankly, bullshit jobs, you know, consultants and copywriters and people that increasingly some of these chatbots can do as good or in some cases better

than they can do. The group that I actually think is more protected, ironically, are the blue collar workers. You know, there's a shortage of nurses, massive shortage of nurses in this country. There's a shortage of plumbers, massive shortage of plumbers. And these are things that we just don't think about. And we sort of look down upon and you go back to like, you know, workshop is soul craft and people actually using their hands. That combined with technology is a theme that I'm actually really excited about. It's this idea of maintenance. And if you think about the past, I don't know, 10 years,

everything's been about growth, growth, growth. And you know accounting, you talk about the flawed accounting of a lot of these big tech companies. You take CapEx, it's got two components. You got growth and you got maintenance. Everybody's been finding growth, growth, growth. Maintenance, you have trillions of assets from basic infrastructure, apartment buildings,

the human body, hospital systems. There's all kinds of things where you can apply new technology to maintaining these systems. And I think that labor, blue collar labor, is going to be a critical piece of that. So it sounds like you think there's investment opportunity in like hard assets that have been overlooked. Is that what you're saying? Well, that's true also, because regardless of what expectations, and we've been sort of saying for, I don't know, two or three quarters that maybe rates don't go lower. Maybe the cost of capital naturally is higher, even though we're in an election year and they're trying to press things down and create a stock market wealth effect. And people are looking at their everyday inflation hit goods and they're feeling pain.

I actually think that when rates are rising, geniuses like Buffett figured this out, you want to invest in capital intensive industries as early as possible because the replication cost of those hard assets is just really hard to do and cost of capital is much higher. So I do think hard assets, this touches everything from industrials, infrastructure, aerospace, and defense. And I think that that has been an under-invested sector of the venture world, and you're seeing a ton of talent going into this. I mean, I can tell you right now, Anderle, some of these people work. They've asked for four years. This is the defense company. Raised billions of dollars, generating billions of revenue. It's one of the great successes in the space that people are pointing to. But these people that work there are super talented and they're spinning off from Anduril, from SpaceX.

And they're going into not SaaS companies or chatbots. They're going into composite manufacturing, rebuilding the arsenal of American democracy with hardware manufacturing, building robots that build robots. So that is actually a really, I think, underappreciated thing that in the next few years, people look back and be like, oh shit, I should have been invested in that. What do you think our economy is Achilles heel is right now? Ourselves, people. I mean, we're our own, you know, you talk about this, I think brilliantly a lot, but we are our own worst enemy. Just the divisiveness. There's so many opportunities for people to come together. I actually think that that will probably be with foreign adversaries that unite us again.

I thought it was going to happen earlier with China and the Chinese Communist Party. It really hasn't as much. But yeah, I think we're the biggest obstacle. It's not foreign adversaries. Foreign adversaries can exploit our divisiveness, but it's our intrinsic divisiveness that I think is slowing us down. That's the biggest friction of progress. Yeah, we're brothers from another mother on this one. You had also said that we should be spending less time thinking about fusion and more about fission. Do I have that right? Yeah. This goes back to this idea, again, people looking at far out ideas, and you're always trying to look at the next thing. I mean, this is what makes music great, right? Young people don't want to listen to their parents' music.

They want their own thing. They don't want to wear the old clothes. They want to invent their new thing. Well, it's the same thing for technology investors. They're always thinking about what's new, what's next. We do the same thing, but we try to temper ourselves with reality. The reality is fission is amazing. We've got decades of very safe use and lots of records of how to operate these plants.

We have a declining labor force supporting them, which we should adjust. It goes back to this idea of supporting these blue-collar workers and maintenance of systems that we already have. But we used to have 104 domestic reactors in the U.S. Now it's down to 90-something. You've lost political support in not only the U.S., but in many countries. Germany, which shut down their nuclear, even though you had an engineer at the helm of the country and its leadership in Angela Merkel. And what happened in Germany, they delivered themselves literally to the natural gas grip of Putin and created enormous dependencies. Right now, there's five countries that can

basically drive nuclear. And it's interesting because this sort of comes back to AI in a sec, but you've got France, you've got South Korea, you've got UAE, you've got Russia, and you've got China. And I testified in front of Congress last summer, basically saying, this is another threat that we are not appreciating. That threat being the U.S. has gone from 104 to 90-something reactors. We've declined. The cost for the newest reactor that we put up, which was in Georgia, about $6, 8, $10 billion a gigawatt to serve roughly a million people per gigawatt. China is doing it for about a billion and a half, $2 billion. Okay. Fifth of the cost, 80% less. Why is that important? They went from two reactors to 20 on their way to 50,

but now they're exporting that technology. And if you are geopolitical strategist, if you care about foreign policy, your state department, your Department of Defense, you do not want China reactors all along the coast of Africa or South America providing large baseload power and creating decades-long dependency on China to provide fuel and maintenance and, you know, basically controlling the ultimate kill switch of the electricity for your economy. So U.S. should really be getting aggressive to combat that. It's interesting because I think people, nuclear sort of had another moment and it seems as if it's stalled. Is it because of, it's like the New York subway system, we just can't produce it as inexpensively as everyone else? Is the technology not advanced? How come, similar to other tech, the price has not come down? Well, I think the biggest obstacle here, again, is people. And so it's the perception. I am encouraged. It's going to take longer than we expect. I mean, you'd love to see like, my God, this nuclear renaissance and reawakening.

You know, I joke that if people discovered nuclear power today, atomic energy, they would just be like running around, you know, with their minds blown, just being like, oh my God, we just discovered magic. We had this very unfortunate phenomenon in my mother's generation, late 70s, when you had Three Mile Island in the US followed quickly by China Syndrome. Exactly. And then you had a certifiable disaster in the 80s with Russian technology in Chernobyl, but, you know, nobody's ever bought anything from Russia other than Cuba buying some, you know, Tata cars and and AK 47s and MiG fighter jets, because those actually had to compete on a global stage. But those were

disasters. Then you had Fukushima, where we actually had a company called Curion that ended up being the only US company for that cleanup. And that was also a disaster. And so it spooked people. And in Three Mile Island, nobody died. There was, you know, it was actually a exhibit A of good engineered fall tolerance systems. So I think that you need a zeitgeist change. And I'm seeing young environmentalists really bullish on nuclear. I'm seeing influencers, you know, hyping up nuclear. So the mindset is changing.

It's probably going to take another three, four, five years. I've tried my part. Instead of calling it nuclear, which again, back to my mom's generation, like this conflated it with James Taylor and Laura Niro and Neil Young protesting, you know, no nukes. That's a good thing. We don't want nuclear war, but you do want nuclear power because it's great for the world. Change it from nuclear to what I call elemental energy. People love elements. They love the sun, solar. They love the wind, wind power. They love water, hydro. What about rocks? Well, there's good rocks and bad rocks. Bad rocks are coal. Good rocks, uranium. Zero carbon. Beautiful. Large baseload power. Elemental energy. Hmm.

What, you, I mean, you sort of see how the sausage is getting made, and that is you're in the front lines of where value gets created. When you look downstream at public companies and you look at the tech sector, open it up to every sector, what public companies do you look at or sectors sector or open it up to every sector, what public companies do you look at or sectors and think, that's where I would bet? You know, everything has been very overvalued in the Magnificent Seven. That's driven as much by expectations and flow of capital as it is by fundamentals. To Microsoft's credit, they made a roughly $10 billion commitment to open AI a year and a half ago, or they're about created a trillion dollars or coincided with a trillion dollars of market cap value.

That's just absolutely incredible. It's one of the greatest investments, you know, in tech history. So you have a dynamic in the AI world, and we can go back and talk about AI because I think there's some interesting things there. But where I think the market in the street is now saying, show me, show me that you've got pricing power. If you're Adobe, show me that you're going from 20 bucks a month to 30 bucks a month. If you're Microsoft and you got the Office 365 suite, that you are actually generating premium pricing power or show me that this actually translates into contribution margin and profitability that we can put multiples on and extrapolate. But otherwise, in many of these cases, it's a race to the zero. The one public company that I found interesting in recent years, and I think it's been underappreciated in the AI revolution, has been Cloudflare. And so this is sort of like you go back 24 years ago, it's almost like the Akamai of today in caching some of this content, distributing edge compute so that people can access and do, if you're in AI, inference and training at the edge. So interesting business. I'm a venture investor. I leave all the public market stuff to my much smarter wife who runs an activist hedge fund, but that one's interesting. You mentioned quantum computing as something that you're sort of bearish on. Are there other sectors or companies that you think are kind of that

the performance isn't going to match the promise? That infusion, and in both cases, both are like historically the pinnacle of what Scientific American Magazine probably put on their cover for, I don't know, 40 issues over the past 20 years. You know, the quantum revolution is just around the corner. Maybe I'm too cynical, so you have to handicap what I'm saying. But for the past 20 plus years, we've been pitched two dozen plus quantum computing companies. And we've even invested in a few that have basically said, we're going to have unbreakable cryptography. We're going to have the ability to model molecules and design drugs. We're going to have totally encrypted

communications. And none of those things have materialized. And when they have materialized, it's been because of GPUs and clusters of novel architectures, nothing to do with quantum computing. But you get one of these machines with the copper wires and all these things that look like, you know, a Tesla orb and people just go gaga. And I think that a lot of these entrepreneurs are somewhere between naive, if you give them credence, and maliciously fraudulent, if you don't. And they're exploiting what I call ignorance arbitrage. Oh, Scott, you know,

this thing's got two femtosecond annealing for a quantum. And you're like, oh, that sounds amazing. But it's just, it's a lot of, as Murray Gelman called it, quantum just, it's a lot of, as Marie Gelman called it, quantum flapdoodle, a lot of bullshit. Coming up after the break. The vast majority of the use cases for these users is the Joaquin Phoenix manifestation of having a virtual girlfriend.

Maybe that's a good thing. Maybe it's a horrible thing. But that phenomenon, I think, is something that is driving the vast majority of the profitable revenue generating uses today for AI that aren't in the mundane things like customer service and call centers. Stay with us. What is your take on the entire crypto market? Do you think, I mean, it's had an incredible resurgence. There's some tech there. There's some, you know, a lot of branding, a lot of marketing. Do you own any crypto? We do personally as a speculative kind of thing.

The fund has owned some. We've made a bunch of investments. More in the infrastructure, so something like Anchorage, which is a custodian for assets. They don't care. Goes up, goes down. This is something that people need. They're like the top institutional custodian. So things like that have done okay.

You know, it's interesting in that you had all the tourists come in, you had all the hype, all the BS, and then it sort of crashed. It's reached, you know, all time highs or close to it. And you have people that are sort of back into it. I'm seeing that there's NFT parties again, which I think are, you know, personally insane. But there'll be something there. I don't want to completely crap on that because the core piece of that, the compute, the infrastructure algorithms that people are trying to find traceability in digital assets, there's something there the first cloud infrastructure was being built out approximate to hydropower some of the crypto people were doing the same thing but now they got repurposed into ai and i actually find tying some of these themes together uh you may have seen this but amazon announced that they are um buying or bought a data center that is entirely powered by nuclear. It's, I think, 960 megawatts, just under a gigawatt, $650 million. This is one of the first nuclear-powered data centers. So that, to me, is interesting because it actually went from being used for crypto mining to now being used for cutting-edge AI. And then, you know, you zoom out into the big picture on AI, you've got, you know, basically chatbots, which I think are reaching their pinnacle of becoming commodity. You've got chips, which everybody knows NVIDIA, people are increasingly appreciating AMD, and some of the other languages that are popping up like PyTorch to be able to run on some of these novel chips, even ARM, and Google and their TPU. So the chips piece. And then you've got this weird thing, which, you know, it feels very, I don't know, Gallowayian, which is chips.

So you had, you know, chatbots, chips, and chicks. Chicks, what do I mean, being lewd and crude? Some of the biggest uses for AI, you know, are either the mundane things, call centers and customer service, or people generating girlfriends. And it speaks to the thing that you've long talked about, about the epidemic of loneliness

and, you know, these sort of incels in their basement. But company like Character AI, which we're not invested in, but it's been an interesting phenomenon. The vast majority of the use cases for these users is the Joaquin Phoenix manifestation of having a virtual girlfriend. And maybe that's a good thing. Maybe it's a horrible thing to feel validated by somebody that understands you better than some of your friends or a potential girlfriend to, I guess, be honest and or live a personal fantasy. But that phenomenon, I think, is something that is driving the vast majority of the profitable revenue generating uses today for AI that aren't in the mundane things like customer service and call centers. And do you see, when you look at the Magnificent Seven, going back to them, but stack rank who you're most bullish and bearish on in the Magnificent Seven?

Most bullish at the moment on the cleverness of Microsoft. Again, not only that $10 billion, but think about the way that they've structured these deals. I mean, they have figured out the regulatory arbitrage between DOJ and FTC. They know that they couldn't buy open AI, but they effectively control it, right? I mean, all the ecosystems, even the thing that slipped in one of these board meetings, I think, where Satya was like, we control them, top, bottom, left, right. We've got all the IP. We've got all the

data. If they went out tomorrow, you know, we own everything. We'll control everything. I don't want to get the words precisely wrong. So Microsoft has done that there. They did it with inflection. You know, inflection raised, I don't know, a billion, billion and a half, something like that. And then for $675 million or $650 million, just a few weeks ago, Microsoft announced that they got a perpetual license, you know, to the technology. Again, very clever way of routing around FTC, DOJ prevention of that. But at a time when the big tech companies can't get acquisitions done, Microsoft is really clever at how they're really doing acquisitions. They got Mustafa Suleiman, who wrote the big book, co-founded DeepMind with Demis. They got that core team, and they left this little shell of inflection for the other investors. I know the investors actually

ended up making a little bit of money the way it was structured. So Microsoft has captured it. Amazon. Amazon has been behind, and everybody's criticizing Amazon. They're coming up on the one-year anniversary of Bedrock, which was one of their platforms. It's adjacent to, and they've partnered with our company, Hugging Face, which is the main repository for all the AI and ML models, like the GitHub of AI. They're going to have the most performative model on that, which is Claude and Anthropic for now until GPT-5 launches or whatever comes next.

They will have it for biology with one of our companies that will be announced. And they'll probably have one in robotics and some other domains. So I think Amazon is sort of quiet and steady and they were rightly getting criticized.

I mean, Alexa and that kind of stuff sucks. And they'll have to redo that internally. But in their corp dev program, very bullish on what they've done. And then you've got Google, which is facing this, you know, they let the inmates run the asylum. You had the Gemini disaster with all their woke and stuff that, you know, corrupted these models. You now have the founders coming back in, making public appearances, pressure building on Sundar. And so that to me is an interesting dynamic. And then you've got Perplexity, which is the startup that's sort of starting to eat Google's lunch on the search piece. Google's what, 240, 250, 280 billion dollar search,

you know, ad business. And I don't know, 95% of the searches on Google are like five words, you know, you type something quick, but on Perplexity, they're like 10 plus words. So they're going after that classic disruptors, you know, innovators dilemma piece of long tail questions. And I know more and more people, certainly I use perplexity way more than Google these days. So, so that to me is sort of interesting, you know, Tesla, I have been a long bear. I've accepted that regardless of what I think about it, it is a religion sort of like the people that are buying Trump social or too social or whatever. It's hard to short a religion. It's hard to short people that are getting the logo tattooed on their body. There, I just personally stay away, even though I

have been very critical of Elon's relationship with the truth. And then Apple, they haven't had a hit product in, I don't know, 2016 with AirPods, really. I mean, I got Vision Pro. I think it's super cool. We've got meta VR as well. And it's a preview of what's to come. And I do believe that it's the worst version of Vision Pro that they'll ever have. It'll keep getting better and it'll get smaller and it won't be so heavy on your head. But they need something new. And you can make the argument Google also hasn't really come out with something new in a very long time.

They all have a lot of cash. They can't really do big acquisitions unless they're as clever as Microsoft. And, you know, you saw Apple shut down their special car program projects. Rumors about them getting into robotics. You know, I'm one of the early suckers. I've got one of those Amazon Astros, you know, running around my house to my kids and my wife's chagrin.

But you can see in-home robots from Apple being a product category as speculative and crazy as that might be. But, you know, and then Netflix is amongst the crazy streaming wars. But I think the most important thing here is that the combined market cap of all these companies is still just bigger than most other countries' entire market caps of the cumulative stock markets. And I think that's the key, is we just have to make sure that we maintain that. The top five, seven, 10 companies in the world are not Baidu and ByteDance and Tencent and Ant Financial or Alibaba, that they are competitive, non-state-owned, things that

approach truth instead of an asymptote of it, as many of the Chinese companies do. Josh Wolfe is the co-founder of Lux Capital, a venture capital firm that focuses on investments and emerging technologies. He's also a founding investor and board member with Bill Gates and Kaimeta, which makes antennas for high-speed global satellite and space communications. In 2008, Josh co-founded and funded Curion, a contrarian bet in the unlikely business of using advanced robotics and state-of-the-art engineering and chemistry to clean up nuclear waste. He joins us from New York. Josh, you define the term like, I feel like I'm on a 386 chip and you're an NVIDIA chip. It's literally a calorie burn for me just to keep up with how fast your brain processes. But I just love your take on stuff.

Thanks for your time. Thanks, man. It's great to be with you. Algebra of Happiness, a call to action. I'm starting to think about a book on masculinity, and I'm trying to come up with a construct. I'm not sure I'm succeeding here, but I think of it as kind of concentric circles. The first circle is taking care of yourself. Be physically fit, be mentally and emotionally strong, try and develop a plan, try and develop economic viability, or at least a path towards economic viability.

Be kind. Be kind to yourself. Second circle out, be good to your, take care of your family, your immediate family. Begin to add surplus value. Start giving more than you're taking. By the way, relationships aren't a transaction where you're always trying to get more. The point of being a man is surplus value. You give more than you get.

Then going out, extending another circle out. You start taking care of extended family. Then ideally your community, voting, being a good neighbor, maybe serving in the agency of others or for your country. And then moving out even further, being really kind to strangers, showing that you are so strong and so confident that you can go out of your way to help people you don't know. You know, planting the saplings, the shade of which you will never sit under. And then also, I think, kind of one of the ultimate expressions of masculinity is to get involved in a boy's life that isn't biologically yours, you're not related to. The single point of failure. We talk a lot about on this show how young men are coming off

the tracks in the United States, and no group has fallen further faster than young men over the last 20 or 30 years. And unfortunately, a lack of empathy for their struggles because their father and their grandfather has enjoyed unearned privilege has created a lack of empathy in an unproductive conversation. And I'd like to think we can move forward, move past that. And I think one way to express your masculinity, if you're a young man or a middle-aged man or a senior that has done well, is to get involved in the life of a young man. And unfortunately, there's this terrible gestalt in our society where men are somewhat remiss to get involved in the life of a young man or a boy. Why? Because Michael Jackson and the Catholic Church have fucked it up for all of us

and create suspicion around any man that wants to get involved in a boy's life. And that is absolute horseshit. And I speak from experience here. My mom, I was raised by a single mother, and one of the wonderful things in my life was I had all of these men come into my life and fill the void. This ranged from a stockbroker, I've written about it, a guy named Cy Saro at Dean Witter, who got me investing at the age of 13 after I walked into the lobby of the Dean Witter Reynolds brokerage at the corner of Wilshire and Westwood. And I used to call him every day and he'd give me a little lesson on stocks, Really nice man. There was a guy across the hall, didn't know him, single guy. He came over one day and introduced himself to my mom and said, does your son like to horseback ride?

And she said, he doesn't know how. And he said, well, I'm happy to take him and teach him. And this man, this man, I think, you know, he seemed older, but he was probably late 20s, early 30s, used to take me horseback riding. Didn't know me. Would take me out to Westlake and we'd get on a horse and then he would teach me how to goddamn horseback ride. A kid who lived across the hall. Think about that. You don't have to be a baller, but are you living a virtuous life? Do you have empathy and love to give? I think there's so many men out there that have love to give, are good men,

are trying to lead a virtuous life and aren't necessarily like entirely sure where to put that empathy and that concern. Well, here's a place. There are young men and boys everywhere, everywhere that need help. And what I mean by help is just some time in the presence of a man who is trying to lead a good life.

Get involved, flex. The ultimate expression of masculinity is to get involved in the life of a child that isn't yours. This episode was produced by Caroline Chagrin. Jennifer Sanchez is our associate producer. And Drew Burrows is our technical director. Thank you for listening to The Prof G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn,

and on Monday with our weekly market show. Oh, this is a great day. This is a great day.