20VC: The 3 Forms Of Edge A Founder Can Have, Lessons From Being on A Board With Bill Gates & Why There Are A Lot Of Tourist VCs Who Are Going To Lose A Lot Of Money, with Josh Wolfe, Co-Founder @ Lux Capital

Josh Wolfe is the Co-Founder and Managing Partner @ Lux Capital, the fund that supports scientists and entrepreneurs who pursue counter-conventional solutions to the most vexing puzzles of our time, the more ambitious the project, the better. Josh is a founding investor and board member with Bill Gates in Kymeta, making cutting-edge antennas for high-speed global satellite and space communications. In 2008 Josh co-founded and funded Kurion, the company was among the first responders to the Fukushima disaster. In February 2016, Veolia acquired Kurion for nearly $400 million—more than 40 times Lux’s total investment. In Today’s Episode You Will Learn: 1.) How did Josh make his way into VC from the science lab? What was it about venture that got Josh hooked? 2.) How does Josh view the rise of thematic investing? Why does Josh believe there are a lot of tourist VCs who are going to lose a lot of money? 3.) Investing in such frontier technologies, how does Josh view market creation? How does Josh look to build a thesis and a methodology when investing in a company without an existing market? 4.) What is the inflection point for Josh for when heavy science and R&D becomes investable? What is that tipping point where science becomes commercialized? 5.) Does Josh get concerned that with such heavy IP and corporations not investing in R&D that this is a market for acquihires? What are the pros and cons of this shortened liquidity cycles? Items Mentioned In Today’s Show: Josh’s Fave Book: Sapiens Josh’s Fave Blog: Media Redefined Josh’s Most Recent Investment: Recursion Pharmaceuticals As always you can follow Harry, The Twenty Minute VC and Josh on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Eight is a sleep innovation company. With their latest product, the Eight Smart Mattress, being a bed that literally tells you how well you slept last night, paired with an intelligent sensor cover that measures the quality of your sleep and delivers a daily sleep report. In order to bring you the best product, Eight used anonymized sleep data and feedback from over 10,000 people, to understand which materials and types of mattresses give customers the best sleep resulting in their unique blend of four responsive and high-density foam layers plus one layer of proprietary technology that helps people track and improve their sleep. You can check it out on Eightsleep.com – and if you use the code 20VC you will get a whopping 20% discount! FullContact provides the ability to organize your contacts, gain rich insights into them and therefore build deep relationships. With features like automatically identifying and merging duplicate contacts to the ability to snap a photo of a business card and FullContact will transcribe them for you, so no more lost and loose business cards at events. It is with these features just being the tip of the iceberg, FullContact really is the best all in one solution for contact management and you can check them out on fullcontact.com.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  You are listening to a very special episode of the 20 Minute VC with me, your host Harry Stebbings at H Stebbings on Snapchat. It would be fantastic to connect there and all ads get a personal message from me. However, to the show today, and why is it such a special show? Well, today's guest is slightly different from many of the traditional software investors we've had on the show. With that in mind, I'm thrilled to welcome to the hot seat today Josh Wolfe. Now Josh is the co-founder and managing partner at Lux Capital, the fund that supports scientists and entrepreneurs who pursue counter-conventional solutions to the most vexing puzzles of our time. The more ambitious the project, the better. Don't believe me? Well, Josh is a founding investor and board member with Bill Gates and Kai Mita, making cutting-edge antennas for high-speed global satellite and space communications. And in 2008, Josh co-founded and funded Kurion.

• 0:45Harry Stebbings?

  The company was among the first responders to the Fukushima disaster. In February 2016, Veolia acquired Kurion for nearly 400 million, more than 40 times Lux's total investment. I do also have to say a big thank you to Josh's partner, Renata Quintini, who will be on the show very shortly, I'm delighted to say, for the intros Josh today, without which this episode would not have been possible. But before we dive into the show today, I really want to talk to you about a company that's really changed the way I sleep and operate. Eight is a sleep innovation company with their latest product, the Eight Smart Mattress, being a bed that literally tells you how well you slept last night, paired with an intelligent sensor cover that measures the quality of your sleep and delivers a daily sleep report. In order to bring you the best product, Eight used anonymized sleep data and feedback from over 10,000 people

• 1:29Harry Stebbings?

  to understand which materials and types of mattresses give customers the best sleep, resulting in their unique blend of four responsive and high-density foam layers, plus one layer of proprietary technology that helps people track and improve their sleep. This is perfect for people like me, people who want to be more productive during the day, who use or have used a fitness tracker and wants to take care of their health and fitness and sleep. And if that is you, honestly, you have to check it out on eightsleep.com. And if you use the promo code 20VC, that's two zero VC, you'll get a whopping 20% discount. And with Eight keeping me productive with a home product, Full Contact is keeping 20VC team on top form. With Full Contact, they provide the ability to organize your contacts.

• 2:10Harry Stebbings?

  Gain rich insights into them and therefore build deep relationships with features like automatically identifying and merging duplicate contacts to the ability to snap a photo of a business card and full contact will transcribe them for you. So no more lost and loose business cards at events like I always suffer from. It's with these features just being the tip of the iceberg that full contact really is the best all in one solution for contact management. And it truly has changed the way I not only manage my contacts, but engage with my contacts. And you can check them out on fullcontact.com. But enough from me. So without further ado, I'm delighted to hand over to Josh Wolfe, co-founder and managing partner at Lux Capital.

• 2:51Speaker 01

  You have now arrived at your destination.

• 2:54Harry Stebbings?

  Josh, it's such a pleasure to have you on the 20 minute VC today. A huge thanks to Renata for the intro, but thank you so much for joining me today.

• 3:01Speaker 02

  Really my pleasure. I'm a fanatic listener and so happy to be on.

• 3:04Harry Stebbings?

  Well, you are too kind. What a great start. But let's start today with a little on you and how you made your way into what I most definitely call the most wonderful world of venture capital.

• 3:13Speaker 02

  Well, I agree. My personal life is a mix of science and finance. Now you got to understand, I grew up in Coney Island, Brooklyn, and I don't know if you've ever been, but it's a special place. And it's actually got the scariest roller coaster in the world, not by virtue of descent or speed, but because it is so old, the cyclone, that your ride may be the last. And I think that's almost a great analogy for venture capital itself. The ride is just insane at times. Growing up in Brooklyn made me a skeptic, you know, you sort of have this hardened mindset about human nature. But at the same time, I think I was also ambitious and pretty optimistic that I'd have a better station in life. I grew up with a single mom who was a school teacher. I loved hip hop. I loved basketball, but my mom pushed me to be a nerd. So science was my path.

• 3:55Speaker 02

  And I competed, became a Westinghouse semifinalist, was on a path to a MD PhD to go be a good doctor or a research scientist. And then a funny thing happened along the way. My scientific mentor, who I had done my research under, he was running an immunopathology lab. And so we would be in his lab spinning down centrifuges of HIV AIDS blood to investigate. And while we're doing that, he would be trading futures and options. So I got Way more enamored with capital markets. And I think literally he handed me a book that was like the thing you get when you get your Wall Street Journal. It was like the guide to money and investing. I knew nothing about what a stock or bond was at even fifteen years old. And then when I learned what venture capital was, this was the perfect hybridization of science and finance. And I was just hooked. And like science itself, it's the endless frontier.

• 4:39Speaker 02

  All these combinatorial possibilities, you thrive and live in risk and uncertainty and these amazing personalities and ambitious characters. So I got really lucky to sort of walk into this because I'll do this till the day I die.

• 4:51Harry Stebbings?

  I do have to ask you, you said about frontiers there, and I haven't seen multiple cycles. So this really is me asking you with the hindsight. You said about kind of working with Aminos there many years ago. I'm intrigued. Do you agree with the thesis that we're now kind of at the very frontiers of a whole range of new breakthrough technologies, be it VR, AR, Bitcoin, drones? Or do you think we've kind of continuously seen these cycles throughout?

• 5:15Speaker 02

  You know, I think it's sort of the same way that people pine for nostalgia of yesteryear. You know, if you went back ten or fifteen years ago, one could probably argue, or let's say even twenty years ago, that the rise of the internet and mobile communication and websites and portals, you know, people would have said, oh, my God, I've never seen anything like this. And so I feel like the next great thing, we'll look back and say, oh, my God, we feel like we're at the cutting edge and this precipice of uncertainty and all these combinatorial possibilities. So in one hand, saying this time is different is sort of dangerous. But on the other, you are correct in that the combinatorial possibilities, the more technologies that we create, the more things can be put together and remixed in different ways. And so you definitely do feel, even looking at the scientific frontier, that the incremental discovery gets more and more specialized.

• 5:58Speaker 02

  It used to be that a single person like Ben Franklin could do geometry and he could do arithmetic and he could do cosmology and look out into the stars. And today, if you're going to make an incremental discovery in a field, you have to be so specialized in that field. And so I think the same thing is sort of happening in the entrepreneurial community on the one hand, where to make that incremental advance, you have to be really specialized. But because people are so specialized in all these different fields, the people that are able to come in almost in a Renaissance style and pick from this guy's discipline and that woman's discipline and put them together are the ones that make these big breakthroughs.

• 6:30Harry Stebbings?

  Sticking to the schedule here, obviously, but I'm just too intrigued. Saying of specialization there, in particular with regards to science. What do you make of the specialization within VC? Potentially kind of the vertical specialization that we're seeing most commonly today. What do you make of that?

• 6:45Speaker 02

  Well, it has its pros and its cons, right? So obviously, people, you know, generals fight the last war. So if you are successful in a particular field, let's say you were an enterprise software investor and you had a big hit. Well, now you've got this halo and the best entrepreneur is going to come to you and equate your prior success with the increased probability that they're going to have success. And so very easily you can get locked into being a vertical specialist. And then if something changes in the capital markets where the thing that you were invested in suddenly becomes passe or out of favor, then you start to reinvent yourself and you're on to the next thing. And so I think that's a natural cycle of people reinventing themselves. But generally, I think on the one hand, you're right to be concerned because you see people sort of pushing off into these frontier areas. And I think that there are a lot of tourist VCs who are in these domains that are going to lose a lot of money. But I think that's always been the case.

• 7:30Speaker 02

  There's always somebody that's going off in some speculative future, whether it was clean tech or green tech 10 years ago, or people doing more hardcore tech and frontier investing today. On the other hand, there are people that are just absolutely passionately obsessed and dedicated to this. And whether it's inside our firm at Lux at the partner level or the entrepreneurs that we're investing in, I have a colloquialism that passion is the best predictor of success. And so at Lux, this is all we do. The idea of these counter conventional futuristic science, technology ventures, this is what VC was meant for. It's it's high risk, it's cutting edge science. The idea that the next generation of industrial titans are going to be scientists, technologists, inventors, the people who are doing in many cases far more than challenging the status quo. In some cases, they're literally challenging the laws of physics. So we've been doing this for 10 years.

• 8:15Speaker 02

  It's 100% of our focus. And I think where you see other venture firms in their other bucket dipping a toe into some of these more proven or now heated areas. I think the idea of investing in the future is pretty much all that we do. And so that means that not only have we learned a lot about what risks are worth taking, but from our ecosystem and networks, which are a lot richer and deeper than I think other peoples, it can also tell us what not to do. And so on the one hand, we will commit early, we're willing to put down a term sheet and. Follow through on it when others are still wondering if they should even take the call because it might seem a little bit weird and out there. But on the other hand, we've got a body of evidence that says certain things are just not worth doing.

• 8:48Harry Stebbings?

  Again, I'm so not on the schedule. But when you say weird and out there, often that would relate to a market that's not in existence at the moment. How do you view market creation then when it comes to truly weird and wacky inventions that I'm sure you've seen?

• 9:02Speaker 02

  It's interesting because you have some firms that will say, we don't take market risk. And you have other firms that say, we don't take technology risk. And we'll actually take both. There is no comp that you can find for some markets where technology just didn't exist before. Right now, again, new things come from combinations of old. So you can take one technology and mix it with this other technology and create something. But sometimes it creates a demand or a market niche that you just never saw before. And I think some of the greatest inventions, some of the greatest technologies, some of the greatest companies and some of the greatest venture investments came when you had that combination of a novel technology into a new market. So oftentimes we'll say, well, what's the comp for this? And once we start asking that question, we actually know that we're on to something. Because some of the best examples in history, there were no comps. What was the comp for Microsoft before it existed?

• 9:46Speaker 02

  What was the comp for Facebook? I mean, maybe you could argue Friendster. What was the comp for some of the optical networking companies? So I think this is a pattern in VC that itself, you know, just when you're confident and think you've got it figured out, you say, well, wait a second, we haven't seen anything like this. And that's a clue and we pay attention to that.

• 10:02Harry Stebbings?

  Saying we haven't seen anything like this often requires quite a significant amount of learning then to get up that knowledge curve. I'd be really intrigued with your kind of heavy focus on hard sciences and investing in hard science. I'm intrigued, how do you look to scale the learning process then? And become familiar with relatively unfamiliar industries? What is the methodology? Teach me here, Josh.

• 10:22Speaker 02

  So there's actually a rule here, I call it the hundred percent, zero percent, hundred percent rule. And it's a mix of ambition and humility. And you might mistake the ambition for arrogance at points. The hundred percent part is basically saying, I have a hundred percent certainty that Lux will be investing in the most cutting edge areas that you can imagine over the next one or two years. The zero percent is that I have close to no idea what those things will be. And then you say, okay, well, what's the last hundred percent? It's the certainty that I have about where they will come from. And so where they will come from is the cutting edge of our Already cutting-edge companies. And I can give you a few examples here. It was an interest in a cutting-edge area in physics that we studied for many years, reading things like science and nature and proceeding with the National Academy of Sciences and Chemical and Engineering News, things that are not your traditional daily publications.

• 11:06Speaker 02

  And we learned about a phenomenon called metamaterials. And metamaterials, actually, the British media got really excited about the possibility of creating these invisibility cloaks, sort of Harry Potter style. Now, it turned out that wasn't actually practical or really accessible in the near term, but there were implications for being able to take materials, which in technical terms have a negative index of refraction, which basically in layman's terms meant that you can take an electronic signal or electromagnetic wave and steer it like a beam without any moving parts. And the implication there was that you could communicate with satellites up in space without needing to turn dishes mechanically. So we said, okay, that's pretty cool. So we look for all the scientists and we get excited about this area. And lo and behold, it leads us to start a company with Bill Gates and Nathan Mervold. And in a surreal stroke, the board of that company called Chimeta

• 11:50Speaker 02

  became Bill Gates, myself, Nathan, and the CEO, founder. And from that company, and this is a really special experience just because it's the only company that Bill was on the board of besides Berkshire Hathaway and Microsoft. We're in a boardroom in Bill's office and we learn that these young guys in San Francisco want to take these antennas made by Chimeta out of this crazy material that's, you know, cutting-edge breakthrough. And they want to put them on their satellites, really small satellites, like the size of a loaf of bread. So from that nugget of information, we go and visit these guys. And it was at the time called Planet Labs. We became an early investor, goes on to change their name to Planet. They would end up buying Google Satellite imagery, which was something Google acquired called Skybox. And they now have the largest constellation of Earth imaging satellites in history up in space.

• 12:34Speaker 02

  Now, from that company, we got the idea that all that imagery that's coming off over time, it might get commoditized and the real value is going to be in applying artificial intelligence or machine learning, the algorithms, to be able to find patterns in the data, to look at the fields at farms or to look at the cars in parking lots, all kinds of things from the sky that you could see as proxy for economic activity. So when you look at this chain, from post facto, none of it was linear or obvious. But a priori beforehand, the idea that we went from Meta Materials to starting a company with Bill Gates, Kai Meta, to leading to Planet, to leading to Orbital Insight, which is the company that we did and Sequoia and Bloomberg and Google have all become investors. None of that was obvious beforehand. And that's one of these amazing phenomenons in sort of the edge of hard sciences.

• 13:19Speaker 02

  Relatedly, we funded a secretive company up in the valley called Zooks, which is reimagining autonomous vehicles and transportation.

• 13:27Harry Stebbings?

  I had a chat with the BlackBerry team about it in Australia.

• 13:31Speaker 02

  Amazing. They were also early investors and knew some of the founders. So what's really special about this company is I'm in a room and the room is a few thousand square feet and all these people look like they're playing video games. And I say, well, what are these guys and girls doing? And they said, you don't understand, outside, all the vehicles that are running secretly are trained on LiDAR and optics and thermal and vibrational sensors and all these kinds of things. And they're ingesting all that information at the rate of one second per second, what you and I call reality. But inside, in Silico, in the computer, you could do thousands of simulations a second. And they were running these on cutting-edge physics engine. They were running them on GPUs, graphic processing units. And it used to be that Intel, the CPU, the computer chip, was the center of the machine. Now, the GPUs are becoming the soul of the new machine and those are made by people like Nvidia and others.

• 14:16Speaker 02

  So because of that clue, we say, wait a second, the future of AI and machine learning is going to be in GPUs. What's the next edge of GPUs? And it leads us to a company called Nirvana Systems. And we fund those guys and within a year, they're bought by Intel for $400 million. So part of doing this hard tech investing and this long-winded examples is the idea that once you're on the edge and you're reading the scientific literature and you're close to the credible founders and entrepreneurs, as long as you're ambitious and humble and a little bit paranoid, they lead you to the next thing. It's a pretty amazing phenomenon.

• 14:46Harry Stebbings?

  I love that chain reaction.

• 14:47Speaker 02

  So on one hand, we're investing at the outermost edges of all this emerging science and tech. And there happen to be very few players and few players in startups and few players in investors just because it's hard. This isn't a dot-com company, it's not a Groupon marketing thing where you have 5,000 global competitors. Our companies tend to have maybe four or five competitors. So from a market standpoint, your security selection is a little A bit easier as well as your identification of amazing founders. Then you've got big, complex, technical barriers. Oftentimes you have a lot of intellectual property. So the patents are a negative right that you can impose on people saying, hey, you guys can't do what these guys are doing. And then you've got teams that are building these companies, who are often the only ones that technologically know how to do what they're doing, because maybe they came out of a university or government lab. So among those areas, I think, you know, it's a common phenomenon.

• 15:32Speaker 02

  Now, the other thing is within law, you've got a diverse team of interdisciplinary thinkers. So this isn't at all, in a politically correct sense, about gender or the color of people's skin. This is about coming from different places, about having different scientific or legal or philosophical or cultural perspectives. My whole view is that the diversity that matters most is cognitive diversity. So companies now, you know, they're not just one thing. They're not just software or biology. We've got founding teams where you often have three different major disciplines. You're driverless cars, autonomous vehicles. You require computer imaging, mechanical engineering, machine learning, GPUs, among other things. So you get this really complex technical subset. Then you have things like ethical considerations. And so our team itself is this reflection of the fact that you have this sort of renaissance of technology and all these multidisciplinary personalities.

• 16:17Harry Stebbings?

  I have to say, I did view hard science as a difficult investment criteria in terms of the longevity that it takes to achieve kind of realized returns. But when thinking about it and talking to you now, I get potentially concerned in the paradoxical view in terms of acquihire and the consolidatory nature of it being so IP-heavy and so technically advanced that it's a natural acquisition target and acquihire target for the big incumbents today. So what it stands as this kind of acquihire IP-heavy nature concern you with the industry? As you said, there was an exit level after 12 months.

• 16:52Speaker 02

  In some case, it's a protection on the downside. In some cases, it's a cap on your upside. So it really depends in that case. I think we would have loved collectively amongst the other syndicate investors as well, that maybe we waited, you know, a year or two, because we probably, instead of selling for 400 million to Intel, could have sold for 4 billion. The difference, obviously, this is life-changing money for founders and you got to take that into consideration. And so I think, you know, if we can have a lot of those, everybody will be really happy. And I think it speaks to the fact that you've got large corporations, despite having huge amounts of Cash, both domestic and overseas, are not heavily investing in R and D, so they are looking to acquire it. And so if you can do the kinds of things that you used to see in the Bell Labs and the Intels and the IBMs and even Microsoft Research being done in startup land, I think that's a net positive.

• 17:32Speaker 02

  Now, the other thing on the time aspect, which I think is pretty interesting, is thinking about how GPs are focused or LPs are focused. And this is an interesting phenomenon because I think the shorter your time cycle, the more competition there is. You know, if everybody's looking for the thing that's going to show big user growth in the next year, it's just easy for hundreds of investors to be able to evaluate it. It's harder for somebody to see if a biotech drug is going to work in five or six or seven years and to have that patience. And I've got a rule of thumb that there's basically three sources of edge. You've got informational edge, analytical edge, and a behavioral edge. So informational, you and I compete for information, right? We're two investors. In this day and age, it's really hard to have information that you don't have. Then you have an analytical edge, which is maybe, okay, you and I both get the same piece of information, but we weight elements of it differently. Maybe you think it's more probable or less probable

• 18:16Speaker 02

  or more important or less important, but there's so many smart people out there, that's also really hard. And so that leaves you with the last one, which is a behavioral edge. And the one source of behavioral edge that I think is timeless, and no pun intended here, is time arbitrage, is having a differing view. If the public markets are thinking one or two years out and discounting back, and VCs are thinking one or two years out, then if you are thinking three, four, five, or let alone 10 years out, then you've got a time arbitrage advantage. So that's part of the reason that I think we like to focus on harder and longer things because it's just less crowded.

• 18:44Harry Stebbings?

  Mentioning harder and longer things there, despite that kind of longevity of sometimes hard science outcomes, I'm intrigued then, do you think that potentially we need longer fund cycles?

• 18:54Speaker 02

  I think as long as you can make money for your investors, then investors are going to be okay with a traditional 10-year fund. The idea that you might be doing something longer than that says one of two things. You were betting on exogenous outside market events. You were hoping that the public markets would be there, you were hoping that balance sheets of large companies would be there to acquire you. We're not funding true science risk, right? Those are things that are coming maybe five, 10, 15 years, incubated, often publicly funded government science out of universities. But there reaches a point where you can see that they're starting to do something in a small scale, and that's the time when you can scale something up for venture. And I think that That hedges against the idea that you're going to be doing five years of science and then trying to do five years of commercialization.

• 19:34Speaker 02

  If you can get it at the point, and that's a big part of our assessment, what amount of money is going to accomplish what? In what period of time and who will care? So when we're making a decision to write a check and size that check, that's really the most important question or series of questions that we're asking.

• 19:48Harry Stebbings?

  What is the inflection point that you'd like to go on in the kind of R and D process of the company? Because obviously, very early on, there can be a lot of processes and testing to continue. Is there an inflection point where there's a kind of consumer find ready to go, go to market for the product? Or do you know what I mean? What is that inflection point for you where it's ready?

• 20:05Speaker 02

  It depends on the industry. It's a really good question. So obviously in biotech, you've got different clinical milestones, right? Phase one, phase two, two A, two B, and so on. In, in hardware, some of it really depends on a simple thing. And, and it's amazing because I think a lot of people have done hard tech and lost a lot of money because they failed to ask the first and most important question with the ante that you're putting in the proverbial poker table to turn over the card, and that's, does it work? Okay, so some of the big blowups and flameouts you saw was just the technology didn't work. So we're willing to take technical risk and we're willing to take market risk. On the technology risk, we're going to fund up to the point, does it work? Now, I think where investors make mistakes is they keep funding it, but it hasn't worked. Maybe they want to believe, maybe they're being lied to, but I think that's the most important thing. Then the second thing after, does it work, is can we make this at scale? So you take that company, Kai Meta, it started off not with science risk, but with technology risk.

• 20:50Speaker 02

  Would it work? Could we make 20 to 30 gigahertz spectrum that could get one to two gigabits a second on an antenna about as thick as an iPad? Okay, now you can do that in the lab, great, now can we manufacture it? And now they're manufacturing at scale and they happen to be leveraging, in their case, supply chain coming from the flat panel display. And instead of making flat panels, we're now using that equipment to make antennas that can communicate with space, which itself is pretty amazing. But I think that's the two most important questions on that timeframe. Does it work? How much money and how long to figure that out? And then when the answer is yes, can you make it? And then the third question is, will people buy it? And that's the market risk. And so each one of those things I think are a fundable, worthy, you know, series.

• 21:26Harry Stebbings?

  I, I absolutely agree. I do, before we move into the quickfire, I have one more though on that. And it's kind of the, does it work? And when it doesn't work, what is that balance between the inflection point of it working and not working? And what determines whether you fund the next phase with? It being still potentially unproven.

• 21:42Speaker 02

  You know, in that case, oftentimes it's about an incremental capital. So we tend to be very disciplined. And I always say, you know, I'd rather lose half my investors than half my investors' money. So we're very disciplined about setting milestones and sticking to them. And we'll give here incrementally, ten percent, thirty percent, fifty percent. But but the idea that somebody's gonna say, oh, you know, we've missed by a year. It just means that, look, the risk is not going to be for us. It means that fundamentally, the technologists misassessed how long and how much money it would take. And if they're doing that at the early stage, it's only going to get worse at the later stage.

• 22:10Harry Stebbings?

  No, I completely understand. I'd love to dive into a quick fire round with you, Dave. So I say a short statement and then you give me your immediate thoughts in about sixty seconds. How does that sound?

• 22:18Speaker 02

  Sounds fun.

• 22:19Harry Stebbings?

  So let's do your favorite book and why.

• 22:22Speaker 02

  Favorite book is Sapiens. Fundamental conceit, as you may know if you've read this. What made us great was not our speed or our power or agility or our knowledge, but the unique ability to conjure and share fictions. And that, I think, is such a provocative thought because it also, in my view, happens to be true. But it gets you thinking about money and gods and religions and nationalities and laws and human rights and things that do not objectively exist. In some cases, don't subjectively exist. They only, as Yuval Harari talks about, intersubjectively. The idea that I believe in it because I know that you believe because you know that other people believe and so on and so on. And when you look around the contracts of most of society, you see this, and it's a really powerful concept, which also lets you shake some of the shibboleths and say, wait a second. That over there is pretty much bullshit and why don't we go and disrupt that?

• 23:05Harry Stebbings?

  What would you most like to change or alter in VC and startups?

• 23:09Speaker 02

  I think that there is a culture that talks about praising and prizing failure, but I think it's disingenuous. I think people pretend to wear failure on, you know, as this badge. And every time you ever see an entrepreneur and you ask, oh, how are things going? You know, they're like, it's amazing, everything's amazing. And they feel like they have to keep this false front up. And then two weeks later, you hear that their company just went completely under. And so I think that there's this fronting that goes on, which is unnecessary. And I think that there could be much more honesty and the culture could change to be more open. You don't have to fake it so much. And I feel like so many people are out there just faking it. And you'd have more authentic relationships, you'd have more honest dialogues. Investors would be spun less. Of course, when you are starting out, you've got How to pitch something that doesn't yet exist. But there's a thin line between that and a con game.

• 23:54Speaker 02

  And I think that there's a lot of people out there that are just totally faking it. What was the big takeaways from being and working alongside Bill Gates with the experience? He would listen and sit and think, and then it would be the ninety ten of it. Meaning he would get to the ten percent of the subject matter that had ninety percent of the value. He was exceptionally tuned in to supporting founder, CEO. Very astute on the economics of product, of technological development and what the big picture was. Also, I've got to tell you a quick story. Maybe two years ago, we're in his board meeting and the Forbes list had just come out. And I think it was for the twenty second or twenty third year in a row. Bill was the richest man in the world. And I'm sitting there and my wife makes fun because I have a very pedestrian palate. Grow up in Brooklyn, you like pizza, you like Coney Island, Ethan, hot dogs.

• 24:39Speaker 02

  And I'm sitting there and I say, you know, you just made my day. And he says, why? And I said, you know, the rich list just came out. There you are again, you know, second decade plus, and we're sitting here eating this. And what was it? California Pizza Kitchen. So I manage money for a lot of very wealthy people and I've met a lot of very successful wealthy people. Everybody's got the same issues. You know, it's Bill is not buying one billion pairs of pants. He's got means to do great things in the world, but most people are fundamentally similar. Absolutely. No, that's incredible to hear. But I'd love to hear your favorite blog or newsletter. What are the must reads for you when they come in? I used to love Sam Arbismen, but we loved him so much, we hired him. So he became our scientist in residence. He's just, he's wonderful. He's a polymath. I'm a trustee at the Santa Fe Institute, which is this birthplace of complexity theory.

• 25:23Speaker 02

  And Sam has been a fellow there and involved and it's just, it's an amazing group. And he likes to think very diversely as we do. Another one, I love Jason Hershorts. So all his redefs, media, sports, technology. I think he does a great aggregation with a little bit of commentary and snark. And I find he's got a great net to capture and filter a lot of stuff. And then the final question is the most recent public investment for you and why you said yes? I think it was a company recursion that, and it's interesting because our internal partnership debates are usually the fiercest over the smallest dollars or what we have low conviction. When we have high conviction, our dollar checks are the highest and everybody is near cons. And Recursion is a company based out of Utah, Salt Lake City. It's a special team. They're in a unique place, both in technology and geographically.

• 26:07Speaker 02

  And this was led by one of our colleagues, Zavendar. It mixes artificial intelligence and pattern recognition with phenotypic discovery. So it's looking at the structural nature of biology and cells and trying to use that to discover disease and then drug targets. And that's sort of turning things upside down because most people are trying to use genetics and the information and informatics behind that to look at individual personal genomes and drug interactions. And this is doing almost 180. So we thought that was a pretty clever approach and they're meeting with great traction. But that was one of the most recent.

• 26:39Harry Stebbings?

  I have to say, it's been beyond a pleasure to have you on the show. Seriously, it's been absolutely a fantastic learning curve for me in terms of kind of onboarding intervention. I've learned so much from you in this call. I also want to say huge congrats on the fundraiser. Such exciting times ahead for you and Lux. So thank you so much for joining me today.

• 26:54Speaker 02

  Such a pleasure. Thanks for having me, Harry.

• 26:57Harry Stebbings?

  I have to really say how much I truly enjoyed that. So fascinating to hear such a different perspective. And I'd like to give a huge hand to Josh for giving up the time today to appear on the show. And again, a big thank you to Renato Quintini for making the introduction. And if you'd like to see more from us and behind the scenes of the 20 Minute VC, then you can follow me on Twitter at H Stebbings with two Bs. It would be fantastic to see you there. But before we leave you today, I really want to talk to you about a company that's really changed the way I sleep and operate. Eight is a sleep innovation company with their latest product, the Eight Smart Mattress, being a bed that literally tells you how well you slept last night, paired with an intelligent sensor cover that measures the quality of your sleep and delivers a daily sleep report. In order to bring you the best product, Eight used anonymized sleep data and feedback

• 27:40Harry Stebbings?

  from over 10,000 people to understand which materials and types of mattresses give customers the best sleep, resulting in their unique blend of four responsive and high-density foam layers, plus one layer of proprietary technology that helps people track and improve their sleep. This is perfect for people like me, people who want to be more productive during the day, who use or have used a fitness tracker and wants to take care of their health and fitness and sleep. And if that is you, honestly, you have to check it out on eightsleep.com. And if you use the promo code 20 VC, that's 2-0 VC, you'll get a whopping 20% discount. And with 8 keeping me productive with a home product, FullContact is keeping 20 VC team on top form. With FullContact, they provide the ability to organise your contacts, gain rich insights into them,

• 28:24Harry Stebbings?

  and therefore build deep relationships. With features like automatically identifying and merging duplicate contacts, to the ability to snap a photo of a business card and FullContact will transcribe them for you. So no more lost and loose business cards at events like I always suffer from. It's with these features just being the tip of the iceberg that FullContact really is the best all-in-one solution for contact management. And it truly has changed the way I not only manage my contacts, but engage with my contacts. And you can check them out on fullcontact.com. As always, I so appreciate all your support and I cannot wait to bring you Friday's episode with Shopify CEO Harley Finkelstein.