Lior Susan - Leave the World Better than You Found It - [Invest Like the Best, EP.353]

Today's episode is a conversation with Lior Susan, the Founder of Eclipse Ventures, whose mission is to unlock solutions to age-old physical industry problems through the intersection of bits and atoms. Lior is Israeli, and served in Israel's special forces before founding Ecplise. The topic of conversation is one fellow investor's perspective of the terror attacks of October 7 and the path forward. I hope more than anything that collective action is in the direction of fewer people dying, and most importantly, zero innocent civilians dying in Israel and in Gaza and Palestine. This is not a political show, and it won't become one. This is a conversation with a person deeply and personally affected by the Hamas terror attacks of October 7, who I believe to be a very good person who wants to be a part of change in the right direction for everyone good in and around Israel and Gaza, regardless of their background, religion, or anything else about them. Please enjoy my conversation with Lior Susan. Listen to Founders Podcast: #326 Anna Wintour For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors, and provider of Canalyst. Tired of calculating fully diluted shares outstanding? Access every publicly-reported data point and industry-specific KPI through their database of over 4,000 drivable global models hand-built by a team of sector-focused analysts, 35+ industry comp sheets, and Excel add-ins that let you use their industry-leading data in your own spreadsheets. Tegus’ models automatically update each quarter, including hard-to-calculate KPIs like stock-based compensation and organic growth rates, empowering investors to bypass the friction of sourcing, building, and updating models. Make efficiency your competitive advantage and take back your time today. As a listener, you can trial Canalyst by Tegus for free by visiting tegus.co/patrick. ----- Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes. Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @patrick_oshag | @JoinColossus Show Notes (00:03:57) - [First question] - Recounting Lior's career thus far (00:09:29) - Insights on the global situation post-October 7th (00:14:37) - Delving into Israel's historical backdrop (00:19:47) - Analyzing the wave of protests on college campuses (00:23:29) - Sharing thoughts on Palestine (00:28:49) - Planning for the use of his time ahead (00:31:41) - Evaluating the current state of leadership in Israel (00:36:27) - Concerns for the welfare of innocent people (00:40:47) - Assessing technology's role in future conflicts (00:44:08) - Crafting pathways to effective globalization (00:48:27) - Identifying traits that contribute to investment success (00:55:17) - Envisioning constructive steps post-conflict (00:57:10) - Reflecting on the lessons from strong leadership (01:01:04) - The kindest thing anyone has ever done for Lior

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

• 0:00Patrick O'Shaughnessy?

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• 0:35Patrick O'Shaughnessy?

  Hello and welcome, everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts, including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

• 1:00Speaker 01

  Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

• 1:32Patrick O'Shaughnessy?

  Today's episode requires a slightly longer introduction to make a few things extremely clear to anyone listening. It's a conversation with Lior Susan, the founder of Eclipse Ventures, whose mission is to unlock solutions to age-old physical industry problems through the intersection of bits and atoms. Lior is Israeli and served in Israel's special forces before founding Eclipse. The topic of today's conversation is one fellow investor's perspective on the terror attacks of October 7th and the path forward. I hope it goes without saying that my personal stance on this situation is to yearn for peace. I hope more than anything that collective action is in the direction of fewer people dying, and most importantly, fewer and ideally zero innocent civilians dying in Israel and in Gaza and Palestine. This is not a political

• 2:15Patrick O'Shaughnessy?

  show and it won't become one. This is a conversation with a person deeply and personally affected by the Hamas terror attacks of October 7th, who I believe to be a very good person who wants to be a part of change in the right direction for everyone good in and around Israel and Gaza, regardless of their background, religion, or anything else about them. If this episode offends anyone, that is of course not my intention. But in the aftermath of the attacks, I had a number of similar conversations to this one, and this is the one I wanted to share. The easier path, which I'll admit to being tempted by, is to simply never publish anything too inflammatory on this feed. I hope at least some of you will emerge from this, as I did, feeling a bit smarter and a bit more motivated to talk about solutions to an awful situation. Please enjoy my conversation with Lior Susan.

• 3:01Patrick O'Shaughnessy?

  Lior, I'm really excited to have this conversation with you. I think it will be a tough one at times, for sure, but an important one. To set the stage, normally I don't do this, but I think it's important for this particular conversation, I'd love you to just give everyone listening your background, in whatever way you think it appropriate to lay out your life experience to this point.

• 3:23Speaker 02

  Thanks for having me, Patrick, and definitely I'll be much more focused and excited to do this type of a podcast with you and your podcast that I love in a different times. But as you said, probably more important than ever that we will do this type of a conversation right now. Goes back to my background. I grew up surrealist enough in a kibbutz in the north part of Israel. Similar kibbutzes in the south is the one that being invented the first in October seven. It's a very open, free communities. Nobody locks the door in kibbutzes. This very free spirit lifestyle environment. You walk barefoot. You work on the farm.

• 4:06Speaker 02

  I decided in the age of sixteen that I'm not going to continue go to school and I will walk in the banana farms. You know, it's the best childhood that a kid can dream. Think about this beautiful, very green communities, a lot of trees, a lot of agriculture. And people, you know, riding their bicycles, living with each other in communities that are very beautiful. So I grew up in the north part of Israel and in kibbutz. And I joined the military and I've been drafted to the special forces. And I served almost eight years at special forces and multiple of roles. I grew up in a family that my grandparents came to fight for establishing the country

• 4:49Speaker 02

  from variety of places around the world, like my dad and like my uncles. It was clear to me that I'm going to do my part and like in everything else, I tried to push as hard as I can and I've been drafted to one of the special forces. The service was, of course, very meaningful to me. I learned about leadership, about brotherhood, about pushing physically, but actually much more mentally myself. And it was a very strong experience that built who I am. I went to the military as a kid and I left the military almost at the age of late twenty five as a man.

• 5:31Speaker 02

  And the reason I left was because I was very passionate about in the last two years of my service, I got to manage that team, it's called Tech Ops, that specializing in figuring out which technologies we had the special forces we use at the field. I fell in love in this things called technology. And I also felt like my purpose in life is to focusing on that rather than being only a soldier. It was hard for me to explain the narrative in my head, but there's a variety of things that happened during my time in the military that I felt my purpose in life will be to focus on that and actually find positive.

• 6:14Speaker 02

  Part of these words by building companies. My young brother was actually finished his service and he come up with this idea, a company called Intucell. And I decided to finish the service after eight years and join him. And Intucell company did software defined network. He was the brain, him and two of his friends, they came from eighty two hundred. They talked to me about what we are going to build. I understood about five percent of that. Uh, but their, their point of view was I was in the special forces. I manage teams under tough situations. So I can take that skills and apply that in the commercial world. And actually, this is where I first saw the connected issue between being a team lead

• 6:59Speaker 02

  in the military and how you actually can use it for entrepreneurship to build a company. And there is a lot of similarity on the leadership between a CEO and a team lead. Uh, so I joined them at Intucell, we built a company, company got acquired in twenty twelve by Cisco for about four hundred seventy five million. I moved to the Bay area in twenty twelve, met the CEO of a company called Flextonics, Mike McNamara, join him at Flex to build his digital transformation team. Fall in love in this notion of digitized transforming physical industries like manufacturing and supply chain and industrial, et cetera. And I left in the beginning of twenty fifteen to start Eclipse to focusing exactly on that.

• 7:42Speaker 02

  So to build companies in the intersection between technology and the physical world.

• 7:47Patrick O'Shaughnessy?

  So you've got such a fascinating background for lots of reasons. And there's a million ways that I would normally take the conversation and probably will later. But given the circumstances that the world's been living under and given your very unique vantage point into loved ones, friends, family, et cetera, that have been directly impacted by this, what happened on October seventh and since. Can you lay out for us your perspective on this entire situation in as much detail as possible? And just as a precursor to that, to me, what's interesting and important about our conversation today is conversation and perspective and not in thirty seconds, not in even thirty minutes, just in real deep nuanced.

• 8:36Patrick O'Shaughnessy?

  Thoughtful perspective that I feel is sort of been lacking so far in a lot of what you see on the internet. Maybe you can begin, people understand your background now, maybe now you can just give us your uncensored, very raw take on what's happened so far and your perspective on it.

• 8:54Speaker 02

  I'm going to start with the facts. And actually, after I relate the facts, I will give my perspective and we will talk about it, I hope, in some point. The disinformation that is happening in the world and essentially what we are viewing is a new type of a war. And it's a war on people mind. And we, as a Western society, actually losing that war. So I will talk about the facts and then I'll give my perspective. So the facts are the following, in October 7, 6:45 a.m. Hamas, a terror organization that controlling Gaza, that by the way Gaza is not Palestine. Gaza is Gaza, it's part of Palestine, there is a West Bank as well.

• 9:37Speaker 02

  But Hamas that took over Gaza in 2007, Israel actually left Gaza in 2005, about two years before. And Hamas being elected by the Gazan people to rule Gaza in 2007 and took control in 2007. So in October 7, Hamas invaded the south part of Israel. There is not exact number yet, but from the intel that I have with people that well familiar with the situation, it seems like it was about 4,000 people. Different troops from the Nukba, that will be their special forces up to the very low ranks that essentially being invented, Israel and the south part of the country.

• 10:22Speaker 02

  And to give you a sense, people give me the 9/11 methodology of the same impact that Israel going to have, the same we had here in this country. I said, yes, it's a 9/11 that came from Brooklyn, though. You just cross the river to Manhattan, you didn't come with a plane, that's the same, essentially. They just cross the fence, they took out all of our security systems and defense systems. And they murdered in a matter of 20 hours, 1,400 people, unfortunately, from the age of three months to the age of 87 years old. Women, kids, elderly.

• 10:59Speaker 02

  They kidnapped two hundred and twenty eight people back to Gaza from the age of six months up to an eighty seven years old that currently holding by the terrorist Hamas in their tunnels. And essentially from October seven, Israel and Hamas in a direct contact from a war point of view. So that's the facts, my perspective now.

• 11:26Speaker 02

  But also based on facts, Israel is the third largest country for per capita and venture investment. Israel, more than fourteen percent of the GDP of Israel is coming from tech. Israel is being called startup nation. Israel invented the ways that you navigate your car with Mobileye, what you're using your ADAS in your car, the computer that you're using, the chip that has been designed at core has been in Intel Israel. Israel have all of the multinationality tech companies, the largest are in these centers, Amazon, Apple, Google, Facebook, etc. Why I say all of that is not to pound the chest of the Israelis is because Israel believe

• 12:08Speaker 02

  that economical development, research, education is the way that we should run the country, based on democracy. Unfortunately, if you will look on other regions that a radical Islam terrorist controlled those regions, besides death, there is nothing. Gaza, there is nothing in Gaza, there is no single development area besides death. Lebanon, Hezbollah took it over, there is nothing there. ISIS in Syria, there is nothing there. Al Qaeda in Afghanistan, there is nothing there. And my main point here is now go back to the perspective zooming out is

• 12:51Speaker 02

  Radical Islam is on a mission to basically control and kill anyone that don't believe in their ideology. Unfortunately, my perspective, we are on the very, very one yard line of a third world war of two camps that some of them are being supported by this extremist radical Islam.

• 13:22Patrick O'Shaughnessy?

  If you think about the history here, what do you think are the things that are most important for people to know and understand that may not know much about the history of the nation of these names of these groups that you've talked about? I think obviously in the last couple of weeks now, everyone's heard these names, but had you asked the average American or something, do you know who this group is? Maybe they would have heard of them, but unlikely that they would know much history. Frankly, unlikely that they would know much history of Israel even. What is the historical context that you think is important? And I ask just to lay a little bit more groundwork before we talk about what you think the path forward might be.

• 14:03Speaker 02

  As I mentioned, they all believe in a radical Islam. And actually, just to be very clear, this is the opposite of what a lot of Muslims will think about. But to give you a sense, the commonality in all of those organizations is if you are not believe in their Islam, you should die. Women will never drive cars. Women will never be teachers. Women will never be able to walk in the streets without a full, full cover. Gay people will be tortured and die. In the name of what they believe in, they will be willing to kill anyone in this world. They do not believe in economical freedom. They do not believe in innovation. They do not want to focus their time on cure cancers or global warming.

• 14:46Speaker 02

  They want to focus all of their time, and that's what they do, on propaganda of why the Islam should rule the world. And they took the Quran and they twisted to support their radical ideas. The other thing that common to all of those terror organization, and there is one in Gaza, Hamas, one in Lebanon, Hezbollah, one in Syria, ISIS, one in Afghanistan, Al Qaeda, one in Yemen, the Chuds, and one in Africa, El Shabab. All of those well-funded terror organizations, supporting by a Syngal country, and it's Iran. I'm going to get a little bit historical here. Iranians are actually, in the Islam, there is two vectors. There is Sunnis and there is Shis.

• 15:32Speaker 02

  All of those radical extremists are Shis. The Persian people are actually Sunnis. They viewed them as a third-type citizen. But it's easy for them to not get their hands dirty by basically funding those terror organizations and push them to do the terrible things that we were seeing in 9/11. Many of the terror attacks in Europe, of course, what's happening in the war in Afghanistan and Syria, and of course, what we are seeing now in Gaza and Israel. When you say, because you got your Twitter or your TikTok to tell you the Israelis are pounding Gaza, and you walk in the streets of Stanford University, and you say, "From the river to the sea", what you mean is that the country of Israel should be eliminated.

• 16:17Speaker 02

  You're absolutely right that the average American do not understand what we are facing against here. And you're talking about organization that is being funded for years in billions of billions of billions of dollars on the name of hate and chaos. And I know that that's going to be some of our topic for the session today. If we are not going to get united, we will not be able to live this world in the same way that we grew up in this world.

• 16:51Patrick O'Shaughnessy?

  Maybe share your grandfather's great phrase, I think it was your grandfather, about simple philosophy.

• 16:57Speaker 02

  My grandfather was a very simple guy that came to Israel from Morocco. And he lives amongst Arabs and he loves them. And they had an amazing relationship. And they lived in Morocco with a respect to you're Jew, a Muslim, but we still can live with each other. And then before the establishing, the Jews being pushed out of Morocco and flood the country to Israel. And he came to fight for establishing. And his sentence that he constantly told me as a kid, he say, son, leave the place better than you find. And I'm telling the same things to my kids today, knowing that I'm not doing enough to leave the place better than I find it.

• 17:42Patrick O'Shaughnessy?

  How do you understand or think about what's happening on often college campuses? It's happened at Columbia. It sounds like it's happening at Stanford. It's happened at NYU. I walked past one yesterday in Union Square of these groups of typically young American people, who, whether it's saying from the river to the sea or host of other things of a similar sentiment. How do you understand the causal mechanism that leads up to that rally that I walked past yesterday happening? Just to draw an analogy, I remember very distinctly right outside New York City, living through nine 11.

• 18:20Patrick O'Shaughnessy?

  Certainly there was no protests anywhere saying anything similar following a similar mass murder. Maybe help me understand what is the causal chain here? And I'm a kind of person that I don't do episodes like this. Frankly, it scares me and the reason it scares me is because I just think things are really complicated in the world. And every time I dig into a complicated issue, I leave it feeling dumber and humbler than when I went into it. So what I'm trying to do is ask questions that help me understand what is going on. And just taking from the river to the sea, very literally, why do you think that has appeared? Why are those young people thinking this way?

• 19:03Patrick O'Shaughnessy?

  Where is their information coming from? You understand the situation better than me. Why are there signs with a star of David and a trash can 20 minutes from where I'm sitting?

• 19:13Speaker 02

  Is the same, Patrick, is the exact same, the exact, exact root cause of the number one, I believe, biggest risk for modern society. And it's this well organized propaganda machine that their mission in life is to create a chaos in the Western world. We saw a little bit of that in the previous election in this country with the social media fake news that some outside stream was turning the algorithm in the same way. We are seeing that right now with young kids in these countries that basically getting fake news

• 19:54Speaker 02

  and deep fake and propaganda mainly through TikTok. And we saw it in the war with Ukraine and Russia. Same social media that positioning the Ukraine people as the one that invented some of the areas of Russia. And actually, they're the one to blame. I will guarantee you, we will see the same if China is going to invent Taiwan. And I will guarantee you, we will see the same in the next election in this country. Shame on me. I thought that my job is to build amazing companies and change the way, the world by building businesses that will endure and transform online industries using technology.

• 20:37Speaker 02

  This is not enough because the other side are putting all of their time, resource and oil money to create a chaos. And it's well organized because the incentives are against the West. It's Iran selling oil to China because of the sanctions. It's China that allow Russia operate in Ukraine in a freedom. It's Turkey that's selling the drone to Russia. To bomb the Ukrainian people. It's Iran that financing this five radical Islam as a front, essentially proxy troops. And it's all of that side that controlling social media and have army of army of bots

• 21:21Speaker 02

  and different type of technology to influence the Western youth mind. So you go in Manhattan and you hear put the Jew in the gas chamber in 2023. That as a Jew and as Israeli, to see it in Manhattan and Stanford University and Columbia University, it makes me sick. And it's just a wake up call for me that we cannot think that just by building companies and investing in amazing businesses will be enough, will not be enough.

• 21:57Patrick O'Shaughnessy?

  The thing that scares me most is I've tried to read as much history as I can, just in general. And if you read the big sweeping histories of the world, one thing you find very quickly is that war and conflict is the norm. It's far more strange to find a year where there's not a tremendous amount of conflict and bloodshed around the world. And combining that, which must just be part of human nature to some degree, with this very new thing in the internet and TikTok and these 30 second video clips with chants and whatever, what can anyone do? It feels so monolithic, so troubling. This is a struggle to know what to do or what anyone could do. And it's a struggle to know, how do you speak?

• 22:41Patrick O'Shaughnessy?

  And I'm curious what you would say if we had all of Palestine listening to this. What would you say? What does one say? What does one begin to do? You said shame on me earlier. Okay, but what can you do? Sorry, that was like eight questions.

• 22:55Speaker 02

  No, no, it's a really good eight questions. What I personally can do, and if all of the Gazan people now listen to me, I will tell them, look across Israel. You can have the same thing. You have very good people. We actually are coming from a similar roots. Fight those terror, clean them out of your place. You should have a port and an airport. Do you know who built the largest hospital in Gaza? The Israelis. Do you know what, where is the command of Hamas? Under that hospital, because they know that we will not bomb it. Gaza had an airport in the late eighties. People don't know it. Gaza have a port, an ocean port today. Gaza have connection to Egypt. You should be a Singapore.

• 23:38Speaker 02

  Do you want your kids to die by us bombing those places? Your civilians? Do you really want to live like that? Go fight. You need to be on our side. Fight those terrorists. They are not to free you. They are fat and happy and rich, sitting in Qatar and in Lebanon. Where is their leaders? Khalid Mashal, where are they? They are in the Four Seasons in Qatar. Do you know their net worth is between a billion to a two billion dollar?

• 24:08Speaker 02

  Gaza is one of the worst place on earth to live. Those people are poor. They have nothing. Their leaders are billionaires living in Qatar, in Four Seasons Hotels. This is insane. I will be the first one to open an R and D center in Gaza in order to build the bridge after we're done with this co-organizations. Me, as a Jew, as an Israeli, I traveled to Abu Dhabi and Dubai this year, almost ten times of doing business. And I brought my family. I brought my parents. I brought my kids. It was amazing. I was like, this is the future. Who cares? What is my passport say?

• 24:52Speaker 02

  I want to travel around the world, do business, build companies, solving tough problems. And the only way to do it is through that, not through all. We were that close, Patrick, for me to travel to Saudi. Because the pen was open and the paper was about to get ink. And that's why Iran pushed Hamas to do the attack. Because the Abrams agreements between Israel and the Middle Eastern countries is not in the plan of Iran and what they want to create in the world. The only way is for both sides to talk about how we can help each other, build businesses, build hospitals, build research organizations, universities. Not to constantly fight because you're a Jew and I'm a Muslim and he's Christian.

• 25:36Speaker 02

  I don't care about that point. They care about that point, the radical Islam people and the people that are pushing them as their proxies. So that's what we can do. I can do that. Goes back to your question on the social media. The reason it didn't see it in nine eleven is because social media does not exist. We need to wake up because in our constitution, we talked about freedom of speech. Freedom of speech cannot be against safety. If someone say we should push the Jews into a gas chambers in the middle of Manhattan, it cannot be in our part of our society because that's not freedom of speech. If a professor in

• 26:19Speaker 02

  Columbia University is talking about how the Israelis doing genocide, this is not a freedom of speech. This is a hate propaganda. I think we are going to walk a very fine line, Patrick, especially in this country between a freedom of speech that are one of our biggest core of what make us special. Because by the way, if you live in Iran and you will say, oh, I hate the governments, nobody will find you. If you live in Russia and you will say Putin is terrible, nobody will find you. If you will live in China and you will TikTok and say, I disagree with the governments, nobody will find you. You can say it here. And that's part of why we want to live in a modern society. But

• 27:00Speaker 02

  we cannot anymore let in the name of freedom of speech, they are finding this crack with their propaganda, using those social media tools to come and create a chaos in our society. And that's their main goal.

• 27:14Patrick O'Shaughnessy?

  How do you expect to spend your personal time over the period of the foreseeable future? To make the answer a bit more relevant, you said it, I'll just say it again, just to make sure it's clear. Eclipse is in the business and has been at large scale of backing technology businesses which are updating, not backwards, but just old industrial parts of the economy and bringing new technology to bear on often very old problems, very old industries that will continue to grow and thrive. And it's my understanding, we're just getting to know each other, but you are very devoted to that as how you spend your time, finding these companies, investing in them, supporting them all around the world,

• 27:58Patrick O'Shaughnessy?

  not just in the US. You said you went to the Middle East 10 times this last couple of years. So. Do I have that right, that that effectively is how you have been spending your time? As an Israeli who's lived through this, how are you going to be spending your time in the next months and beyond?

• 28:15Speaker 02

  So you're absolutely right. I spend a thousand percent of my time building companies in the intersection between technology and the physical world. And I think the impact of these companies just got way more important. If I can build Teslas and SpaceX and Vulcan forms and bright machines and waves in this world, I know that the west part of the world and my camp are going to have a much more control mode. So the other side will not trying to play games. I actually think that industrial powerhouse have much more weight in today world than nuclear box.

• 28:58Speaker 02

  We lost in the last thirty, forty years, the industrial powerhouse of United States. In the name of globalization, it was easy. We thought we are doing this fair deal. We will give our manufacturing to China. In returns, they will buy American bonds and we all becoming really good friends. Globalization works well when everyone playing fair. And I think the other sites took a disadvantage of our willingness to trying to build a world that there is a much more, a global community than this regional camps and essentially de-globalization.

• 29:40Speaker 02

  I think if we wants to have freedom of speech, I think if he wants to have freedom of live, freedom of religion, I think if he wants to be able to

• 29:51Speaker 02

  live the place better than we find it, we must, must, must rebuild those physical industries and have the western and especially America controlling those industries. I didn't know that that was my mission in life. I thought that is because I was passionate about those companies. And I thought that those markets are huge and I will be able to generate a strong returns to my limited partners. I thought that that's my mission. Actually, my mission is much bigger. My mission is to protect the principles I believe in and leave this place better than I find it for my kids and the current kids and all of us. And it's true building those companies. So not only I'm going to continue to do the same, I'm going to double down on that and

• 30:34Speaker 02

  I'm going to speak with whoever I can to make sure that everyone understands that we need to unite it right now behind it.

• 30:42Patrick O'Shaughnessy?

  Can you say a bit about your impression of existing leadership in the areas that matter, that can drive the best possible outcome, hopefully of peace and of mutual respect and working together in some of the ways that you've described? What do you think about the state of leadership and what leadership means to you as we face all this down?

• 31:06Speaker 02

  I have a lot to say, just to be clear, me being Israeli entrepreneur, ex-special forces, not mean that I don't have a lot of feedback and frustration with the Israeli leaders. I do not think we did a good job in Israel as a leadership in the last couple of years to unite the country and find a way to live with our neighbors by helping them build and develop their economy so they are pushing out those terror organizations out of their society. I think we did a bad job. I also think that in this country, in America, I'm a dual citizen, we did not do a good job as well. I see too much hate between the two parties. I see bureaucracy and cheap politics are coming on the way of approving budgets or

• 31:51Speaker 02

  the Speaker of the House, for God's sake, in order to be able to operate and deal with these very large conflicts that are coming in our backyard. It's not by a coincidence that we have two wars now against our side and what we believe, one in Ukraine and one in Israel, that is being attacked in about the same time. It's not a coincidence. The China making all of that statements on Taiwan. It's not a coincidence that Iran is getting more and more aggressive with their nuclear plants. It's all in a vacuum of a leadership on the western side. I'm not a politician, but I want to believe that I'm a leader in this country and in the western side. And my job is to not build any more only companies.

• 32:36Speaker 02

  My job is to carry that message and find other leaders to make an impact and influence on our leaders to united behind what we want and what we sign up for.

• 32:48Patrick O'Shaughnessy?

  This may be a totally impossible question, but in the face of history, is it even conceivable that we reach a state where a category of people that want to kill other people based on their beliefs are gone? And is there a modern or historical precedent for it being possible to do the thing that I would say that you've said you want here, which is to remove the worst people capable and willing and eager to do these things and then build partnerships and hopefully friendship and interdependency with those who want the opposite? Do you think that that's possible?

• 33:29Speaker 02

  I think we have no other way around. Otherwise, we will not leave a better place for our kids and their kids. I'm a believer. The German Nazis killed six million Jews. The German governments today is one of the biggest supporter of Israel and what is right and what is wrong. I traveled across the UAE this year. I traveled to Morocco. I traveled to Jordan. I saw the people that wants to move on. And relatedly, from a Jew and Israeli and here and Arab. We want to, at the end of the day, the people wants the same things. They wants to have food on their table. They wants to have their kids have a good education and a healthcare system. That's about it. It's the Maslow hierarchy.

• 34:12Speaker 02

  I want to believe that if we do our job of strengthening the economy of this country, building the industrial backbone, showing the world that we are powerful than ever, that we are united than ever, the other sides will put their arms down and join us again.

• 34:35Speaker 02

  On the name of not religion, not God, not nothing, in the name of having life. Do you know that Hamas, one of the principle is they say that they start the life after death. They believe in death. I believe in life. And if we are not going to united against those terror organization and show the other sides that after we will destroy those terror organization, we will give them the hand back immediately to go and build the bridges, this place is going to be very dark.

• 35:12Patrick O'Shaughnessy?

  Björn, have you had conversations with members of the Muslim community? Who, whether they're Palestinian or live in the area and very clearly do not want Israeli children and women and citizens to be killed and murdered? Have you had conversations with people of that background? Who of course nonetheless are terrified of their own women and children being collateral damage, being thoughtfully avoided, but inevitably sucked into this conflict? How do you have a conversation with somebody like that that's out there and have you?

• 35:52Speaker 02

  I have in the last three weeks, I did about 25 calls like that. People that lives right now in Gaza, civilians that I know, Israeli Arabs, people don't know, they called Israel and apartheid, apartheid country and genocide and all of that. There is a one and a half million Arabs Israelis that their rights and my rights are the same. They have the same passports, same IDs, same rights, exactly the same as I am as a Jew. Actually, a lot of them are working with my dad and his construction company and I had multiple of conversation with them. I have a really good friend that he is a doctor in the south that is an Israeli Arab,

• 36:34Speaker 02

  that unfortunately his nephew is one of those kids that got slaughtered in the south. These are Arabs, by the way. And they told them when they attack, we are Arabs as well. And they say you are worse than the Jews because you live amongst them and kill the whole family. All of them have one thing in common, Patrick, and is they don't believe.

• 37:00Speaker 02

  That these people are serving their interest. They don't believe that these people should be part of the Islam. Their shame of this behavior is like, where in the Islam it say that you can burn babies and cut the head of women? Where in the Islam it can say that you can rape? They don't view their behavior as the one that's representing them. And they all wants one thing and one thing in common. They want to go to focus on the things that they care about. And is raising kids in a safe manner, having them have a great education so they can have a good job. And can have a good healthcare system, the very basic stuff. They came and asked me sorry. And I'm like, you don't need to ask me sorry.

• 37:43Speaker 02

  We need to ask sorry for both of us. Because the people I know in Gaza, your house is now getting bombed. And I'm sorry for that. And to my friends that is an Arab doctor in the south of Israel. That now, do you know that Israel took care in the Israel hospital system, the Hamas terrorists that we captured? Next to the bed to the people that they killed. Because we don't view the same way that they view life. We believe in life, not we don't believe in death. And even to the worst enemy of us, we will take care of them because that's what we believe in.

• 38:20Speaker 02

  So, and this is maybe why in some way I see this small shiny light in the far, in this all big dark. Is because I had those conversation with those people and I know that all of them wants the same things that I want. And is believing in life and innovation and technology and freedom. They don't want what we are seeing today.

• 38:45Patrick O'Shaughnessy?

  Because it is certainly your incredible deep area of expertise. I'd love to talk a little bit about the role of widespread technological advancement in all of this. Maybe expand the conversation a little bit beyond what's happened recently in Hamas specifically. You mentioned China earlier. Again, I don't want to wade into territories where I'm not qualified to say anything, but I certainly have been exposed to no one in China that wants to kill babies and old women. Nonetheless, I think there's plenty of tension, there's plenty of a race, perhaps an arms race, if you will. You mentioned that we're probably right now losing one arms race, which is control of information, narrative messaging, et cetera,

• 39:30Patrick O'Shaughnessy?

  using modern platforms to disseminate those ideas. Teach me a little bit about the roles that technology you think will play in the future that you hope for, that you are going to work for, as you described in the West.

• 39:45Speaker 02

  I've two answers for that. Before I talk about the West is in any country, the technology play a big role. You see growth, prosperity and freedom. Because technology making you get out of the propaganda that you get in the mosque or in whatever they enforce you to learn. And that's why in those dark countries, they will shut down the internet and they will control what you can do in social media or not, because they know if you will be exposed to technology, you will challenge those radical mindset. Our job, your job, my job is to push technology as far as we can into this globe.

• 40:28Speaker 02

  And every time that you will have a society touching technology at scale, you will see good things happening. So before I'm talking about the West, go back to the West there now and where I focusing most of my time. In order to United States and the Western countries to continue their amazing leadership that we were seeing essentially post World War Two, that on the back of it, we could live in a fairly safe manner with not a lot of huge wars, because the US was a country and a nation that nobody will mess with. We needs to bring back this, what I call digital transformation, industrial backbone.

• 41:12Speaker 02

  And manufacturing capabilities, in a lot of case, it's more powerful than a weapon. And we saw the cracks of it a little bit during COVID. We suddenly are like, oh my God, we cannot manufacturing so many of our essential products. We cannot ship them. There is lack of resiliency. We heard about this lack of resiliency constantly during COVID. That cracks are not small cracks. They are huge cracks in the backbone of our economy and our society. The ability to use automation and software and hardware and semiconductor to own those capabilities in this country from building rockets that we can go to space

• 41:53Speaker 02

  through batteries like Innovix, not too far from where I sit, that building batteries in Silicon Valley to manufacturing automations, company right now I'm sitting in, Bright Machines. All of these industrial capabilities and the technology and the innovation are not only helping United States drive the GDP and the growth of the GDP, because this is the industries that moving the economy, more importantly, it's strengthening our force, even more important than our aircraft carriers and nuclear capabilities and our F-35s. And we underinvested and underestimated the importance in that in the last 30 years

• 42:38Speaker 02

  because we were in the name of globalization. We should just outsource as many things as we can.

• 42:43Patrick O'Shaughnessy?

  What's the bridge to success here? Because one of the problems for sure is you get dependent on low-cost manufacturing. It's very hard for some business to work when you take their cost of goods from one thing to something much higher than that thing. How do we affect a thoughtful transition to re-strengthen that base? And is there any argument to the contrary? Is there any argument that, Noah, what we should be fighting for is increased globalization, is increased specialization around the world so that we can concentrate on, you look at the S and P 500, the top 10 are US technology companies, but not manufacturing companies. Should that be what we're doing? So I'm just trying

• 43:26Patrick O'Shaughnessy?

  to get as much perspective on this problem as possible and how you think we can thoughtfully rebuild this base and making sure that it's worth it to do so.

• 43:34Speaker 02

  I think globalization can happen only when everyone play fair. I do not think people play fair with us in the last thirty years. They have a very different. Is there is a freedom of speech in China? Is there is a freedom of religion there? No. Is there is a freedom of speech in Iran now? Is there is a really truly a leader in Russia that we can actually negotiate and do things in a common sense? No. So I can't focusing on specialization when the other side is taking advantage of me, and I think that's what happened. If you are looking on actually the S and P five hundred, then you're looking on the largest companies in the S and P five hundreds. What you will find is a company like Nvidia, they're building chips. So that's actually a hardware manufacturing company. You will find a company like Amazon, they're doing logistics.

• 44:18Speaker 02

  You will find a company like Apple that building hardware. You will find, not in the top ten, but you will find a company like Tesla that building cars. I think what we're seeing in the commonality and logistics, semiconductors, automotive, hardware is those industries are huge. And we're used to focusing on the design of those products and the end markets. And I think what we are seeing now that vertically integrating by building this industrial capabilities domestically can actually giving us a lot of other benefits that are not purely the focusing of low cost. And it can be how fast we can move. It can be the idea that I can

• 45:01Speaker 02

  control everything in the car and I can push software from remote and I can do things that I couldn't do before. I call it, it's a technology company that building a car. It's not a car company that using tech. And Nvidia, it's a technology company that building chip. It's not a chip company that using tech. And that's what we do in Eclipse and looking for other companies that looks like that. The other thing that is happening that I think it's worth to give a little window and talk about. Tech transformation is happening in those industries in China as well. China have the same issues that we actually had forty years ago. They are running out of people that wants to do those bad jobs. I rent factories in China. Trust me, it's not a fun job on an S and P line to stand fifteen hours a day. So they don't want to do those jobs anymore.

• 45:46Speaker 02

  They have a declining, massive declining of their industrial workforce, meaning they need to use the same automation and software that we are using here. If you will see where Qi is spending all of his time, so they totally shift away. For investing in internet, they all want to invest in semiconductors, robotics, quantum computing, and the things that are in the core of what we do here. So in some way, the competitive of our industries and their industries is first time in the last thirty, forty years in part, knowing that we actually have the innovation and engine and the design and the powerhouse that we always had, but now the manufacturing scale and the tools that we are going to use from an industrial point of view is in the same as they have.

• 46:31Speaker 02

  And I think there is a big opportunity to grow the domestic economy around that here.

• 46:36Patrick O'Shaughnessy?

  This seems to be an area of hopefully tremendous common ground, certainly speaking to a very specific audience and pretty much everyone listening will agree, but the notion that we can build new businesses, a Tesla, a SpaceX, whatever, lots of great modern examples in Amazon, that operate between the hard world and the software world very seamlessly. This seems like as close to a universal good as we can agree on for human flourishing. You've looked at more of these companies than probably just about anybody. So this question is both for investors with capital to deploy on this thing that I think hopefully most of us can agree on, that you're devoted to, and to founders who have or may start

• 47:21Patrick O'Shaughnessy?

  companies like this. Maybe teach us a little bit about what you've learned, leads to success, can lead to success, attributes that matter to you, the sorts of things about impact that these technologies may have, and how to think through those impacts. Again, if this is the area that we can all say, okay, yeah, there's lots of places we might disagree, but here we agree that this is a net good for all of us. I would love to learn what you've learned about the founders that do that well and the investors that allocate capital thoughtfully to those people.

• 47:53Speaker 02

  I will start by giving a three second macro view. World GDP depends on the day about a hundred trillion, give or take. About eighty trillion is in physical industries, agriculture, manufacturing, supply chain, logistics, aerospace and defense, et cetera. Tech penetration in those industries about single digit. So regardless of what Leo thinks and regardless what Elon Musk thinks, basic investment principle, you wants to invest in a very large town that have a very small tech penetration, but you see the growth coming up. And when I started Eclipse in 2015 and everyone told me, oh, venture should do only crypto and only SaaS and only enterprise software and only fintech.

• 48:38Speaker 02

  No, no, semiconductor, this is not automotive. No, no, no, this is not a venture business. And I was like, how it can be? I mean, how many DevOps company the world needs? I see 50 of them doing exact same things all get funded and I see none of the semiconductor get funded. And I'm like, if you will wants to run all of this machine learning, a cloud, you will need a lot of silicones. So basic principles, I believe if you wants to make money, this is the right place to invest. But this is my two cents. What we are seeing here is the average check that Eclipse is writing is about $8 million in the initial check. Those industries used to be extremely capital intensive a decade ago.

• 49:22Speaker 02

  And that's why you saw venture investments declining in those industries because those software companies was very easy to invest. And you didn't need a lot of capital in order to flip a card. So how it can be that they can transform in industries like logistics or manufacturing or industrial with an $8 million is all of the tech tools that is being built in the last 30 years, cloud computing and mobiles and sensors and open source software. Now is being used in the physical industries and I can build a prototype or I can build some sort of an MVP with couple of millions of dollars, almost regardless on the sectors I'm going after. Now, if I'm successful, naturally I will need more capital, but that will be true to any venture business.

• 50:06Speaker 02

  So now I also see that the traditional tech tools that we will all use to build a DevOps company backend, frontend, open source, cloud infrastructure, I will use exactly the same stack when I'm building a company in the industrial market. And now I'm essentially using the tech, that's why I say it's a tech company building a car, rather a car company using tech. And it's just tremendous amount of opportunities that we are seeing. And I think the public market is seeing it. And that's why we are seeing those multiples of some of the companies I mentioned. And I think now tech founders are seeing and saying, hey, the richest person on earth is actually not a DevOps guy or a traditional software guy, it's a guy that building cars and rockets.

• 50:50Patrick O'Shaughnessy?

  Maybe tell us what the most substantial changes have been that make it possible for a company like this that sounds so daunting and hard to start to actually start and get an MVP out the door. What are the enabling technologies that have come online in the last five, 10, 20 years, whatever the period is, that make this possible?

• 51:12Speaker 02

  I will give a quick example of a company we're just finishing build because it will be easy to illustrate. It's a company called Peak Energy and they're focusing on long duration energy storage. So they're, they're going to build this very, very large battery farms to offset the grid using a sodium ion chemicals architecture to do NES or long duration energy storage. So I will first start with the people because actually the people is also a change. So the team there, it's a person that works on Tesla in many years. Then he moved to Northvolt and was the CEO of Northvolt. And then he came to build with us the company and his co-founder,

• 51:53Speaker 02

  it's a person that built with us in other battery company called Inovix that we took public. So you have a two unbelievable talent that used to not build companies in that space. Not only coming to build the companies, they're also coming with a success behind them and understand how scale works, what we wants to see in venture. And what they are using there, they're using simulation software. You simulate now, even before you build anything, you're using a ton of simulation. On the simulation, they're using machine learnings to learn the patterns of the chemistry and figuring out when they build the bench test of that chemistry, they know it's going to work because they simulate and then they train the model. They are using vendors off the shelves. They actually don't build anything on the hardware that is custom in the MVP.

• 52:38Speaker 02

  It's all available off the shelf. There is a well-defined supply chain that is being worked. They're using cloud infrastructure to collect all of the data. Of course, they don't build anything on-prem, so you can spin an AWS instant in a minute. They're using a lot of, they build a BMS, battery management system that is well-defined, that is being built on Tesla and all of those companies many times, so they can run the battery in a better way. In the BMS, they're using open-source software that is being developed in so many areas. They're using Kafka and they're using the same DataDog that you all use to deal with the software. And here you have, going to have a company with a $5 million investments be able to

• 53:23Speaker 02

  show me a small-ish battery using Scytomion in the most cutting-edge technology to do energy storage. $5 million. And you're going after the energy space that in this country it's about $2 trillion. And if you take the energy storage out of that, it's about a half a trillion dollar. So you're talking about gigantic industries that don't have 50 companies, have maybe five.

• 53:54Patrick O'Shaughnessy?

  We've strayed a little bit from our original conversation, which I want to come back to now. First of all, I think like it's so interesting to hear how not only can technology provide all the things we all say we want for all of our families and our loved ones, et cetera, but that the ability to create those new companies is accelerating because of these enabling technologies. I think that's an incredible story. How do we bring all that back to this awful reality that we're facing now?

• 54:24Patrick O'Shaughnessy?

  And you said you're going to double down on your mission because that's the way you can have a positive impact. What's next? How do we actively take that truth, hopefully it's a truth, and apply it to the present day conflict, which seems so intractable and so hard to know what the next first step is?

• 54:43Speaker 02

  If I'm being successful of building a very large energy storage, I will need to buy less oil from Iran. Without Iran selling oil, they have nothing. Do you know that in the last 10 years, the GDP of Iran has been declined constantly, when oil is actually ripping? Building those companies is giving us the tools of industrial security to actually push our team and our side of the conflict. And this is, of course, just one example on energy. I can give you many other examples on manufacturing and industrials and aerospace and defense and agriculture and food securities is we cannot be depends on only Taiwan TSMC

• 55:26Speaker 02

  in this country. We need to have our own semiconductors capabilities in scales in the most cutting edge five nanometer and three nanometer nodes. So nobody, even if they move their ships to the backyards of Taiwan, is not going to risk any of our supply chains. So you know what they will do? They actually would not move their ships. They're doing that because they know how strategic is this technology and country for our economy. So what I'm telling all of us is we should use our power to build those companies because it's going to help us push of living in this place better than we find it.

• 56:05Patrick O'Shaughnessy?

  You were on calls and have been on calls with leaders of your companies based in Israel. And I know on those calls that those people have been very appreciative of your leadership. And I'm curious for you to describe what that means. What have you been telling them? What does small scale leadership impactful, but a small episode of leadership? How do you think about that and being a strong person and leader in a very difficult situation for a very specific set of people?

• 56:37Speaker 02

  I will start by saying that I'm not a small leader, I'm a tiny peony leader. And I'm doing very basic stuff and there is a much bigger leaders than me. They're doing an amazing work and this is the CEOs of our companies in Israel. And to give you a sense, I've stand up call with them multiple of times a week to talk about how we can tactically do things, helping them build a budget for 2024, helping them delay payments with SVB, helping them. We Eclipse team are going on their behalf to a sales meetings in US because they cannot travel now outside of Israel. Because the airport are very hard to fly out and fly in, that sounds surrealistic for me.

• 57:17Speaker 02

  But to give you a sense, in the last meeting, we had the call with them yesterday or the day before and the sirens went on. So some of them that lives in Tel Aviv needs to run to the bunkers in parallel to the call because there is multiple of hundreds of rockets flying on Israel every day from the south and the north. And there is those sirens and you need to run to the bunker. These people are navigating between having their kids at home, because there is no schools, having either they are in reserves or there are other family members in reserves and needs to run companies.

• 57:54Speaker 02

  And my admiration of the resiliency of these Israeli tech founders are overwhelming. And they are so freaking strong of just not giving up and knowing that the real way to win it is not with our military powers. To show them that they cannot create a chaos in Israel and show them that we will continue grow our GDP and we will continue be the third place for venture investments per capita. How you will not want to work with a company that doing insane war like that was able to continue run the company? When your kids at the top and rockets are flying and your beloved one are in the front line and you're still running those companies?

• 58:37Speaker 02

  Their only ask of me is not for more capital and not necessary to help them navigate some of their business. The only ask for me is carry our message to the world.

• 58:51Speaker 02

  So we were all united behind this notion of technology is going to be the way that we are solving conflict in this world and prosperity and innovation. And the only thing they say is it's the people that are going to lead that, not our governments. It's the people.

• 59:10Patrick O'Shaughnessy?

  Would you be willing to share with me just the emotion of watching this happen to your community from afar?

• 59:21Speaker 02

  Hard to describe in words. In the very first day, I wanted to just take a flight to Israel and go immediately to a reserve. But I didn't do reserve for 10 years because I live in America and I'm out of the special forces bench. Then it's turned to anger of what happened because I talked with parents that lost their kids. I have a really good friend that his daughter is being slaughtered in that festival in the south when she just went to dance. The funny thing is this festival name, it's almost Burning Man of Israel that the festival name is Lights and Freedom.

• 1:00:01Speaker 02

  So you had 4,000 people dancing on that border for lights and freedom, no weapon, no soldier, no nothing. And 260 of them is being slaughtered and cold blood after being raped. So the anger went to a pain because I talked with parents that lost their kids. Then I talked with a father that is three years old, being kidnapped. So you talk with someone that you're trying to find rationale, how to even support him. And you promise that you will carry the message and will explain what's going on in Israel. So it went to from a pain to a compassion to these people.

• 1:00:41Speaker 02

  Then I talked with a lot of my Israeli Arabs friends and people on the other sides and there is more pain because both sides are going to suffer. And then you see what's happening in the US schools and the social medias. Asking myself, I'm not going to live a better place for my kids, not like that. People wants to put the Jews in a gas chambers? I mean, what? What are we doing here? So I've been through a lot of tough stuff, but the last three weeks has been by far the toughest.

• 1:01:16Patrick O'Shaughnessy?

  If you've listened to me do this before, thanks for sharing that. My final question is the opposite of a lot of this, and I look forward to your answer. What is the kindest thing that anyone's ever done for you?

• 1:01:28Speaker 02

  It's actually happened recently, and it's a simple thing. Sorry that I'm emotional. My daughter, the youngest one, she's six and a half. And she saw that I'm in a tough spot because I just finished a call with one of those parents. And she came and hugged me. And she said, I see that you're upset about what's happening in Israel. It's all will be fine.

• 1:01:57Patrick O'Shaughnessy?

  As someone with kids of a similar age, picturing their faces a lot in our conversation today and when we've talked before, thanks for the answer and thanks for the conversation, Leir.

• 1:02:10Speaker 02

  Thanks for having me, Patrick.

• 1:02:12Patrick O'Shaughnessy?

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