EP #30 Venture Capital in 2023 w/ Dakin Sloss

In this episode, Dakin and Peter discuss tips for new entrepreneurs, how to build a successful company and the power of venture capital for the economy. You will learn about: 04:37 | The story of Prime Movers Lab 22:25 | The 'do's & don'ts' for new entrepreneurs. 35:47 | Ambitious Vs. Conservative: creating balance for your company. Dakin Sloss is a venture capitalist, founder, entrepreneur, and philanthropist. He is the founder and General Partner of Prime Movers Lab, a VC startup that’s become the world’s leading partner in breakthrough scientific startups. Learn more about Prime Movers Lab. _____________ I only endorse products and services I personally use. To see what they are, please support this podcast by checking out our sponsors: Levels: Real-time feedback on how diet impacts your health. levels.link/peter Consider a journey to optimize your body with LifeForce. _____________ I send weekly emails with the latest insights and trends on today’s and tomorrow’s exponential technologies. Stay ahead of the curve, and sign up now: Tech Blog _____________ Connect With Peter: Twitter Instagram Youtube Moonshots and Mindsets Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:02Speaker 00

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• 0:30Speaker 01

  I'm looking for people who are driven by a desire to grow personally and a desire to contribute to the world. These are drivers that will basically fuel a person endlessly. You might hit like a particular plateau, but ultimately that'll kick back in and you just keep wanting to give more and grow more. And that's what's necessary to make big, big things happen.

• 0:51Peter Diamandis?

  And a massive transformative purpose is what you're telling the world. It's like, this is who I am, this is what I'm gonna do, this is the dent I'm gonna make in the universe.

• 1:03Peter Diamandis?

  Hi, everybody. Peter Diamandis here with Moon Shots and Mindsets. We're about to enter a podcast with a dear friend, Deacon Sloss, a venture capitalist, philanthropist, entrepreneur. He runs Prime Movers Lab. It's a billion-dollar fund that, unlike other venture capital funds, is going after solving the world's biggest problems. We're gonna be diving into, as an entrepreneur, what is a venture capitalist looking for? Tricks and trades, the do's and don'ts, the way that they go through their process of how you reach them, how you present to them, you know, how you value the deal with them, and ultimately, how do you get to a point of capitalizing your company?

• 1:43Peter Diamandis?

  We're gonna be looking at some of Prime Movers Lab's most exciting companies in space, in hypersonic and supersonic aviation, in fusion, in brain-computer interface, in energy production and storage, and carbon capture. You know, they are looking at some of the most exciting companies on the planet that they've backed and taken from startup to public. This is an opportunity for any entrepreneur who wants to understand the inside baseball of the venture capital funding, listen up. As I like to say, rather than starting a photo sharing app, go and build something that can change the world, that can make a dent

• 2:23Peter Diamandis?

  in the universe. All right, now to our podcast with Deacon Sloss, the founder and creator of Prime Movers Lab. Welcome to Moonshots and Mindsets. I'm here with a friend, a venture capitalist, an entrepreneur, a philanthropist, and I'm excited about this conversation, Deacon. We're going to talk about the lifeblood of entrepreneurs, capital coursing through their veins, their moonshots, their ideas, help them go big and hopefully not go home. Where are you today?

• 2:57Speaker 01

  Thank you for having me, Peter. I'm in Miami at the moment, and really appreciate you having me on and excited to chat with you.

• 3:03Peter Diamandis?

  Yeah, absolutely. You know, one of my premises for this podcast is to inspire entrepreneurs to go bigger than they have before. With all due respect to those people who are in the photo sharing app business, I keep on saying, we don't need another photo sharing app. Go after something that is going to change the world, impact the lives of a billion people. I like to say the world's biggest problems, the world's biggest business opportunities. And when I think about a venture fund that has that as a principal precept, I do think that Prime Movers Labs, PML, your fund, that's foundational for you, isn't it?

• 3:41Speaker 01

  Yeah, here at Prime Movers Lab, we only invest in breakthrough scientific inventions that have the ability to transform billions of lives. That's literally our mission. You were a bit of an inspiration, as you know, Peter, for starting the fund and encouraging me to go even more moonshot in the things that I was building. And yeah, I mean, I think it's quite clear at this point, we're at this threshold as a human civilization, and photo sharing is not going to move us forward. We need to address the world's most important problems: climate change, an aging population, the mental health pandemic, changing demographics, making goods and services cheaper, expanding into space. And these are opportunities, of course, as you said, to produce huge businesses and thus huge portions.

• 4:22Speaker 01

  But also, when you build a company, they're all actually really equivalent difficulty. It's going to be a decade-long process if you're going to build something meaningful. And you might as well build something that's going to meaningfully make people's lives better. It's just so much more rewarding, so much more fulfilling to know that you're really making a contribution to the world.

• 4:39Peter Diamandis?

  Yeah, in this podcast, I really want to talk through advice for entrepreneurs at every stage, at the seed, at, you know, series A, B, and so forth. What ultimately makes for a great company to back? I want to hear your points of view, what you're looking for, what you're not, you know, tips and tricks, but also just to, you know, help get entrepreneurs on the right, on the right path. And so, let's, let's jump in. I want to talk about a number of things. First off, the name Prime Mover Labs, where did that come from?

• 5:14Speaker 01

  So, I think we're both a bit of fans of Ayn Rand.

• 5:18Peter Diamandis?

  Yes, we are.

• 5:19Speaker 01

  And it comes from Howard Rourke's speech in the Fountainhead in a courtroom where he is talking about the prime movers, the inventors of the wheel, the people who brought fire to civilization. And really, why we started Prime Movers Lab was to be the place where prime movers, people who are breakthrough scientific inventors, can come and not just get capital, but get real partnership, where they actually have the hands-on tools across PR, marketing, government relations, sales, fundraising, and, you know, not to put it lightly, but like the shoulder to cry on over that long journey as you go through the ups and downs of the startup game, and a partner that you can really turn to at every step along the process to help you build this company and help you enjoy the process of building that company.

• 6:04Peter Diamandis?

  You know, you said that, and it's interesting, right? Because you only, I mean, historically, people think about venture capitalists as a place to go get money. They're also a means for filtering and vetting, but it sounds like you're offering a lot of additional services beyond that to the companies that you're backing. Let's start with some of the basics here. How much capital do you have under management? How many companies have you backed thus far? And I want to dive into sort of the through line on your philosophy.

• 6:34Speaker 01

  Yeah, it's about $1.2 billion under management. We have a few early-stage funds. We have a growth-stage fund, and we've done a ton of SPVs. And basically, been around for now almost six years. We've done 40 companies roughly, though most of the capital sits in about 15 companies. You know, our philosophy is to be very concentrated, and we'll start at the seed round, do the A, do the B, do the C. And we've ended up with companies where we have 100-plus million dollars into them, a couple of them, that are kind of the core things that we focus our time and attention around.

• 7:05Peter Diamandis?

  Yeah. And if you were going to say you've invested in 40 companies, how many have you seen over that period of time? Just to give people a sense of the ratio, when you go into a venture capitalist, you know, all things being equal, what's your chance of getting capital?

• 7:17Speaker 01

  6,000. It's a lot harder than getting into Stanford or Harvard.

• 7:22Peter Diamandis?

  Wow.

• 7:23Speaker 01

  And I think those numbers are a little out of date. It's probably more like 8,000 at this point. I just don't have the latest ones.

• 7:29Peter Diamandis?

  Forty out of 8,000. And so, the principal focus of backing sort of world-changing, billion person, high-technology, high-science, I mean, some of these ideas must be crazy ideas. At the end of the day, I like to say the day before something is really a breakthrough, it's a crazy idea. And do you back stuff that other funds think is too crazy and don't want to?

• 7:57Speaker 01

  Yeah, definitely. I mean, I think in the last couple of years, some of that stuff has gotten a little more in vogue. So maybe our craziest things don't even seem so crazy anymore, as more money has flown into deep tech. But we have a space-based solar company, for example, which, if you'd asked anybody about that, you know, 24 months ago, they would have thought you were just totally nuts. I think there's now actually a couple of different companies that are tentative. Pursuing that, but we think we have the best team and the best technological approach for that. And we, I mean, we, we actually have something out there on our website, which people should check out, which is our Breakthrough Science Roadmap, where we take the six areas broadly that we focus on, energy, transportation, infrastructure, manufacturing, human augmentation and agriculture.

• 8:41Speaker 01

  And we go for each of those areas, what's going to happen over the next decade, two decades, three decades? And we've broken down a few hundred different technologies that are kind of coming to market, whether it's like advanced lithium extraction, or brain-computer interfaces, or cleaning up oceans. And that roadmap gives us a context of what's the right level of crazy to back. You know, there might be something like asteroid mining that I know you're excited about, that probably isn't the current decade thing, that's probably a 2030s thing. And so come the end of this decade, we may invest in an asteroid mining company. Today, it might be a little too early for venture scale returns.

• 9:14Peter Diamandis?

  Yeah, I can tell you it is, and I bet my pick on that. I had an argument with, I had an argument with Elon about whether it was too early. He said he would buy the liquid oxygen from us if we delivered it, but he said it's too early, and he was right.

• 9:26Speaker 01

  Yeah.

• 9:27Peter Diamandis?

  He hasn't been wrong about many things, but we can get there later.

• 9:30Speaker 01

  I think, I think Marc Andreessen said this really well, you know, every idea we see as venture capitalists is a good idea, it's really just a question of timing. And so even the crazy like things that we see, that we pass on for the idea reason, they're usually good ideas, like most of the things that are, we're looking at, 99% of these really are going to happen at some point in time. And a lot of our project is essentially figuring out what is overly enthusiastic wishful thinking, and what is real technology here now today that's going to make an impact on people's lives.

• 10:01Peter Diamandis?

  You know, a mutual friend of ours, and you backed in a number of his companies, Bill Gross. I've had him on my stages, he's been a ex-prize supporter. I've worked as CEO of one of the Idealab companies. Bill had done a study that he presented at DLD and at TED, in which he looked at all the different parameters of successful companies and failures. Looking at, you know, is it a first-time CEO, how much capital went in, what field they were in, and said, what was the key factor of the successful companies? Do you remember what the answer was?

• 10:38Speaker 01

  Oh, my, my answer is I didn't give up. Are you gonna say timing?

• 10:42Peter Diamandis?

  Timing, yeah. It is timing. Yeah. I mean, it's like, it's like, you know, Airbnb and Uber, you know, materialized. No, the idea wasn't new. It had been, it had been conceived of before, but after 2008, when people wanted to earn additional money, after that came down, you know, SpaceX, after the spatial accident, right, the commercial crew contract allowed them to get into business. If they hadn't won that, that would have been a difficult slog. And being an entrepreneur who, I'll use a phrase from Ray Kurzweil, who lives long enough to live forever, so to speak, right? If you've got income and you're break even and you have

• 11:24Peter Diamandis?

  long enough to intercept new business ideas and opportunities. So, I assume that's the sort of stuff you look at.

• 11:33Speaker 01

  Absolutely. Yeah. I mean, if you're talking about kind of our criteria for the companies that we're investing in.

• 11:38Peter Diamandis?

  Yeah.

• 11:39Speaker 01

  I mean, we, we basically look at companies, I'll give it to people very directly, through four lenses. It's the team, technology, business, and deal. Kind of going in reverse order, you know, an early-stage fund has certain valuation and ownership criteria that it needs to achieve. A growth fund has slightly different ones. Those valuations have changed dramatically in the last 12 months as the market has changed. If you go to the business, we're looking for things that can be $10 billion-plus businesses. I think that's clearly the case for all the kind of technologies that we're investing in. But when you just, as an entrepreneur, if you're communicating with a venture capital firm, you have to understand power law returns. That as a venture capitalist, even though you're really excited about all your portfolio, you're assuming that if there's 10 or 15 companies, one or

• 12:21Speaker 01

  two of them are gonna hit. And the one or two that hit have to be big enough to kind of help you produce a 5X or 10X fund, whatever you've kind of marketed to your LPs and the timeframe that you have. For us, that's a 10X fund, which means you really need to see investments that can be 100Xs. And if we're investing initially at 10, 15, 20 million-dollar valuations or less, then you gotta see $10 billion-plus outcomes as, as possibilities when you account for dilution. Those are kind of like the check the boxes things. The two things that we spend the majority of our time evaluating at the early stage is the team and the technology. On the technology... We really think of a spectrum of risk. So there's science risk, engineering risk, and commercialization risk. If it's at the point of science risk, it's still in a lab, in a context where it's

• 13:06Speaker 01

  pretty difficult to predict, even as the inventor of that technology. How long is it going to take to market? How much is it going to cost? Because you're still in the fundamental invention process. And the level of uncertainty is such that it's actually generally better suited for an incubator, an accelerator, a government grant is often what's funding that kind of research. When we like to enter is right at that inflection point between science risk and engineering risk, because at that point, the market still doesn't have a lot of people out there who know how to price this and how to assess these types of companies and support them. But you've gone through this major inflection point where now you can sit down and make an engineering plan and understand how long it's going to take to get to market. So that's kind of our typical entry point.

• 13:49Speaker 01

  Then we help companies overcome that engineering risk, build the product, and then of course commercialize and scale it. And I'll talk more about the team piece too, if you'd like.

• 13:57Peter Diamandis?

  Sure, I definitely do. I want to get into some of the do's and don'ts. So you've got a first-time entrepreneur who's listening to this, and they have a great idea. Maybe they have raised some seed capital from friends and family, maybe they funded it themselves. You want to talk through, first off, the stages of capitalization of a company? You started that a little bit, but let's, you know, just to give some entrepreneurs a sense of when should you be going out and actually presenting to a venture capitalist with the hope that you might get an investment?

• 14:35Speaker 01

  Yeah, so typically, right, there's two or three people who will start a company, split up the equity 50/50, or a third, a third, a third, or something like that. And then you, you know, maybe put in some of your own money as a founder to fund it or don't take a salary for a period of time. You get to the point where you've got something that you can show off, so that this is no longer just an idea. It's gotten to the point where there's something to show off. Maybe now you bring some friends and family in for a couple hundred thousand dollars. Maybe you actually go get some professional angel investors these days for a couple hundred thousand dollars, even a million bucks. What you really have got to aim to get to at that point is being able to show a professional venture capitalist that this is not a science project.

• 15:19Peter Diamandis?

  This is a business.

• 15:20Speaker 01

  This is a business.

• 15:21Peter Diamandis?

  With customers and a business model.

• 15:24Speaker 01

  There's two ways, there's two ways of showing that. One is go get customers, go get revenue. Of course, that's the best way to show that. But even more subtle, in a lot of these types of companies, you know, I mean, we're, we're an investor in supersonic and hypersonic jet companies that just have no chance at the time that we're initially investing of having customers lined up. That's not going to be the case. But you can tell from the founder's mindset, and I love that this podcast has the focus on mindset in this. We, we have a very simple thing we're kind of screening for is, is the founder in love with their technology, or is the founder in love with their customer? And if you're a technical founder, the number one mistake you can make is come tell us everything about how exciting your technology is as your starting point. Come tell us about your customer.

• 16:07Speaker 01

  Come tell us about the pain point that they're experiencing, and then explain how your technology solves that problem.

• 16:13Peter Diamandis?

  Let me point, let me put an exclamation mark on top of this, right? Because I can't express that enough. At the end of the day, there are so many companies where the founder falls in love with a widget, a technology, a science, and then they're out there searching for a solution. And that's a, that's a formula for failure. There's a great video of Jeff Bezos over the course of 20, the first 20 years of Amazon, basically saying, all we care about is our customers. Making our customers happy. What do they want? What do they need? Serve our customers over and over and over again. That's his massive transformative purpose is serve the customers and whatever makes them, you know, whatever you can provide for them.

• 16:56Peter Diamandis?

  I, I think his business plan is anything that's cheaper, faster, better, you know, more variety, Amazon will do. Also to slow down a little bit what you said, early on, at the start of a company, don't be going to a venture capitalist with an idea, right? If you have an idea, you're going to fund that early on by sweat capital, meaning nights and weekends, putting a few dollars in shekels in. And then at the next stage, when you're bringing in some potential partners, or looking for capital to develop the idea further, maybe it's develop some software, maybe it's develop a prototype. You're typically going to go to the people who know you and love you best and who are backing

• 17:37Peter Diamandis?

  you, not your idea. They're backing you. I trust you, Dakin, and I'm going to back you on this because I know you can be successful. They know nothing about the idea, right? And that's your friends and family round, angel round. And then they have, when they're coming to you, they have a minimally viable product, some customers lined up?

• 17:58Speaker 01

  It's a wide variety, given the types of things that we do. You know, we have nuclear fusion, we have two nuclear fusion companies. You know, we were the first investor in one of those nuclear fusion companies. And at that point, they had a really ambitious vision and a team that had kind of, you know, collectively hundreds of years of like the right expertise and a plan, like a really well thought through roadmap of how are they going to do this over the next two decades to make commercial fusion viable. Hard to have like a really built out proof of concept, given the scales of capital that were required in that case, but they had a lot of research to show you that it was possible. That's kind of like the far extreme. I think more typical would be, we've got some, you know, if you take a aviation company, there's

• 18:43Speaker 01

  like a small model scale of the plane that demonstrates the proof of concept on a technical level. Now they're going to go through years of building it, certification, and bringing it to market. Or if it's a energy technology company, they've done like a bench scale kind of prototype that shows that the science works. And now it's a question of can you manufacture it at a large enough scale and cheap enough to actually have the unit economics add up for going to market?

• 19:07Peter Diamandis?

  That's your story early. You do some seed funding. And seed stage funding has a valuation in what bracket, would you imagine?

• 19:16Speaker 01

  You know, it could be any, we've entered at companies at like a $5 million valuation, all the way up to a $30 million valuation for seed rounds. I think you're seeing in the market today, at least, that it's more in that kind of like 10 to 20 range again, given tough macro headwinds.

• 19:30Peter Diamandis?

  Sure. And then Series A and Series B, follow on, later stage investing, how would you bracket those?

• 19:37Speaker 01

  Yeah, so I mean, first off, for everyone, like, these these letters and names are made up, and you have to recognize that and not get too rigidly stuck on anything. But generally, Series A, so Seed, you are backing a team with a proof of concept. Series A, there is some sort of customer traction, right? By the time those kind of aviation companies I was talking about at Series A are raising Series A, they have some LOIs from airlines or from the defense community or some customer that validates there is a significant customer demand and the kind of business model through which that is going to be monetized. Probably very early revenue or no revenue in some cases. And these are going to be valuations that are in the 25 to, you know, max $100 million valuation range.

• 20:22Speaker 01

  And again, those numbers, those numbers have come down 40% in the last eight months. So probably more like 25 to 60 at the moment. And then Series B, you have, you have customers, you have revenue, you have some sort of validation. And again, with deep tech, it's going to look a little different than a software as a service company. But there, there's revenue. And that could be a contract with a customer for pre-orders. That could be a joint development agreement. And those valuations, once you get into Series B and Series C, there's such a widespread because it's so dependent upon what the company is doing. But you're looking at, you know, north of a $75 million valuation. And some Series Bs have been very high.

• 21:05Peter Diamandis?

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• 21:46Peter Diamandis?

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• 22:28Peter Diamandis?

  for myself, but my friends and my family, that I think are high-quality and safe and really impact a person's life. So, check it out. Levels.link/peter. Give you two additional months of membership, and it's something that I think everyone should be doing. Eventually, this stuff is going to be in your body, on your body, part of our future of medicine. Today, it's a product that I think I'm going to be using for the years ahead, and hope you'll consider as well. All right, let's get into the do's and don'ts. So, first-time entrepreneur comes in and presents. So, we'll talk about in-person versus Zoom in a minute. And he's making a classic mistake. You mentioned one classic mistake, which is being in love with your

• 23:11Peter Diamandis?

  technology versus the customer. Other, other big mistakes that entrepreneurs make coming in without the experience?

• 23:19Speaker 01

  Well, I wouldn't say this one's necessarily recognized as a classic, but I think it's a pretty important one. If I'm giving a presentation, the first thing I do is I ask a lot of questions. And I make sure I understand the person I'm presenting to, what matters to them, what are their decision-making criteria, what are the language and tools and patterns that they like to use when they're speaking. And I'm speaking to someone for their benefit, right? We often get caught up in hearing our own voice and lose track of who is our audience, what is that actually matters to that audience. And I think a lot of entrepreneurs would benefit from pausing and doing a lot more custom... Like, when you're fundraising, it's customer. A customer is the investor. And you should do customer discovery and understand what do they like, what do they not like, what are the things

• 24:04Speaker 01

  that are going to land for them in a presentation. So that's one of the top ones that comes to mind. I think another would probably be if you have a team, making sure that the team is presenting together and it's flowing well amidst the team. Often at an early stage, so much of the investment thesis is the team. And you can see with a team in a live presentation, are they in a good sync or is one person just running over another person kind of verbally?

• 24:31Peter Diamandis?

  What would an entrepreneur who's presenting to you do to impress you or what have they done to impress you? Is there something that stands out in mind like that was impressive?

• 24:41Speaker 01

  Yeah, so one is videos and or actual tech demos are really helpful things at this stage where you can kind of visually see this like long-term vision as it's going to come together. The second is order books. I mean, a lot of what we end up getting most excited about is company comes to you with a billion dollars of LOIs and as you dig in on those, they're not like made up LOIs that are like loosey-goosey. It's like if you build this, it's going to have a customer base. And then the thoughtfulness of the engineering roadmap, right? These are all fundamentally boiled down to like pretty big, hard, hairy engineering challenges. And the question is, how well has somebody thought through what's it going

• 25:25Speaker 01

  to take, who you're going to have to hire, what are the most challenging parts, how much is it going to cost? Yeah.

• 25:31Peter Diamandis?

  Yeah. When you speak about a book of business, you know, one of the companies you backed, Energy Vault, again, from Bill Gross, I was so blown away when I heard the book of business that he had set up. Oh, my God. We'll get to that. We'll talk about some of the companies that PML has backed that are epic successes. In-person versus Zoom? It used to be all in-person. Are all your presentations now over Zoom?

• 25:54Speaker 01

  Initial conversations tend to be over Zoom, but we won't invest without an in-person meeting between a founder or CEO and multiple of the partners. And that's just because there's something that doesn't get captured over video. That's really important to kind of assess. You know, we're signing up for a long-term relationship. It's like a marriage and anyways, harder to get out of than a marriage. And there has to be good chemistry between our team and the team that we're backing because we're not just giving people money and saying goodbye. We're getting involved and we're really helping.

• 26:27Peter Diamandis?

  Slides versus no slides? Have you, you know, do you see?

• 26:31Peter Diamandis?

  Teams or entrepreneurs coming in and just speaking to you and having a conversation versus, you know, depending on a slide deck? And how long should they be pitching? Give me a sense of that mix that works well that you recommend.

• 26:46Speaker 01

  I'm always more impressed by a conversation than a set of slides, but that's a personal thing. There's other people who like slides. I think it fundamentally, again, it comes back to that customer discovery point of when I was a founder, I built two companies myself. I would ask somebody, do you like slides or do you like just having a conversation? And let your audience tell you how it wants to be sold. And don't do it like your way, do it their way. Length of time? I always find it challenging if somebody's talking for more than a few minutes without there being some back and forth. I think you just don't know what impact you're having and whether it's actually effective communication.

• 27:28Speaker 01

  So that's also part of why I don't like the slides is it tends to depersonalize an interaction rather than allowing mutual engagement to occur.

• 27:37Peter Diamandis?

  Yeah, no, I find that so important to be able to, you know, have a, you connect and have a relationship with the individual, understand how they think and steer the conversation in a way that's important for you. You know, jockey versus horse, I mean, they're both important, right? The entrepreneur versus the field that they're in, the customers that they're serving. I assume you want both, but can you talk a little bit about sort of the jockey versus horse calculus that you do?

• 28:11Speaker 01

  Yeah, it's a both. You know, we have backed, and we've done this from learning, you know? We've backed founders that we loved that were in areas that just didn't have the momentum required to build something big and the right timing and doesn't work. And we've backed some founders that I would not back again, even if they were in huge areas, because they just didn't have the mindset required to adjust and adapt and adapt and ultimately succeed. So it's a both. You know, we want people who are, oh, please go ahead.

• 28:43Peter Diamandis?

  You know, just gonna, yeah, of course, it's both, but end of the day, if you've got a great team. That team will pivot and find a solution, right? If you have a lousy team and a great marketplace, you've made a bad investment.

• 28:56Speaker 01

  Totally. And what we've, I mean, what we've often found is because of the level of expertise we have in the areas that we invest and the way we engage with founders is even in the process of doing diligence with world-class founders, they are learning and growing and shifting in that process. And hopefully, we're contributing something that helps them narrow in or refine a strategy or refine a tactic. And you see the pivoting, micro pivoting happening. Ideally, you don't want to have to make huge pivots. You want to make micro pivots and like that adds up to the huge pivot. And those micro adjustments are happening often in the diligence process. And that's a good sign to us. We don't want somebody who's like, here's my plan. I'm not listening to any feedback whatsoever. We want somebody who's like, here's the big picture strategy and I'm going to do whatever it takes to get there. And this is my current thinking.

• 29:41Speaker 01

  What can I learn? Okay, cool. I'm going to do it slightly different.

• 29:44Peter Diamandis?

  Let's talk about how deals get to you. I'm assuming that who introduces a deal to you matters versus, I mean, that's part of the signaling, right? Versus something coming in as a cold email or into your website. How do you find deals and how do the deals come in? And how important is the introduction to you?

• 30:03Speaker 01

  Yeah. We've done zero cold email or introduction deals, even though that represents thousands of those deals in the pipeline. It's just not going to happen ever. We have such a large volume of high-quality introductions coming from folks like yourself and other folks that we trust and rely on. And if you're not, if you're not getting an introduction from somebody that already knows us and that we've already done some sort of business with, it's almost impossible. And

• 30:29Peter Diamandis?

  Meaning that's the first filter, right? If someone, if there's a, if an entrepreneur or an idea is strong enough, they should be able to overcome that hurdle.

• 30:38Speaker 01

  Yeah.

• 30:39Peter Diamandis?

  So deals are, you know, the split between Deals that you hear about and go after versus ones that are inbound, how does that feel?

• 30:48Speaker 01

  I mean, this has changed over time, you know, in 2018, we were kind of hustling and going after everything. And today, we we basically end up established as one of the preeminent deep tech funds out there. And so pretty much everything is coming to us. Um, there's not a lot of us going out needing to to chase something now. And what that boils down to is what we talked about before is uh, the commitment we make to founders is the least useful thing we provide is capital. And I think we've delivered on that for a lot of great folks like Bill and other serial entrepreneurs.

• 31:17Peter Diamandis?

  I know one of the companies that you backed, uh, I was a co-founder of Vaccinity, we'll talk about that. Uh, PML provided huge value throughout the entire startup process. And that was, um, that was awesome. I want to talk about my entrepreneur mindset, right? There's the entrepreneur who's excited, there's an entrepreneur who has passion and purpose, and then there's the entrepreneur who's obsessed. What are you looking for in the mindset of that entrepreneur that you want to back?

• 31:46Speaker 01

  Looking for a few things. Number one is what's driving them? I'm looking for people who are driven by a desire to grow personally and a desire to contribute to the world. These are drivers that will basically fuel a person endlessly. Um, you might hit like a particular plateau, but ultimately that'll kick back in. And you just keep wanting to to give more and grow more. And that's what's necessary to to make big, big things happen. Second thing I'm looking for is somebody who's really resilient. Uh, there is no way you're building a major world changing company without falling flat on your face a number of times every year on the way to getting there. And you've got to basically start to learn to hear no as not right now.

• 32:26Speaker 01

  Or that person hasn't figured it out yet, or I got to try something else, rather than that actually causing you to stop. Uh, we we joke, you know, people need to run through walls.

• 32:36Speaker 01

  And then the third thing is being really adaptive. It's kind of like a weird contradiction. The most successful entrepreneurs or oxymoron are both unbelievably resilient. They're not going to take no for an answer and they're extremely flexible and adaptable. So they're not going to take no for an answer in getting to that big, long-term vision. But all of the tactics, all of the things around hiring, firing, sales, government relations, all the specifics, they're willing to take new information and learn and adjust and shift. And we specifically test for that. And like the process that we go through with people is making sure they get some sort of feedback, they get some no's and they have to push through them and they get some sort of feedback and that feedback is useful feedback and they act on it and they adjust. And if they're not willing to do that, then they might be successful somewhere else, but they're not the right partner for us.

• 33:20Peter Diamandis?

  You know, one piece of advice for entrepreneurs, and I got this message, I'll tell the story briefly. I was at MIT, I was running my first organization ever, Students for the Exploration and Development of Space, SEDS, which grew into a global college group. And I was trying to raise money to print a monthly newsletter. This is back before the internet. This is when you actually used a printing press in the US mail office. And I went to Draper Labs, which had a lot of money, and I met with the head of Draper Labs and pitched him on like $5,000 a year to do printing and mailing of our newsletters to our chapters. And he, you know, on the way out, you know, he said, "I'm sorry, would love to, but we're

• 34:05Peter Diamandis?

  not in a position to make donations." And I was like, you know, "Ah, okay." And I was literally walking out the door, had opened the door partially and I paused and I said, "Well, you can't make a donation, but could, do you have, do you have printing facilities and mailing facilities? Could you print our newsletters and mail our newsletters for us?" And he said, "Absolutely." And we got probably $10,000 a year versus 5K worth of services for the next five years. And the lesson I learned in that is whenever you get a no, don't stop there. Walk away with something, even if it's a "What would it take for me to come back and get a yes?"

• 34:47Peter Diamandis?

  Or "What's the most brutal advice you can give me?" You know, another short story is I'm on stage interviewing Elon at a Goldman Sachs event. One of the things he said that I'll never forget, he said, "My friends tell me what's great. My best friends tell me what sucks." Yeah, so can you get brutal truth from somebody? Because that's, that's worth a lot.

• 35:09Speaker 01

  Yeah, I mean, a number of stories that come to mind of the same lesson and genre. But I think at the end of the day, if you really think about it, to, to succeed, you're going to have to fail a lot of times in order to get there. And really what entrepreneurship boils down to is can you fail really gracefully? You know, the people who are great entrepreneurs fail constantly and their failures just become learning and fuel rather than something that gets stuck with a bunch of emotional baggage like a lot of other people have. And if you can kind of get excited about like failure equals I'm growing, then you're going to succeed at everything in life, but particularly in entrepreneurship.

• 35:48Peter Diamandis?

  I think that's so critically important. And as an entrepreneur, you know, if you, if you don't believe in your idea enough to keep going, you know, the proverbial story, and you know it from me, Dakin, was with, you know, the I'm Sorry X Prize before it was the I'm Sorry X Prize. Hundred and fifty no's, you know, they're, they're the same stories for Google and for a multitude of companies. And just you've got to keep going. You have to believe in your deal, in your company and your vision enough to keep going. So one of the things that makes you different, Dakin, and I love you and the team there for it, is your, you know, your moonshot vision, your billion person vision, your desire to go big.

• 36:30Peter Diamandis?

  Um, and ambitious versus conservative. So I, there's, yeah, how do you dial that? I mean, one of the questions, and if I come into you with this crazy ass vision of putting like a hundred thousand satellites in low earth orbit, which our friend Greg Wyler did.

• 36:48Speaker 01

  And we funded it.

• 36:50Peter Diamandis?

  And you funded it. Um, so I'm, I'm trying to give advice to the entrepreneur here who wants to go big, does want to build a photo sharing app. But they don't have the experience yet or the track record that Greg had, Greg Wyler had. But so how do they balance audacity and vision and like, you know, I'm gonna go mine asteroids out there with actually starting and building a company?

• 37:21Speaker 01

  It's a great question. So, and my advice might surprise you a little bit. I'd say if you're a first time entrepreneur, you should not be going after the same scope of problem as a Greg. Greg started and built other companies that were simpler companies and learned valuable lessons about hiring and firing and scaling and fundraising and the basics. And a lot of our philosophy is making sure the founder and the mission are good fits. You know, if we're gonna go put a hundred thousand satellites in lower floor but like nobody has ever done before, that person better know how to do all the basics of company building so that you're not having to stumble over those issues and can just focus on

• 38:01Speaker 01

  how effing hard it is to do the thing that they've set out to do. And even for myself, you know, if I look back, my first company was a software company called OpenGov that was delivering government budgeting and planning software. That super useful mission, I'm really proud of what we've done there. And nowhere near as hard as my second company that was delivering oil and gas modeling and optimization technology that involves some really fundamental scientific incorporations into that software. And nowhere near as hard as doing hardware venture capital. And so you have to progress in your own career and build your skill set. And there's nothing wrong with that. Like, I remember in my early twenties thinking like, I wish, and sure Elon had some of this, like of like when he was building PayPal, I wish I was doing the rockets now. And you kind of got to get

• 38:44Speaker 01

  over that of like, you're not gonna do the rockets until you get the basics down. And there are enough interesting hardware and biotech problems today that you could go after some of those problems that are platform plays and maybe don't have quite the same level of difficulty or are tackling a little niche within that as your first company if you're younger and build off of that success to kind of set yourself up for the longer term thing. That's one approach. Second approach, which if you really do want to do it now, go partner, like if you're like a fantastic. Inventor of something and you want to go for the moonshot now. Go partner with a Greg or a Bill Gross or somebody who has Peter, somebody who's done it before. And you're going to give away a little bit economics, but it's well worth it.

• 39:29Speaker 01

  To be able to bring to market and have somebody there as a day to day mentor to help you kind of get over the basics and focus on commercializing your technology.

• 39:38Peter Diamandis?

  Yeah, I mean, it's important to realize a lot of the biggest companies on the planet, which are billion person companies like Microsoft, like Apple, like Facebook, were started by first time entrepreneurs in the early twenties. So the situation is there. I wouldn't say there are many hardware companies that have done that because then if you're going to put a ratio of the degree of difficulty to a software versus hardware company, what would you say?

• 40:08Speaker 01

  Ten to one.

• 40:10Peter Diamandis?

  Yeah, at least hardware is hard. So if you're looking at starting a hardware company,

• 40:16Peter Diamandis?

  I like to say if you're going to build a hardware company, come prepared with a large bankroll.

• 40:22Peter Diamandis?

  You know, the only way that Elon really got SpaceX going was he had a hundred million dollars out of his PayPal. You know, a hundred and forty he made and put into Tesla and into SpaceX and would never have gotten it going there.

• 40:35Speaker 01

  And he ran out a couple of times and had to get Peter and others to jump in.

• 40:40Peter Diamandis?

  After the third failure, he scraped together enough money for a fourth attempt on the Falcon one and succeeded and then won the government contract that from NASA that allowed him to give birth to SpaceX.

• 40:53Speaker 01

  This is why partnering with somebody who's already had success can be such a good strategy here. Because at the end of the day, there's doing the thing and there's funding the thing. And even if you actually have many, much of the skill set to do the thing, if you've never raised the money at the volumes that we're talking about before, that is its own project. And you really need somebody who has some track record once you start getting into the much bigger dollar figures that are involved. So if it's a very capital intensive business, it almost certainly is going to require a seasoned entrepreneur.

• 41:22Peter Diamandis?

  Yeah, and the other option is can you start in the software business, build something that is cash flow positive and then start building your hardware vision on the margin by stealing time until you have an MVP, something to show and have a track record and then raise the capital there.

• 41:41Speaker 01

  Another great way to do it, for sure.

• 41:43Peter Diamandis?

  You can have the long-term vision, but not jump into the fire right away. So, a lot of entrepreneurs are probably right now saying, "I want to build something. I want to build a world-changing company. I'm excited, I'm passionate, I want to do something in one of the, you know, the global grand challenge areas." And they come to you, Dakin, and they say, "Hey, Dakin, uh, uh, what, where should I build a company? Um, you know, where are there the biggest opportunities, unmet, unmet needs? How do you answer that?"

• 42:12Speaker 01

  Well, a cou- I mean, a couple of things. First is, I think the best entrepreneurs do, do have gravity towards a particular area. And so, I, it is really hard to build fantastic companies, and I would encourage people to make sure they are connected enough to the problem they're solving. So, I would never encourage someone, "Solve the problem I think is important." Like, they gotta solve the problem they think is important. That, that caveat aside, um, the two kind of obvious things to focus on today is something around energy transition. There are trillions of dollars going into a change in the fundamental infrastructure of our world across nuclear, wind, solar, geothermal, energy storage, uh, vehicles,

• 42:56Speaker 01

  the utilities, um, electric aviation, all of these things. And so, there's just like, you can come up with a hundred different, uh, things that are happening there.

• 43:04Peter Diamandis?

  I just finished a blog on energy, and by the way, PML's blogs are amazing. And I just finished one on sort of the future of where energy is going over the decade ahead, and it is ripe for entrepreneurs, right, to build on the margin, build in the center of it. It's huge, you know? And on the software side and the hardware side.

• 43:27Speaker 01

  Totally, like endless possibility. And the second thing, broadly speaking, would be, we are undergoing a extraordinary revolution in biology and biological engineering, and we look at this kind of in two areas, but the fundamental building block is just, if you think about what we invest in any of it, like space, the cost of, uh, transportation has come down by a factor of 10, is going down by another factor of 10 in the near order, maybe even more, depending on where Starship ends up, and that just opens up this whole new economy. If you look at bi- biology, the cost of sequencing the human genome has come down orders of magnitude, so these are, these are different.

• 44:06Peter Diamandis?

  A million-fold, a million-fold, yeah.

• 44:08Speaker 01

  These are different analogues of Moore's Law. That was what was driving kind of the software revolution. And you're seeing that software evolution now in hardware and in bio because of the follow-on effects of that. And so in bio, some of the things we're most excited about is longevity medicine. We obviously have talked a lot about that area and it's something really near and dear to your heart. Where we are starting to understand aging as a disease. And what are the causes of aging that we can address directly? So that instead of tackling cancer or a heart issue, we're tackling the cellular mechanisms that have led to degradation of the body or degradation of a particular organ well in advance and actually prevent them. And this is obviously really exciting.

• 44:53Speaker 01

  And then the second thing is our understanding of neuroscience has progressed so much in the last 20, 30 years. And probably the single greatest challenge we face as human beings is now that we have so much abundance in the West, how do we actually enjoy it? How do we remain happy? How do we not fall into the traps of depression and anxiety that hundreds of millions, well probably billions of people have? And I think there are extraordinarily exciting things happen in psychedelic medicine, brain-computer interfaces, non-basis devices to address this that are only going to continue to accelerate over the coming decade.

• 45:26Peter Diamandis?

  Yeah, no, agreed. And I love the fact that you centered your thesis areas there. Also, transportation. On the abundance side, I've got my, I'm using my abundance mug today and it says on the back, "How would you live, how would you live life if there was no scarcity?" And so that's, that's, I think, where we're, where we are heading. You know, technology is a force that takes whatever used to be scarce and makes it abundant over and over again.

• 45:52Speaker 01

  I just want to pause there and say, remind everyone, basically, if you're, if you're listening to this podcast, no matter what exactly, where someone sits in like the current socioeconomic system, there is no more scarcity. Like, we, we actually have transcended that as like a Western civilization. If you told somebody a thousand years ago that the poorest person in the US was going to have a cellphone or a computer and toilet paper and this thing that like flushes their like...

• 46:20Peter Diamandis?

  Flushing toilet.

• 46:21Speaker 01

  Yeah, like refrigeration.

• 46:23Speaker 01

  Kings would have given up their leadership of countries or whole segments of the globe to have that. And I think it's just important to pause and remember that regularly, that we've already made it. Like, this is all bonus at this point. And of course, there are people with more than me and you, and there are people with less than us. But focusing on who has more or less, when everyone already has so much, gets the wrong mindset.

• 46:50Peter Diamandis?

  Yeah, I agree. And I think one of the questions is if there isn't scarce, if there isn't abundance in an area, are you the entrepreneur that will create abundance in that area? One of the companies I love, I know the founder, Martin, he's going to be speaking at Abundance 360 this March, is the Diamond Foundry. And they basically have built the capability to build perfect diamonds. You know, do you want a five-carat perfect diamond, a 10-carat, 40-carat perfect diamond? You know, eventually it will be dollars per carat. It's going to redefine it, and they're building now diamond wafers. And so, you know, aluminum used to

• 47:33Peter Diamandis?

  be the most scarce metal on the planet because of the energy required to turn bauxite into aluminum. And so, everything becomes, you know, we're seeing, you know, something may not be available, but technology makes it available. And so, that's something I'm asking entrepreneurs all the time. What do you see as scarce that you could make abundant? A brief note from our sponsors. Let's talk about sleep. Sleep has become one of my number one longevity priorities in life. You know, getting eight deep uninterrupted hours of sleep is one of the most important things you can do to increase your vitality and energy and increase the health span that you have here on earth. You know, when I was in medical school years ago, I used to pride myself on how little sleep I could get. You know, it used to be five, five and a half hours. Today, I pride myself on how

• 48:17Peter Diamandis?

  much sleep I can get. And I shoot for eight hours every single night. Now, usually, I'm great at going to sleep. If I'm exhausted, you know, I've worked a hard day, I'm right out. But if I'm having difficulty, and it occurs, I'm having insomnia, or my mind's overactive, and I need help to get that eight hours, I turn to a supplement product by Life Force called Peak Rest. Now, Peak Rest has been formulated with an extraordinary scientific depth and background, includes everything from long-lasting melatonin, to magnesium, to L-glycine, to rosemary extract, just to name a few. This product is about creating a sense of rest, and really giving you the depth and length of sleep that you need for recovery. It's a product I hope you'll try.

• 49:01Peter Diamandis?

  It works for me, and I'm sure it will work for you. If you're interested, go to mylifeforce.com/peter to get a discount from Life Force on this product. But you'll also see a whole set of other longevity and vitality-related supplements that I use. We'll talk about them some other time. But in terms of sleep, Peak Rest is my go-to supplement. Hope you'll enjoy it. Go to mylifeforce.com/peter for your discount. I want to go to inside baseball, if that's the right term, I'm not a sports person, on deal analysis here. And if you don't mind being open with it, you know, you said you're seeing thousands

• 49:45Peter Diamandis?

  of deals per year, or have seen thousands of deals, and you're investing in, you know, one in a thousand, one in four thousand, whatever that number might be. So, an entrepreneur comes to you, and through a mechanism, scores an hour-long virtual pitch, is that the first step?

• 50:09Speaker 01

  Usually, it's like a quick conversation with a member of the team over Zoom to get to know them as humans. Frankly, that's where we start our process. And then we'll go on to more details about the technology and the business.

• 50:22Peter Diamandis?

  How long before an AI pitches you, and it's no longer getting to know them as a human, but it's an algorithm you're investing in?

• 50:28Speaker 01

  Well, I don't know. That seems like a little ways off to me, I think. But we're doing humanoid robotics investments right now, so let's see.

• 50:40Peter Diamandis?

  I saw that, that's awesome. So...

• 50:44Peter Diamandis?

  I introduce someone to the PML team. They say, sure, Peter, we'll, we'll listen to it. The CEO, the entrepreneur makes a, has a, a meeting with a member of your team. What happens next?

• 50:58Speaker 01

  Well, I mean, roughly speaking, our process is there's an introductory screen where you're kind of getting to know the person. There's a second screen that's much more business and technology and deal focused. If it passes those two things, one of the partners who leads the firm, there's four of us, advocates for the deal. And then we go do a deep dive and that's where we really allocate significant resources. First in the deep dive on founder references, business, customer references, deal, deal, all that stuff. And then the last thing we actually look at ironically enough is the technology because it takes the most time. You know, like when we go do a deep dive on, and we'll do it in like layers, but when we go do a full deep dive on a technology,

• 51:39Speaker 01

  that might be two or three people's full-time job for three weeks and full-time is like three times full-time. And it could be months, you know, if the, there's not a sense of urgency, there's usually a sense of urgency. So that, that's kind of how we make sure that we're not investing in a Theranos or clean tech in the mid 2000s. It's really understanding that technology, the patents, the intellectual property and engineering plan. But we, we backload that to make sure that everything else checks out before we spend the time and resources on that.

• 52:12Peter Diamandis?

  So you come back now to entrepreneur and say, we're interested. And there's a concept of leading a deal versus participating in a deal. That entrepreneur has without question gone and spoken to other venture capitalists as well.

• 52:26Peter Diamandis?

  Let's talk about when you decide to lead and what happens if, you know, do you find yourself in situations where you're the sole? Advocate, you know, five, six, 10 other venture funds have said, no, we don't like it. But you do, or there's almost like a herd mentality here, like, you know, people jump on the deal that everyone else wants to get into, or shun the deal that no one else wants to get into. How does that mindset work?

• 52:55Speaker 01

  Yeah, so we exclusively lead, we don't follow. And we're unique. I mean, probably if you're on my team, the one question or one thing you know not to say is like, this person's interested or this person's not interested in terms of other firms. That has no sway for our decision-making process. Unlike, most firms it does. Most firms are like, who has invested before, who will invest later, who? We're asking a very different question of what is the right answer here? And it's so easy in venture capital to get stuck in a herd mindset. So I've kind of like forbidden that. And when someone, they'll get a look from me of like, why are we focusing on that? That's not like, the thesis is we know how to assess these things. We don't need to rely on somebody else's perspective. Now, you do have to understand, are there other sources of capital available?

• 53:40Speaker 01

  So that you're not going to be the only funder indefinitely. And what are the milestones that a company is going to hit? Where somebody else can realize, you know, maybe at a growth stage and come in. So it's not like it's totally binary. But we just don't function that way and it is unique. I think a lot of other firms do get caught up in the, I know this guy and this guy is in or is out. And there's validity in that, right? Like there's a legitimate approach there. It's just not the approach that we're taking. We kind of view ourselves as best in class at assessing these types of technical risks.

• 54:12Peter Diamandis?

  Love that. Now let's talk about how a deal gets priced. You know, I'm not sure if entrepreneurs understand the dynamic here. You know, you've made up a number in your head that you think the company is worth based upon how much time you've put in, how big the market is. But at the end of the day, how many of the deals? Are you pricing as the lead venture capitalist versus the entrepreneur saying, "I'm looking for this much money at this valuation"?

• 54:39Speaker 01

  It's always us pricing it, yeah. I mean, the, obviously founders have what they're looking for, and we're very upfront with people as well. We're not going to be the cheapest source of capital. Eighty percent of our time last year went into supporting the portfolio and 20% into making new investments. That's atypical. That's not how most firms are working. We are really working closely with our companies and so often the thing we challenge people on if there is a disconnect on valuation is what do you think you would need to give to get us as part-time members of your team incentivized to come work on this company? And add that on top of whatever dilution you're kind of expecting to get from a financing? And that's how a lot of our founders think about it. If they wanted to sell 15% of the company but we need 20%,

• 55:24Speaker 01

  is the 5% extra that they're giving worth the incremental odds of success of making this a hundred X or a thousand X bigger company in partnership with us? And that's kind of like our focus.

• 55:35Peter Diamandis?

  Got it. And then at the end of the day, you do want to bring other investors in with you, right? You're not looking to be the sole investor. So typical check size for that you'll put into a company if it's raising, you know, if it's raising a $10 million late seed, early A round?

• 55:55Speaker 01

  Yeah, I mean, frankly Peter, we will often at seed or late seed like that, we will do a full thing. If there's a $10 million, we can do $10 million, but we'll do anywhere from five to 10 and it depends who are the other folks that are around the table that are interested. If there are other folks that are around the table and interested, we make space and we want to have others who can help, but we're comfortable, at least in the early stages, doing it all ourselves. And then as we get into later stages, bringing in other folks that can help with those later stages.

• 56:25Peter Diamandis?

  If you were to say out of the average 10 deals that you've invested in, How many succeed, wildly successful? You alluded to this earlier in terms of the power laws of a return to a fund. But what do you typically are seeing? What is a best-in-class venture capitalist expect out of 10 deals?

• 56:44Speaker 01

  Well, I'll give you straight math from one of our funds. So our first fund was raised in 2018, 15 seed deals. We followed on to five of those companies as Series As where 75% or 80% of the capital ended up in those five companies. Of the other 10 companies, five are zeros at this point, five and a half, six years in. Five are still operating and we'll see what happens with them. Don't know. I guess that two, three of them have raised up rounds, I guess. So they'll be either decent or good exits. Two others probably go to zero. So half basically of the portfolio, if you're tracking that, ends up at zero. And then of the five that we put most of the money into, three of those are breaking out as huge successes and that's like a really good ratio.

• 57:29Speaker 01

  I would not bet on that happening every time. Usually you get one or two. The three are breaking out as huge successes. So you get something like one to three really good out of those 15. Another seven, five to seven that are like, okay. And then everything else is zeros.

• 57:45Peter Diamandis?

  So, I mean, and that's one of the reasons, again, if you're an entrepreneur, going to present to venture capitalists, that the venture capitalist needs to own enough of the company early on so that if you're the breakout success, that's going to make up for the other, you know, 80% who are not. Hey, everybody, this is Peter. A quick break from the episode. I'm a firm believer that science and technology and how entrepreneurs can change the world is the only real news out there worth consuming. I don't watch the crisis news network. I call CNN or Fox and hear every devastating piece of news on the planet. I spend my time training my neural net, the way I see the world, by looking at the incredible

• 58:28Peter Diamandis?

  breakthroughs in science and technology, how entrepreneurs are solving the world's grand challenges, what the breakthroughs are in longevity, how exponential technologies are transforming our world. So twice a week, I put out a blog. One blog is looking at the future of longevity, age reversal, biotech, increasing your health span. The other blog looks at exponential technologies, AI. 3D printing, synthetic biology, AR, VR, blockchain. These technologies are transforming what you as an entrepreneur can do. If this is the kind of news you want to learn about and shape your neural nets with, go to dmandis.com backslash blog and learn more. Now back to the episode. Some fun questions here.

• 59:12Peter Diamandis?

  Craziest idea you've ever been pitched? Or craziest ideas you've ever been pitched? If you have a few categories.

• 59:19Speaker 01

  I mean, we had somebody bringing us this thing for like terraforming the moon using nuclear to kind of like blow up like spots on the moon and like create like infrastructure beds from that. It sounded pretty wild. We've had folks that are looking at, I mean, I don't even know how, like in some ways, I don't know how to answer the question.

• 59:50Peter Diamandis?

  Because you do that crazy ideas.

• 59:52Speaker 01

  Yeah. Like I was gonna say, like, we're opening people's skulls and putting implants in. But yep, that's, that's part of the, the brain computer interface stuff. So it, we, we are totally comfortable with things that other people are not comfortable with. And we're really understanding, not like shock face value of like an idea, but there's lots of things that sound shocking at first. And, you know, I think we were talking five years ago and you said, somebody was going to be able to write at like with an AI, the level that ChatGPT is writing at, I think we would have both agreed at some point in the next 20 years. I don't know that we would have thought five years from now that it would have been the case.

• 1:00:33Peter Diamandis?

  Yeah. Or if you'd asked the question, you know, 18 months ago, it's, it's insane. Any companies come in that are fundamentally disrespecting the laws of physics? I'm curious.

• 1:00:43Speaker 01

  Yeah, yeah. Those ones we have to pass on. I, I mean, I have a soft spot for those because I personally suspect that we, I mean, I know that we don't, the laws of physics today are our current laws of physics. And at some point we will have a new understanding of the laws of physics. So I, as a physicist, always get curious. Maybe I'm talking to like the next Einstein that's, that's on to something. There does tend to be a strong correspondence though, between the companies that are presenting things that require new laws of physics and some very weird behavior that so far I don't think I've found a guy that is actually presenting new laws of physics.

• 1:01:18Peter Diamandis?

  You know, I've had a few experiences in my life and I'm curious if you've if you've had this where you're in the midst of the meeting and you're like, I value my time more than being overly polite and like stop and say, I just need to end the meeting here right now and go. Have you have you broken off meetings in the midst?

• 1:01:37Speaker 01

  Yeah, I mean, I think one of the benefits of being a couple of years into this is there are people who screen those things out. That doesn't have to happen anymore.

• 1:01:45Peter Diamandis?

  The venture capital business has changed over the last two to three years and a lot in the last six months. How would you describe that?

• 1:01:53Speaker 01

  In the last two to three years, probably the main change is there's a lot more funds. You know, it used to be.

• 1:01:59Peter Diamandis?

  Is there a glut of funds?

• 1:02:01Speaker 01

  There's probably too many right now. And you've got people, look, in a low interest rate environment, venture capital is a very attractive thing for any investor to invest in. And you had a lot of people enter who probably are not going to last as durable brands kind of in this through multiple cycles. Because in the last six months, markets have corrected heavily, last 12 months. You have Series B and Series C valuations down 70 to 80%. You have Series A down 40%, C 20%, which means that a lot of people who've invested over the last few years are sitting on portfolios that look good on paper but are not actually good and are going to have trouble going to raise more money. So you're going to see

• 1:02:43Speaker 01

  a number of the new funds shut down. But then there are people who started in this period of time who have the right kind of companies in the portfolio and will weather the storm and come out the other side. And it's positive. You know, somebody wrote a blog post the other day about juice cleanses, you know, and how it's an opportunity to cut the fat. And that's what's happening in the industry right now. And it can be painful in the moment, a few days in, you know, when you're like, just starting to get really hungry from the juice cleanse. But when you look back on it afterwards, you've ended up in a much stronger position as a result.

• 1:03:15Peter Diamandis?

  And, you know, one of the advice for the companies I've invested in and the companies I'm on the board of, the companies I've co-founded is over the last six months was, you know, top up the tanks. Your goal is to be able to survive the next two or three years and really build the company until we're out of this, out of this. Doldrums, if you would.

• 1:03:36Speaker 01

  For sure. At the end of the day, not running out of cash is your number one job as the founder. And if you can get profitable, fantastic. If you can't raise enough money to get to the point that you can get profitable.

• 1:03:47Peter Diamandis?

  I'd love to share some of your fun companies that you've led and backed because they're extraordinary companies that sing to my heart, so to speak, right, as moonshot companies. I'm not sure where we want to start, but let's cover a number of them and give a sort of a top-level description. And if there's a story as a piece of advice for entrepreneurs as you're telling that, that would be great. Where do you want to go?

• 1:04:14Speaker 01

  Maybe let's start with a couple of the Bill companies, since we've mentioned them before.

• 1:04:17Peter Diamandis?

  Bill Gross, the CEO of Idealab in Pasadena, one of the most consummate entrepreneurs. And just for a moment, Bill comes up with his own ideas and he's one of the most prolific thinkers and entrepreneurs on the planet. We'll typically back them with a quarter million dollars and put a team together and incubate them inside of Idealab on Union Street and then spin them out. A few classics you've backed, talk about them.

• 1:04:47Speaker 01

  Yeah, so we've done now five energy technology companies together. Heliogen, Energy Vault, Carbon Capture, Water from Air and Flowing Energy. And kind of going through those, Heliogen is basically industrial solar, where he can kind of take and concentrate solar energy and get up to temperatures north of 1,000 degrees Celsius. So they can use this to break down thermochemical bonds in steel production, cement production, glass production, and ultimately produce green hydrogen cheaper than any other means out there, is the thesis. And I think a good story on this is, Bill has started this company three times. This is the third iteration of it. And at the end of the day, the best entrepreneurs

• 1:05:30Speaker 01

  Are so focused on I'm going to make the world this particular way that even if they fail twice, they build the company again. And you know, the prior times, the unit economics were not there, the market was not there, the technology was not there. At this point, we believe that it is there. And we have validation of that with significant customer traction. So that's an exciting one.

• 1:05:51Peter Diamandis?

  I love going to the roof of Idea Lab and there he's got the mirror units and it's, you know, it's material sciences and AI tracking software that matured to be able to do this. And then the market's maturing, right? At the same time that you might be engineering and designing it, the world's changing and people's and tax credits are changing and people's, you know, needs are changing.

• 1:06:12Speaker 01

  Absolutely. Um, second one is EnergyVolt. Yeah. So this is grid scale energy storage. You know, if solar and so at this point, solar and wind are cheaper than fossil fuels. The problem is they're intermittent. And so you need some way to store the energy that is generally being produced at a time of day that isn't the time of day that it is needed most. And if you look to like lithium ion batteries, the cost is prohibitive. So what they figured out how to do is basically make a more efficient form of gravity storage like hydro, where they basically take a crane and move around blocks, again, using computer vision to very efficiently store and then put the energy back into the grid when it's

• 1:06:53Speaker 01

  needed. And EnergyVolt and Heliagen have both gone public. Both have major, major, you know, billion dollar plus, many billions, tens of billions of dollars of order book kind of behind the idea and have gotten to the point where they're not just ideas, they're demonstrated technologies and now they're just scaling them out to that customer base.

• 1:07:15Peter Diamandis?

  Yeah, love it. What's next on your list?

• 1:07:18Speaker 01

  Carbon capture. So carbon capture is

• 1:07:20Peter Diamandis?

  Another bill company.

• 1:07:21Speaker 01

  Exactly. Yeah. It's a direct air capture company. So they're pulling CO2 out of the air. And probably two interesting stories from this. One is between the time that we invested first and a later investment, they basically completely pivoted the technology. And when they, when they brought in CEO, he was just telling the story at our annual investor conference last week. When they brought in a new CEO, he basically said, guys, we're about to go scale this thing. You got sixty days to check, is there anything we want to change? And the team basically came back, built a totally new version of the system that was significantly more efficient before they went to go scale. And I think it was a great, uh...

• 1:08:02Speaker 01

  We often think that making changes is going to take longer or be harder than it may actually be. And having a culture where there's space to experiment and as leaders you're actively encouraging experimentation even as the company grows and taking risks like that. Worst case scenario, you keep scaling, the current technology you have, not a big deal. But you give people sixty days. Man, that company is going to be so much bigger as a result. And the second thing is, for a lot of these areas, you've got to pay attention to regulatory. Regulatory is one of the number one drivers, obviously with carbon capture, so it's a bit of an unfair example. But the, when I invested in this company, to be frank, I was pretty skeptical. Uh, I liked Bill and I liked the area, but there wasn't the Inflation Reduction Act yet.

• 1:08:47Speaker 01

  Um, and you were kind of, uh, hoping that the technology was going to get, uh, cheap enough to match up with the current subsidies. Last year with the Inflation Reduction Act, it's basically five times the amount of, uh, incentive for removing CO2 from the air. It took this from like a good heart story to probably one of the most profitable businesses in the portfolio, um, overnight because of that change.

• 1:09:11Peter Diamandis?

  And by the way, this goes, this goes back to the, the, the concept of timing, like living long enough to live forever, right? And it's like, when do you start your company? And can you continue it? Um, do you have enough capital or revenue to keep going until the world shifts in this way to make it much more profitable?

• 1:09:33Speaker 01

  For sure.

• 1:09:35Speaker 01

  Um, so that's a good sampling of some of the Bill companies and...

• 1:09:39Peter Diamandis?

  How about the Greg Weiler companies? You've got a couple of... Greg Wyler investments here.

• 1:09:44Speaker 01

  Yeah, we got two. One is called Toronto Wireless. So they basically have built a way to deliver fixed wireless to people's homes that's significantly cheaper than laying fiber and uses unlicensed spectrum. So you don't have to go buy a bunch of spectrum. And it's kind of like magical almost, where basically they send signal through noisy spectrum and they can reconstitute the signal out of that noisy spectrum, which, which basically has allowed them to go from nothing to a hundred million dollars in revenue in, you know, less than a 24 month period.

• 1:10:20Peter Diamandis?

  Yeah, it is magical.

• 1:10:21Speaker 01

  And scaling super fast.

• 1:10:22Peter Diamandis?

  Yeah, it's, it's the power of computation and, and algorithms. And, and his newest company, where I'm an advisor for some of the companies here, but eSpace in particular, which, you know, having spent 30 years in the space business, when I first heard Greg's pitch here, it was like, dude, you're insane.

• 1:10:46Speaker 01

  Yeah, no, I mean, Greg, Greg is insane, but right. And I, Greg likes to keep things relatively quiet on, on companies. So I don't know how much to say other than he's figured out a next generation of satellite design that significantly reduces the cost and has a lot of customer interest at this point. And hopefully he'll, he'll be sharing a lot more publicly soon. One of the coolest things is basically it, it might be a way to, to address the space debris problems that we have out there. He's been public about this, where basically the satellites are designed to, if they get some sort of debris in them,

• 1:11:26Speaker 01

  entrap it and then kind of gracefully return through the atmosphere, which is, you know, not the core actual use case, but a pretty exciting way to make space sustainable.

• 1:11:38Peter Diamandis?

  Yeah, I, I think the other public item he said is it's 100,000, 100,000 satellite constellation, which is impressive, right? I mean, historically, back in the first satellite constellations, like Iridium at 66 satellites.

• 1:11:54Peter Diamandis?

  By the way, it was supposed to be seventy-seven satellites, which is the atomic number for iridium. And then they changed it to sixty-six, which is the atomic number for dysprosium, but it didn't sound as good as iridium, so I don't think they changed the name. But, you know, it used to be like, you know, ten to hundred satellite, and then comes Starlink with, you know, tens of thousands, and here comes Greg with a hundred thousand.

• 1:12:16Speaker 01

  And ultimately cheaper than Starlink by a significant amount.

• 1:12:19Peter Diamandis?

  Yeah. Though Starlink is up and operational and looking forward to Greg getting his up and going. You want to hit towards the brain?

• 1:12:27Speaker 01

  Yeah, so we've done a lot of stuff in neuroscience, but I'll flag two things there. One is a company called Peridromics that's building brain-computer interfaces. They have their kind of... Yeah, it's fantastic. They...I think they have the best technology in the space for addressing the populations that really need this medically. If you look at folks who've had a stroke and can't communicate, this can really become a way to restore full communication abilities. And they've demonstrated this in animals and should be moving into humans in the very near future. And then, you know, probably the area I'm most passionate about, again, I think about the world very simply as there are a lot of people who actually already have enough

• 1:13:09Speaker 01

  stuff today, and of course, spreading further abundance to them is great, but the number one problem they face is enjoying what they already have. And then there are, of course, huge portions of the world where I do a lot of my philanthropic work that don't have basic needs met, and that's a real problem and a real opportunity to serve and to contribute. But in the West, the number one thing we're facing is a mental health pandemic. You know, there are hundreds of millions of people diagnosed with depression, anxiety, it's probably actually billions when you look at all of the kind of moderate effects of this. And there is one tool that we've known for thousands of years that in a single couple of hour session can basically radically shift that, and that's psychedelic medicine.

• 1:13:52Speaker 01

  And in the 50s and 60s, it became LSD is actually, people don't realize this, LSD is the most studied compound in human beings on the planet. And what you're seeing now is a new psychedelic revolution where basically people are producing novel psychedelic compounds that can help with anxiety, depression, PTSD, and maybe have less psychedelic effects, be shorter acting, and actually fit in a single psychotherapy session with a therapist so that this could scale to hundreds of millions of people. And the data that's coming out of the clinic right now on MDMA, psilocybin, and some of these next generation psychedelics is so promising that you have therapists who've been prescribing SSRIs for a long time clamoring to how do they get access, how do they get their patients into clinical trials?

• 1:14:36Speaker 01

  And we invest in a company called Gilgamesh that we think is the best at these next generation psychedelic compounds, and we also invest in a company called Beckley SciTech that has some other ones that are also complementary.

• 1:14:48Peter Diamandis?

  Anything else you want to flag for the for the community here?

• 1:14:51Speaker 01

  I guess one-

• 1:14:52Peter Diamandis?

  Your favorite children?

• 1:14:53Speaker 01

  One other one is Axiom Space, founded by another kind of serial entrepreneur who's built quite a few exciting things, Cam Gofari, and he's got Intuitive Machines, which is landing stuff on the moon, Quantum Space, which we backed, which is building kind of the infrastructure of cis lunar space between here and the moon, and Axiom Space, which we backed, which has got basically a replacement for the space station, and they've won that contract and are in the process of kind of delivering on that.

• 1:15:24Peter Diamandis?

  You know, one of the things I find so fun and exciting now is the idea that space companies and fusion companies are venture-backed companies. That's insane, right? These things that are always like, you know, they're the long haul government research projects that move at, you know, snail's pace. I mean, there's something like 70 fusion-backed companies, and there are dozens of VC launch companies. I mean, it's amazing. It's amazing. And that means that the entrepreneurs and the technology need to have created a convincing enough case that, you know, there is a relatively decent chance of a near-term return, which

• 1:16:09Peter Diamandis?

  means the speed at which the stuff is moving. You're in a fusion company too?

• 1:16:14Speaker 01

  Two, yeah. Focused Energy, which is laser-based fusion. And recently, like probably one of the most exciting things that happened last year in human history is NIF, the National Ignition Facility in Lawrence Livermore National Laboratory, achieved net gain. Nobody had ever actually demonstrated net gain before in fusion. And it basically took what was a science problem and made it a very expensive engineering problem. And we had been fortunate enough to have some of the foresight for that and backing kind of the best laser-based team and approach out there. And then we also did back Commonwealth Fusion, which has gotten a lot of press and is a magnet-based fusion approach as well.

• 1:16:51Peter Diamandis?

  Okay. Last chance, any other?

• 1:16:55Speaker 01

  Um, I think we've covered a good number there. I guess the last would be aviation.

• 1:17:00Peter Diamandis?

  Okay, you gotta talk about boom.

• 1:17:03Speaker 01

  Yeah, so I'll start with Venus and then boom. So Venus is hypersonic jets. And this really today starts as a defense application. But the promise is, you know, LA to Tokyo in an hour, where you basically launch something like a space plane up kind of above the atmosphere and then it rides waves basically along the edge of the atmosphere.

• 1:17:23Peter Diamandis?

  It skips along the top of the atmosphere, yeah.

• 1:17:25Speaker 01

  Yeah, yeah. And so we're kind of the initial investors in that. And then a little more near term is Boom Supersonic, which actually I was basically one of the first angel investors in back in 2012, 2013. And then by the time I'd started Prime Movers, it had matured enough to where we did like a growth stage investment in this. And Blake is just a phenomenal example of everything you're looking for in a world-class entrepreneur. He has, no matter what has come up, figured out how to tackle the issue. It can be capital issues, team issues, technology issues, partnership issues, some of which were public last year. And he just always finds a way through. And they're delivering a supersonic jet.

• 1:18:09Speaker 01

  And they're delivering one that is economical and that there are pre-orders to the tunes of billions, actually tens of billions of dollars for at this point. And really at this point, you know that the plane is going to be built as long as they have the capital for it and the capital is coming together.

• 1:18:24Peter Diamandis?

  Yeah, I mean... If there's, I was gonna say if there's a category of company that I go and say, uh, too hard, just insane, right, hypersonic and supersonic aircraft and doing it within a small private company and not, I mean, the reason it can be done is because it's in a small private company versus a Boeing or McDonnell Douglas or Lockheed and so forth, but still insanely difficult and, um, you know, I think the size of your cajones, I think is the right French term for taking on projects like that is amazing.

• 1:19:00Speaker 01

  Well, I, I always like to joke, uh, naivete is a good compliment for the kinds of things that we do and we, we have some, some amount of courage and some amount of uh, uh, ignorance that comes with, uh, maybe not having watched some of the failures so spectacularly, uh, from the past, but either way, yeah, we've taken, we've taken on some big projects and I think we're, we're really fortunate that at least so far, a number of them are, uh, are panning out, but we got a lot more work to do to make them reality still too.

• 1:19:29Peter Diamandis?

  Extraordinary. So, you know, watch this channel for world-changing billion-person, you know, uh, opportunities. And, you know, if your success record holds out as it has, and I hope it does, where you're seeing, you know, uh, two out of 10, three out of 10, then some of these companies that portend for an exciting future are going to materialize as well. All right. The question I ask every guest at the end of the podcast, which is, you know, if we were going to do a PML X Prize or a Dakin Sloss X Prize, you know, a hundred million dollar challenge out there that want to inspire entrepreneurs, philanthropists

• 1:20:09Peter Diamandis?

  to go and focus on solving a problem that's stuck or needs to be accelerated, what would you want to do it on?

• 1:20:16Speaker 01

  Raising consciousness. Imagine a prize that, you know, many of us have touched probably either through, uh, being with children or meditation or yoga or an incredible accomplishment or psychedelic medicine, an experience that kind of transcended our everyday consciousness, where we really embodied and were aware that we're not just the little simple creature that we appear to be and that there is this vast interconnectedness between all of us. Imagine a way of making it possible for a day-to-day basis for most people to be living in that state of consciousness, that That's the world that I want to live in.

• 1:20:57Peter Diamandis?

  And it's not pumping DMT into the bedroom while you're asleep.

• 1:21:01Speaker 01

  Well, somebody might submit that to the X Prize, but I think there'd be some side effects of that, too.

• 1:21:08Peter Diamandis?

  So it's basically that through your day, you are, you know, we have amazing books like The Power of Now and The New Earth that that portends to the idea and the power of being present. By the way, one of the technologies I use for being present, I don't have it on now, but I have a watch that on the face, it's not an Apple Watch, it just says "now", just printed on the face, so that if I'm, I wear it on weekends or on vacations, and when I go to see what time it is, it says "now", so okay, you know, be present, because we're always driven by our schedule and what we have to do next, instead of being present. So that's the tech now.

• 1:21:51Peter Diamandis?

  Take me beyond that one second, so you want through the day at various points for some amount to be connected with the

• 1:22:02Peter Diamandis?

  higher level of sort of the infinite wisdom out there?

• 1:22:05Speaker 01

  Yeah, I mean, I'm not proposing, I have thoughts about particular solutions, but I'm more kind of proposing, I take the question as like, what is the most important problem we face as human beings? And that is worth directing everyone's attention and awareness to? And living as our deepest selves, and bringing that level of kind of caring, compassion, and awareness to our moment, to moment being? At the end of the day, if we were all doing that, it matters a whole lot less what's happening with any particular technology. That's kind of what we're all after in a certain sense.

• 1:22:37Peter Diamandis?

  In my, my book that I wrote, Futures Fast When You Think, I closed out the book talking about the future of Brain Computer Interface, BCI, the side of work that Paradromics is doing and said, you know, in the future in which I'm connected to the cloud and you're connected to the cloud and a billion people are connected to the cloud, we're becoming conscious, connected to each other at a, you know, a new level, sort of a meta, a meta level. That would be an interesting solution to it as well.

• 1:23:08Speaker 01

  For sure.

• 1:23:09Peter Diamandis?

  Yeah. Buddy, where can people go and learn about the work that you're doing and your team is doing at Prime Movers Labs?

• 1:23:16Speaker 01

  Yeah, if you just go to our website, it's www primemoverslab.com. So, prime movers with an S and then lab.com.

• 1:23:24Peter Diamandis?

  And the roadmaps you mentioned there, take a second and describe those because I think for any entrepreneur who's looking for, how do I get inspired? Where should I be going? What does the future look like? These roadmaps are amazing.

• 1:23:36Speaker 01

  Yeah, so we, we basically realized we've been looking at all of these opportunities and they broke down into 100-plus sectors that we were kind of analyzing. And we thought it would be helpful to us to understand what's our view on green hydrogen. Is that a 2020s, a 2030s, a 2040s thing on psychedelic medicine, on any of these particular areas? And so we went and kind of took all the research we had done and published and organized that into this roadmap that takes each of the key technologies we think are coming over the next few decades and maps out how we expect them to evolve and what are like the current investable theses versus future ones. And we are not omniscient, so I'm sure there's lots of stuff that we're wrong about, but we'd love for people to check it out and

• 1:24:18Speaker 01

  give feedback and ask questions and engage with it. And we recently held a conference in the fall with 40 academics kind of giving their perspectives and takes and entrepreneurs and other folks from industry, trying to kind of refine and hone this to make sure we're presenting as viable of a vision of the future as possible.

• 1:24:36Peter Diamandis?

  Beautiful. Ladies and gentlemen, a dear friend, a brilliant venture capitalist and entrepreneur philanthropist, Deacon Sloss. Deacon, thank you for joining me today, buddy.

• 1:24:46Speaker 01

  Yeah, thank you, Peter. It was good to connect.

• 1:25:00Speaker 00

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