Four Brilliant Frames for Finding the Next Big Thing, With Venture Capitalist Josh Wolfe. Plus, What's Eating Tech Stocks in 2022?

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Check out the Ringerverse on Spotify or wherever you get your podcasts. This episode is presented by AT&T. America's First Network is also its fastest and most Reliable based on RootMetrics United States Root Score Report 1H2025 tested with best commercially available smartphones on three national mobile networks across all available network types. Your experiences may vary. RootMetrics ratings are not an endorsement of ATT. When you compare, there's no comparison. AT&T this episode is brought to you by Zendesk, introducing the next generation of AI agents built to deliver resolutions for everyone with an easy setup that can be completed in minutes, not months. Zendesk AI agents resolve 30% of interactions instantly, quickly giving your customers what they need. Loved by over 10,000 companies, Zendesk AI makes service teams more efficient, businesses run better, and your customers happier. That's the Zendesk AI effect. Find out more at zendesk.com Today's episode is an intellectual feast. It is about how to see the future clearly. And because actually seeing the future is impossible, it's really an episode about how to see the present clearly. Today's guest is venture capitalist Josh Wolff. We turn talk about the state of technology, the stock market meltdown in the last few months. We play a game of overrated versus underrated for the metaverse, NFTs, the space economy. But mostly this is an episode for Josh to share with us his big brain and his four big theories for predicting the future. Four mottos, I guess you could say, for spotting the next big thing. And I had about as much fun in that segment as I've had doing anything in this show. So I want to start with a brief story about how Josh and I first met. It was three years ago. I was in New York City. I was hanging out with a friend of mine who works at the intersection of finance and media. And he asked me, derek, do you want to go to this off the record dinner at a steakhouse that I'm going to? We're going to have wine and steak and smart people. And I said, well, those are in fact my three favorite things in the world. Smart. So you should definitely count me in. So I arrive at the steakhouse about 10 minutes late, because arriving 10 minutes late to things is my fourth favorite thing in the world. And I walk into this room and see the table and I'm like, okay, I definitely do not belong here. I don't think I can name all the names because it was in fact an off the record dinner. But they had me seated between. On the right, a Nobel award winning economist who is also a prominent media figure. To my left, a chief economist of one of the five largest banks in America. Across the table is a New York Times bestselling business journalist and one of the most famous tech commentators in the country. I grab my seat and immediately I'm like, all right, I'm gonna have to chug at least three glasses of wine before I have the courage to say my name, much less offer an opinion on world events. And then Josh Wolf walks in and he basically blows everyone else out of the water. Like tech, science, politics, China, art, culture, philosophy. In 2018, LeBron James put up 51 points, eight rebounds and eight assists in Game 1 of the NBA Finals against the Golden State Warriors. Josh Wolf put up a 51.8 N at that table. And anyway, I'm not sure that I belong there at all. But I am very pleased today to bring you the very best of that evening. Josh is the co founder and managing partner of Lux Capital, a venture capital firm that backs entrepreneurs and scientists working on projects like AI and flying robots and synthetic biology and satellites and space and drones. His brain is a Wikipedia. He talks like he's always just come off of his 13th cup of coffee after an extremely caffeinated afternoon. And I cannot wait to for you to discover what I found out for myself in a steakhouse in New York City three years ago. And that's that Josh Wolf is really, really friggin smart. I'm Derek Thompson, this is plain Eng. Josh Wolf, welcome to the podcast.

Good to be with you, man.

How are you? I'm doing good. Josh, tell me a little bit about Lux Capital and how you try to distinguish yourselves as a venture capital firm. Since there is so much competition among VCs these days. What is it that makes Lux special?

There are generally these two arrows that I'm always trying to find. One I call the arrow of inevitability, and one I call the arrow of impossibility. The arrow of inevitability is the certain directional arrows of progress in almost every domain of technology. And again, just being a student of history can help to inform what you see in the present and what might be happening in the future. And then the arrow of impossibility is when everybody else believes there's no way that that's going to work or that just ain't so. And if they're wrong and we are right, we have entered at a low valuation reflected by the fact that there isn't a lot of demand for the thing we're investing in and our future return should be really high. So those directionals, hours of progress, you see them in lighting. You know, we went from incandescent, from a flame, you know, in a, you know, in a fire pit to an incandescent bulb to a light emitting diode. Undeniable directional arrow of progress. That light became what was once more heat than light and is now more light than heat. You know, an LED is cold to the touch, whereas a flame is very hot. In automotive, we went from horses to horse drawn carriages, to cars, to electric cars, to autonomous electric cars. We are not going back along that hour of progress to having horse drawn carriages in the streets strewn with manure. Maybe in some cities you might same sort of thing where you look at communication protocols, you look at semiconductors, you look at computing, we went from spinning mechanical disks to solid state everything. And so there's certain directional arrows of progress that you can find those arrows of inevitability. And it doesn't point to who the entrepreneur is or what the technology is or who the company, which company it is, but it gives you a higher probability of being right. And then I read voraciously and I'm just always looking at what does everybody else believe and, and where might they be wrong. And when those two lines intersect, it's perfection.

So for those of you out in podland, you'll already understand two things that I love about Josh. Number one, his brain is an encyclopedia. Number two, I like to listen to my podcasts at 1.5, 1.75 speed. Josh is pre programmed to speak at 1.5 1.75 speed. And I always appreciate that for information density, I suppose you could say. So why don't you tell me about one of the companies in your portfolio that you're particularly excited about that maybe lives at this intersection of arrows of inevitability and arrows of progress.

It sounds a bit sanctimonious and righteous, but we like to say that we invest in matter that matters, physical stuff that really has meaningful things. And many times those things tend to have very few competitors because they're so technologically hard that it's just the number of People that might be able to do what these people are doing is few and far between. In this particular case, the inventor of this company, Ikon Eikon, is a guy, Eric Betzig. Eric had the distinction of winning the Nobel Prize. He, he won the Nobel Prize because he was looking out into the outer regions of celestial ether to find biology, you know, to look for aliens and that kind of stuff, inventing new forms of telescopes. And so that itself is interesting. But he decided, okay, as is often the case with technological breakthroughs, almost always preceded by the words, huh, that's funny. He realized that by inverting the technique he was using, you could actually look not to outer space, but to inner space, by which I mean being able to look inside of cells in real time to see what's happening. Now, the reason why that's important is we've never been able to do that before. You can use a microscope, you can use a high resolution microscope, you can look at a cell, but you're typically looking at something before and after. So if you introduce a drug into a cell or a culture and you are a pharma company trying to figure out what is the quote, unquote mechanism of action. How does this thing work? How does it do the thing it does? It's almost like looking at a 711 security video footage camera and you see 7am in the morning, you see 3pm in the afternoon. The store got ransacked, a bunch of stuff was stolen, the Cheetos are on the floor, but you don't know who the guy was that came in and robbed the place. So now you can actually see in real time, effectively almost in slow motion, what happens when a drug, a molecule that's designed, binds to a protein, is sitting there in the cytoplasm, gets metabolized by mitochondria, causes the cell to emit hormones, and a protein then reacts with another protein. We've never been able to see that before.

This reminds me, Josh, of a phone call that we had about a 15 minute phone call last summer, which was probably the Most information dense 15 minute phone call of my life. And you had this amazing riff on the power of tools. You said, imagine a world where Jimi Hendrix existed, but the electric guitar did not. Where Babe Ruth existed, but the baseball bat did not. Or where Steve Jobs existed, but the microchip did not. And I'm hearing you and what you're describing is a tool. And it's fun to imagine that this science fiction microscope that captures security video footage of drugs interacting with our Cells could allow some genius in 5, 10 years to develop a breakthrough drug that would previously be impossible to conceive of, that you are building an electric guitar that we will later place in the hands of, of a pharmaceutical. Jimi Hendrix. So now that we have people with a sense of who you are, what Lux is, I want to get your big brain on the news of the year, which is that tech is getting its butt kicked in the stock market. Stocks have been punished. The Nasdaq right now is down 14% this year. The Tesla, Facebook, Meta, PayPal, these companies are down 30, 40, 50% in the last two months. Josh, what do you think is happening and why is it happening now on.

Tech stocks broadly, I have been wrong for the past two or three years, prophesying, predicting in my general default cynical stake or skeptical stake that the end was nigh and that the current turn would come. And I've been wrong. So, you know, broken clock might eventually be right twice a day. I have been wrong for the past few years, anticipating that the excess of excesses, the abundant speculation, the mass retail participation, the availability of participation in part because of increased margin now at all time highs, meaning people borrowing stock and borrowing money to invest in stock, last seen at these levels at the last two major crises of 2007, 8, 9 and 99, 2000 were all at all time highs, compounded by people being home sports being canceled, not being able to gamble on athletics and instead gambling on stocks. The echo chamber of social media and the social proof that whatever was going up would continue going up, exacerbated by the positive feedback effect. That belief in it would further increase the valuations of these companies. None of it was predicated on fundamentals. And so, you know, you saw this first with Peloton, I think in a significant way. You've seen it now with almost every major tech company at the time that we're talking. Now we're just maybe a week or two away from the fact that Facebook had its largest, or really the market had its largest ever one day loss of value in a company, you know, in excess of $225 billion. And notably within a day of that, you had Amazon with the market's largest single day gain of in excess of $119 billion. And so what that tells me, and added another moment which was snap down 24% in one day and then up 50% the next, there is just mass volatility. Now what that to me is suggestive of is that there are structural changes afoot in the market for the past 10 years you have had a rise of passive indexation, meaning people were investing in indexes and ETFs and arguably that's a form of quant trading. When I say that, what I mean is $in algorithm just says buy, buy indiscriminately. Whatever's in that index, if it's market cap weighted, if it's value weighted, whatever it might be, just dollars came in, stocks went up. Well, on the downside, what happens, dollars come out, stocks are going to go.

Down, in some cases indiscriminately, just to jump in here. So it sounds like your stock theory has three parts. Number one, this was going to happen eventually. The level of speculation, retail gambling meme, stocks getting bid up by bored people sitting at home. Things were just getting too weird and the market was becoming a little bit like a late game. Jenga Tower. It wasn't a matter of if things were going to fall down, but when. Number two, once that Jenga Tower started to tumble, once the market started to fall, whether it's because of inflation or anticipation of interest rates going up, the amount of passive trading, of algorithmic trading accelerated the decline of stock prices after years of accelerating their increase. Which frankly tells me that after years of irrational exuberance, we might be seeing a little bit of whatever the opposite is, irrational doom. Number three though, you're saying we're also seeing a revenge of fundamentals, the revenge of profit margins, the revenge of value investing, the revenge of unit economics.

What were those words? Profit margins, unit economics.

This is an ancient Greek term that actually hasn't been used for many generations in the stock market.

Yes, here's my long bet for you. If you could get copies of Seth Klarman's Margin of Safety, if you can get Charlie Munger's or the book about Charlie Munger, poor Charlie Salmaniak, if you can get Buffett's letters. Those things I remember when in like super scarce value as everybody rushed out, you know, post.com crisis in one oh two and they started, you know, went from these 50 basis.1% declines on a daily basis, which is what we're seeing now. I think we might be March 2000 going for an 18 month period until October 2001 where by the way, many companies dropped 80% in value and they dropped slowly because that was the slow decay of people's belief being shaken from them. So yeah, go back to you. Yes, profit, profit margins and unit economics.

I want to get to your philosophy of the world in just a second, but I actually just Want to pin you down on the prediction that we are back in 2000, right. In addition to the nihilism, I want to pin you down on the 2000 prediction in 30 seconds. What's the biggest similarity between right now and the dot com crash of the early 2000s? And what's the biggest difference?

Biggest similarity is some of the composition of the investors. Retail investors, first time investors, people that never experienced loss, people that thought markets could only go up, people that never saw layoffs and rifts and just wild abundant speculation of the kind that was highly correlated by which everything was going up at 1. Today you see the same sort of thing, whether it's crypto, meme stocks, high tech stocks, growth. The main difference is interest rates. Interest rates then were three and a half, going up to four and a half. You had the Y2K boom bust. It was sort of a non event. But you had Greenspan that began tightening and arguably in hindsight, at the wrong time.

Interesting. So similar dynamics with retail investors and irrational exuberance, but a little bit different because inflation rates are significantly lower than.

They were 22 years ago, interest rates much lower. So you can argue there's irrational. What else are people going to do with their money? The classic Tina, there is no alternative. I would say there are companies that have real fundamentals and real sales this time, whereas the main metric last time, which in hindsight of course was laughable, but was eyeballs and clicks and those things didn't necessarily correlate to monetization. You still have a real ridiculous number of companies that have gone public in the past two years that have no sound business. And I do think that there will be a mass shakeout and I think the next wave that we're going to see in markets public and private is consolidation. Just a wave of M and A.

Interesting. All right, moving on to your philosophies. In addition to we are all going to die, we've spoken a few times and look, cards from the table. I am just a huge sucker for great frames, great memorable ways of thinking about the world and the future. And I truly think that the Josh Wolf frame store is one of the best frame stores that's out there. You have the Tiffany's of frame stores, just some really compelling philosophies that I think investors can learn from. I think writers, entrepreneurs, marketers, artists can learn from. And I want to walk through four of my favorite frames that I've heard you spiel about on podcasts or at dinners. So first, you have a very sophisticated two word Question to figure out what the next big thing is. What are those two words and why?

Well, just be forewarned. You really do need a PhD to understand this. So I'm going to try to simplify it, but here we go. What sucks? What sucks? That's it. Every entrepreneur that has ever started anything looks around and basically says, huh, that sucks. You know, there's got to be a better way to create a car. There's got to be a better elevator. There's got to be a better zipper. There's got to be a better way to wheel a suitcase. Whatever it is, everything around us was somebody looking at something and say, that sucks. I can do it better. Now. The beautiful thing about that is they were driven some sort of chip on their shoulder or whatever it was, to basically make their name, make their wealth, create status, whatever that human force is that pushes that, it's just an absolute inevitable. And for me, I literally ask everybody, what sucks? And they're like, oh, I just discovered this problem. I can't believe this thing existed that way.

How do you develop your what sucks? Muscle? Right? There's lots of people. I go online, I go on Twitter. People are complaining all the time. They're complaining about the world all the time. But like I sometimes say, they vent rather than invent. They complain and complain and complain, but the solution aspect of that equation never comes into the picture. And so I wonder how you can train yourself to be a venter who is also an inventor.

I love your framing there of venting and inventing. Some people here are complainers, But I think for the vast majority of the team at Lux, we're listeners, and you're going around and listening to people. People vent and say, that sucks. And so we're constantly asking the question, what sucks? But somebody else has basically said, not only does it suck, I'm motivated to fix this. Now, I can assure you that there are people that are so frustrated and angry by customer service that they have figured out AI ways to, like, I'm going to replace every customer service person here. There were people so frustrated by the 1 percenters that were using their black cars and, like, everybody should have access to this. That a guy decided, hey, we're going to create this thing called Uber, right? And then you. You launch this competition. One of the beautiful things about these things when they work is people look back and are like, I can't believe it was ever that way before, you know? And so there's a complacency that we have with the way something works. The social proof of seeing everybody else just using it. And then somebody stands out from the herd. You know, they're the black sheep that is either so emotionally riled up that they're like, I'm just, I'm literally going to like change this industry that they go and do it. And our job is to find those people. Whether they're trying to shorten how long or how much it costs for discovering drugs, whether they are trying to invent faster transportation and do vertical takeoff and landing, flying cars, whether they are trying to invent a brain machine interface, Somebody is always out there just basically saying, that thing sucks and I'm going to make a better version of it.

All right, so frame number one is what sucks. Frame number two is a little bit more sophisticated. I guess it's four words rather than two words. Science fiction, science fact. What is this frame? What are some examples? Why is this important?

You know, I grew up on escapist science fiction as a kid. I grew up in Coney Island, Brooklyn. I just, I loved science fiction. It was the future. It was what was possible. It was the epitome of change and technology. And the amazing thing, by the way, of course, and I believe this is true throughout all history, in everything we've ever done in venture capital. I am extremely, as you can probably tell by my voice, and like, ebullient and optimistic when it comes to science and technology. And yet I am also very cynical or skeptical when it comes to human nature because businesses change, markets change, technologies change, but human nature is a constant. So every story, it's the same Shakespearean drama, different setting, more or less gravity, different clothing, but it's the same human dramas, but the technologies change and they solve different problems. And every technology that somebody invents in science fiction ends up creating new problems for new technologies even further in the future to solve. And that's just the history of it. We started cataloging this and it became sort of amazing. And at first, I have to be honest, it was sort of just like, huh, that's sort of funny. Like, look at all the stuff we funded that has come out of sci fi. But over time, it actually became a playbook. And I will tell you, we are not the only ones. So you look at pod racing from Star wars, we backed a guy, Nick Korchowski, who started this company, Drone Racing League. And it literally looks like it's right out of science fiction, you know, with these people racing drones, wearing first person view goggles, doing these hairpin turns, flying these things at 100 miles an hour. It's just wild. You look at 3D printing and 3D scanning, I mean, straight out of science fiction. There was this old Michael Douglas movie movie called Disclosure. Not a particularly great movie, but a very cool scene that I've captured where he scans himself and enters this virtual reality world. Again, going back more than 25 years ago. 3D printing itself is basically Star Trek's replicator. Being able to look at some of the designs, even of the aesthetics of Motorola. Startac came straight out of Star Trek's tricorder. And so there's all kinds of inspiration between these things. Drones, satellites, space rockets. Many of the engineers that are working on these very hard problems were absolutely inspired by something that they read or saw as a kid. And so I always say that either our scientists are becoming way more creative because that gap keeps shrinking between sci fi and sci fact, or our sci fi authors are becoming less creative. I actually think our sci fi authors at the moment, for the past 10 years, have had a little bit of a bias towards a dystopian future. Less of an optimism. And they've also been taught by the zeitgeist about climate. So every major sci fi movie today is about climate catastrophe. Very few books are talking about nuclear energy.

Right?

Like, it's just like that, to me is the answer to climate. But we'll get there.

There's a corollary here. There's a corollary here that I want to ask about. Because, you know, another trend through the history of technology isn't just first we imagine it in science fiction and then we actualize it in science fact, but also this interesting trend where we invent things for minorities, for people with disabilities, that gives them the ability to go from disabled to abled. But then that technology is adapted to help people go from human to superhuman. So you think about something like optics technology. In the 1400s and 1500s, optics tech helped the visually impaired read when Gutenberg's printing press was proliferating all these different things for people to read. But then Galileo takes the same technology that plays with curved glass to magnify objects on the other end of that curved glass turns it upward, kind of the opposite of Akon therapeutics, upward at the moon, and then uses it to see objects far away in space. Are there other examples you can think of where people move from? Where that which is built to help people go from disabled to abled helps other people go from human to superhuman?

Totally. And you nailed it. Vin Cerf, who you talked to, he was hard of hearing. And part of the original design of arpanet was even thinking about people who were hard of hearing to be able to communicate through visual text.

Arpanet being the precursor to the Internet that the Defense Department built.

And then text to speech, speech to text. You know, as a kid I had the Franklin. You know, what was it? Speak and spell. You know, that started as a handicapped assistive device. When you look at wheelchairs, you know, the Segway itself really was originally designed by Dee Kamen with this idea of having this quad wheelchair that could actually climb stairs. There's a social component here too, which I think is very interesting. And it started with in the early 80s, the Disability Act. People basically advocating for design and technological inclusion and improvements. One of the most amazing things that I think people take for granted in this current era of instant on E commerce and now robots delivering things on sidewalks. Curb cuts, Curb cuts. This was such a simple thing. But curbs used to not have that little ramp dip. Well, you know who the main beneficiary of that over the past 30 years since that became a law are moms pushing strollers.

Okay.

The second greatest beneficiary is every single one of us who benefits from our daily deliveries that are coming from Amazon and Whole Foods and all our other places that are delivering with the guys that are pushing these giant carts up and down New York City and elsewhere. And now you have robots that are able to actually navigate street corners and cross streets all because of something that started with disabilities. So huge fan of this idea of the adjacent possible. You know, this idea from Stuart Kaufman.

Say a little bit more about what that is, what the adjacent possible is, because that's an idea that did it emerge from the Santa Fe Institute. But then also I think Steven Johnson wrote about it in his book Where Great Ideas Come From. But it's a fun idea at the sort of frontier of science and tech, this idea of the adjacent possible, well.

Drawing on what you said originally, which was an idea taken for one intent, ends up getting used in another unintended way. One of my favorite examples, a lot of things come from early adopter industries. Gaming is a big one, and so video games, because, you know, it's silly, it's trivial, people are tinkering, gets in the hands of lots of people. 3D depth sensing cameras really saw their first major expansion with huge volumes, declining price points. So it got cheaper, became more available with Xbox and PS4 and Dance Dance Revolution and these, you know, 360 cameras where your kids are in front of them and they're dancing and and showcasing. It turns out that that camera inside. One engineer that we backed in a company called Matterport, now a multi billion dollar public company, but at the time it was like a $10 million little tiny thing, no revenue. He said, what if I took a bunch of these little 3D depth sensing cameras from an Xbox or PS4 and actually put them in a camera, press the button, have them do a 360whirl and be able to capture physical spaces around us. We said, okay, well that could be sort of cool. Fast forward we get into Covid and the entire real estate industry with no house showings, with no ability to for people suddenly and this thing went from, you know, not so great quality to just incredible high resolution. Photo quality is like the tool that became indispensable. So there was no way that anybody that was designing a depth sensing camera for Microsoft, Xbox or PlayStation, Sony PlayStation, PS4 ever thought, hey, this little fun thing that we might use, almost like the, you know, old school Nintendo Power Glove or something like that, was going to be used as a multi billion dollar product in the real estate industry. So we're always looking for those adjacencies. How is something in one domain going to be seen by somebody else who might have that inspiration of something sucks and then reach into that other guy's domain and pluck it and reapply it. And I think that that is the essence of most innovation. All new things come from combinations of old. The more old stuff we have, the more probabilistic it is that can be combined in new ways and often super surprising ones.

So good, so good, so good.

Score.

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It's Time to be great. Hey, friends, it's Karamo, talk show host, life coach, and your next best friend. You just don't know it yet. I'm hosting a new podcast called started on WhatsApp brotherhoods. We're going around the world to explore male friendships and all the wins, challenges and bonds that are made in WhatsApp group chats. And that's exactly where you can listen to it, right in the app. It's streaming on the official WhatsApp channel. Just open the app and go to the updates tab to start listening. While you're at it, message your best friend and make sure they listen too. I'll see you there. Frame number three. This one is just three words, but they're three words that sit on top of slightly more complicated ideas. This is your Twain, Fitzgerald, Schopenhauer theory of the future. Tell me what the Twain, Fitzgerald, Schopenhauer theory of the Future is.

I'm a voracious reader, very intellectually competitive. I get information anxiety when I find out that somebody didn't know something. But I loved Mark Twain, by the way.

I learned the term information anxiety from you. And I love the concept of information anxiety, especially as it compares sometimes with status anxiety that some people I think in conversations are status anxious. How do I be right and then other people are information anxious? Ooh, I might be wrong. I can learn something and then become right. And I think it's a lovely idea to think about how you can be fruitfully anxious if you're informationally anxious rather than status anxious. So that's my little sidebar. But please continue with Mark Twain as a further sidebar.

You and I hit it off because you're a voracious writer and reader. And there's people like Michael Mauboussin, one of my partners, Sam Arbusman. Every time you talk to them, there's just this super pro social positive, like, what are you reading? And they have like 10 books, you know, fiction, nonfiction, old books, new books. Whereas other people, I might be like, hey, what are you reading?

Ugh.

I have no time to read. Like, you know, can't hang. Okay, so these three words, Twain, Fitzgerald, and Schopenhauer, each is a famous author, and each of those famous authors has a renowned quote. And each of those quotes to me dictate where you should spend not your money, but the most valuable thing you have, which is your time and your attention. So let's go through each of the quick quotes. Fitzgerald's quote was, the test of a first rate intellect is the ability to hold two opposing ideas in your head at the same time and still retain the ability to function. So this, to me are front page newspapers. This is the front page of newspapers where it's the thing that everybody is talking about. You might have a debate about it, but it's really well known. So there's no scarcity, there's no real rare ideas. It's going to be relatively efficient pricing as it relates to stocks, but everybody's paying attention to it. This might be things like gold. Gold is a shiny piece of metal. Gold is nothing but a shiny piece of metal in an otherw fiat world. Or gold is this great store of value. Somebody might say China is this great engine of growth and the future of humanity and it's going to be the number one gdp. Or somebody might say China is nothing but lies, damn lies. And government statistics and Chinese government statistics. Somebody might talk about the Olympics and somebody might say they're not important. But things that just everybody's talking about tend to have low value, particularly for those of us that have information anxiety. And so when I read the newspaper, I'm actually looking not at page A1 or A2, and I actually try to read the physical newspapers or at least the digital replicas of them, because there's value in that. I will look at like C22, where the editors have decreed that a little small inch in the bottom left of the page is not that important. And then I have a differing view of the magnitude and the importance of that information. So that leads to the second quote, which is Twain, which is, it ain't what you don't know that gets you in trouble, it's what you know for sure that just ain't so? And so where is their certitude that things will continue as they are and if they don't, the consequences are going to be really bad. So this is your sort of classic Nassim Taleb story of the turkey, where every day the turkey goes, and from the time it's born, it's fed, it gets fatter and fatter and fatter. And they would presume, rightly, linearly, that life is really good. And then all of a sudden Thanksgiving comes and chops off with its head. And so same thing happened with the housing market. You know, housing prices could only go up and then all of a sudden, boom, you know, massive housing crisis. Same thing. Probably today you have an entire generation that has not seen a downturn in 14 years, a true downturn. So the average person that graduated college 21, 22 years old is today 36 years old. The average person in their mid-20s today was 10 or 11 years old back then. There is a mass generational amnesia which is par for the course of. People who have not seen a downturn believe that stocks can only go up, Tesla can only go up. Growth can only continue until it doesn't. So that's a Twain situation. The third area is Schopenhauer, who said that talent is hitting a target that nobody else can hit, but genius is hitting a target that nobody else can see. And that is really what we do on a daily basis. We are trying to find those entrepreneurs who often, with arrogance of the highest order, say that this is the way that the world should look. This is the technology that has to be in everybody's hands. And then we go and back her or him in doing that. And those are people that are inventing brain machine interfaces and coming up with new drugs and new microscopes and deciding that they want to launch things into space and manufacture. They are the people who see something that everybody else doesn't. And you go back to those intersecting arrows, they found the technological inevitability, that arrow of progress. And it's beautifully matched against this perception of impossibility. When everybody else is like, that'll never work. Or that's 20 years out. And then they've got that chip on their shoulder and they're like, I'll show them.

I love this because I am not a venture capitalist, I am not an active investor. But these ideas I use all the time as a writer. So exploding false certainties, that's zagging. That's writing. My most read piece in the last two years about hygiene theater. Everyone thinks that this disease lives on surfaces, so they're dunking all their vegetables in soap and water when we know for a fact that the coronavirus spreads more efficiently in the air. So there is and false certainty. I love the idea of bringing that which is important but not obvious into the important and obvious realm. Right. That's a little bit more Schopenhauer. Right? Seeing that which people aren't paying attention to, setting that slightly askew target and then pulling it into everyone's frame of mind. That's what great journalism does. No one's paying attention to this really important thing. Let's have a conversation about it. One of the things I love about the Fitzgerald quote, about keeping two things in your mind at the same time. My wife is a PhD student in clinical psychology and she has described to me this theory in dbt, dialectical behavioral Therapy, which is often done for people with borderline personality disorder.

Marsha Linehan. Yeah, yeah.

Yes. Marsha Linehan, the American psychologist who came up with dialectical behavioral therapy. Josh, I thought I could get something by you, just one fact by you. And it turns out that I cannot. So there's this lovely theory called wise mind. And wise mind assumes that the person's psychology is torn between the reasonable mind, which is driven by logic, kind of like the Star Trek data that lives inside of our brain, and the emotional mind that is driven by feelings. But there is a beautiful synthesis that can happen when we hold our feelings and our reasonableness side by side at the same time. And sometimes for me, this is just really useful in analyzing the news. What are the facts of the case and what are the interpretations? This is something I ask on plain English all the time. But it's also so useful in life. Like imagine, for example, if you, Josh, you walk into a room, you say hello to your wife and kids and they don't look up at you. They're still looking at their phones, they're watching tv. You might storm out of the room and say, oh my God, my wife and kids are hate me. They never pay attention to me. But then you can sit with this sort of wise mind exercise and you can say, let me check the facts here. The facts of the case are I walked into a room, I said hello to my family, they didn't respond. Now I check my emotions. My emotional response is that they didn't respond because they're so, so angry with me. Now you can hold those things side by side while also imagining other interpretations for why they didn't look up. Maybe they didn't hear you, maybe they were just distracted. And I think it's so lovely to imagine that in the psychology of our normal life or in the analytical mode of reading the news, interpreting the news, or trying to pick the next big thing. In vc, there's this beautiful wisdom that comes from synthesizing our reasonable mind and our emotional mind.

I love that. And yes, DBT is something that I think should be taught at companies. I think kids should learn it at an early age in what, whatever construct it is taught the idea that, yes, there's two opposing ideas of sort of the emotional mind, which is your reactive mind, you can think of in Some cases System 1 or System 2 in a condiment sense, and your analytical mind. And there are people that have natural dispositions for one or the other. I am a high twitch, fast response person. So my natural default is to Assume. And I remember, first time growing up, Cornell in Brooklyn. I show up at Ithaca Cornell, freshman year, somebody's like, hey, nice haircut. I'm like, what are you trying to say? You know, my first instinct is they are being sarcastic and snarky and they're challenging me, you know, and I'm ready, I'm girded for a fight. So some of us have blueprints where we're primed for one thing or the other. It has made me. And I wish I would have learned some of these skills way earlier in my life because I would have had less relationship conflicts in some cases. But whether it's with CEOs, board members, fellow partners, just the idea that you never go to extremes, which itself is a meta violation of that.

Right.

But you try not to go to extremes. It's not like you're always this or you're never that. Right. That things are gray. And this idea of just. Yeah. Trying to find the wise mind in these situations, which is not the default thing, but what a beautiful way to avoid conflict and help with people that get easily dysregulated. I think it's an absolutely beautiful technique. I wish I would have learned it way younger.

I want to talk about the fourth category that I'd written down, the fourth frame that you have that I think is really useful. I think of it as your triple failure philosophy. Tell me your triple failure philosophy.

This is mostly a protective psychological mechanism. So let's say that this really derived not from brilliant insight, but from my own psychological desire to prevent vulnerability and anticipate bad things. It's failure comes from a failure to imagine failure. So failure comes from a failure to imagine failure. The idea here is if you can anticipate the things that can go wrong, whether you are an investor or an active venture capitalist like we, you are trying to throw time or money or talent to think about the things that can go wrong, prevent them from happening and reduce and eliminate risks. I'll give you two adjacent ideas. One is that a lot of people celebrate entrepreneurs as these heroic risk takers. And I think they are the exact opposite. They are risk murderers, they are risk killers. They identify risks and they kill them. They are not jumping off of bridges and jumping out of planes and doing crazy risk taking things for the thrill. They're often identifying what could go wrong and they're eliminating them. Whether that's internally personnel, whether that's, that's a competitor, whether it's technology, I love.

That for some reason. What that reminded me of is I Have a friend who's writing a book about umwelts, animals that have a different sensory appreciation of the world. So you think of a hound dog. It smells very well. It senses the world through smell. There are other animals that are extraordinary at seeing in the dark, other animals that have extraordinary taste. What you're describing is a kind of risk, heavy umwelt. When you look into the world, you see risks. You have a taste for risks when you look at the world, whereas other people might only see the opposite. They only see opportunities. They only see sort of a Pollyannish gloss to the world. It's really interesting to think that. That entrepreneurship is not about being. Having a high aptitude for risk, but rather about having a advanced taste for risk. They know what risks are worth taking and what risks are not worth taking because they process the world by being so. But they process the world so visibly through risk. I wonder if that sort of connects to you. If that connects to you. You're a personal umwelt.

It does. And I'll give you two sort of adjacent things to that. One is, I sleep well when I know that my entrepreneurs, the people who are running the companies whose board I sit on, are not sleeping well, that they are stressed and worried. When I say, hey, how are things going? They're like, everything's fine. You know, God forbid they ever say, oh, yeah, this competition that just came into this marketplace, that's validating for our. No, nothing is validated. So when somebody is freaked out and stressed, I feel a sense of calm because I know that they're worried, and I don't have to import their worry and take it on. So that's number one.

I want to say very quickly, I feel this way about worry, like, within rooms. Like, if lots of people are freaking out about something, I don't freak out about it because I'm like, clearly the room has already reached threshold of freakout that I think is necessary. But when I'm in a group and no one's freaking out about the fact that, like, we haven't, you know, whatever, made a dinner reservation in a foreign country and we might not be able to find a restaurant to eat at, I freak out because I'm like, we're not even close to the threshold of freakout that is necessary within this group, and I need to lift us up. I'm naturally, I think, a relatively cool and collected person, but I share this theory of threshold freakouts.

Well, the other component of this is, I think it's the secret of happiness. Failure to imagine Failure. What do I mean? You know, if you're always expecting the worst, again, might not make you the most happy party person, but your threshold and preparedness for bad news is so high that when it doesn't happen, it's actually a positive thing. This is going to sound super dark. Every morning I wake up out of. I've got three kids, 12, nine and six, two girls and a boy. I assume that one of them is going to come to my bedside, as they do, and say, daddy, my throat hurts. And you know, and I feel. And there's like a lump there. Every day, every day I walk out of the house and I think I am going to get hit by an E bike delivery guy and I'm gone, right? And so I think that just like the sort of memento mori, the constant reminder, shedding that illusion that we're not all going to die, that we are all going to die, it just makes me appreciate every single day. And so I think being risk conscious makes me happier. Because the very definition of risk is more things can happen than will. And most of those things don't happen. And when they don't, it makes me happy.

Last thing I want to do with you. Very, very quick game, if you're down for it. Of overrated versus Underrated.

Yes.

Metaverse Overrated. Why?

Well, again, sci fi sci fact. This is something that really started with Neal Stephenson. It's been basically stolen via Ready Player One and Ernest Klein and beautiful book, the first one. That is Zuck's playbook. I mean, people on the board have said, this is Zuck's playbook. And so I don't think that people truly want to be ensconced in headsets for long periods of time. I will say the thing that I've changed my mind about is there are large groups of people, the vast majority of the world, that are living in squalor and crappy conditions and their lives are not great. And we already have people who come home after work and don't find meaning and purpose in community and feel dejected and go into social media or take Tock or movies or sports or whatever. And so there is an element of a large group of people that we will be saying, my God, get out of the metaverse and get in the real world. And they will say, the metaverse for me is better than my real world. And I think there's a social dimension there. So I'm sympathetic. But I do think at the moment it's overhyped, like every technology. And the real people that are going to be developing the Metaverse. I don't think it's going to be Facebook. I think it's going to be somebody else that comes along just as Facebook came along when we were all focused on Google or Microsoft. And I don't know who they are, it's my job to find them. But I'm convinced it'll be some young junior folks that are like 16 years old right now that have a better conception and are going to go do it and become billionaires in the process.

Overrated. Underrated. SpaceX underrated.

I am very publicly critical about Elon Musk as his relationship with the truth when it comes to Tesla. I think that SpaceX domestically has inspired a generation. We have started companies like or funded companies that have been started like Hadrian that's doing manufacture using robots for space, replacing the 3000 mom and pop shops that are doing aerospace engineering, and Varda, that is manufacturing in low earth orbit, and Kymeta, that's making antennas to beam down satellite bandwidth. All of that is possible in part because there are brilliant people that have followed Elon siren song and call to go pursue a high expectations, very tough culture. They've done it and yeah, they've done it well. So brilliant people coming out of SpaceX that are the next generation of entrepreneurs.

Yeah. I think SpaceX to me seems like another chapter of the story, the power of tools. Right. If you think about cheap, reusable rockets as a kind of tool for accessing the new frontier of space, it seems to me like a tool whose positive externalities could be really, really fantastic. Last one. Sorry, I had to do it. Overrated. Underrated.

NFTs underrated in that in the current form, I think they're overrated. They'll be a form of artwork. But I do think that NFTs are akin to satellites, by which I mean in the same way GPS came from triangulation of multiple computers in the sky that tell you that there's a blue dot or some other abstraction. Technologically, there is a adjacency of multiple computers that are saying this digital artifact is in fact in this space and time. And I think that that's going to be an important foundational technology.

Well, NFTs as satellites for art is not a metaphor that I thought I would land on, but that's a really lovely way to put it. Again, the Joshua Frame store. Very happy to have spent an hour shopping within it. Thank you very much, man. And I will talk to you very soon.

My pleasure. See you soon.

Planning this with Derek Thompson is produced by Devin Manzi. Thank you so much for listening to this show. If you like us, follow us on Spotify rate and review on Apple Podcasts. We will be back with with our second episode this week on Friday. We will see you then.

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