How to Invent and Invest In the Future with Josh Wolfe

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Thank you so much for taking the time. So, so excited to get to have this conversation and a lot I want to cover with you. But, you know, I thought maybe we could just start start, uh, really with like this idea of your map of reality. Um, you're a really interesting guy, really interesting thinker, investor. You do so many different things. And one of the things I like to just start out with is kind of establish what is someone's map of reality, like what has created that for you, what has set your map of reality. So maybe we just start there, you know, like as you think of your own map of reality as you look at the world, What have been some of the kind of key moments or key points in your life that helped to form that?

Some of this is post facto. So, staying intellectually honest, right? The things that were informing me 20 years ago or 15 years ago or 10 years ago, at the time, I might have prescribed or ascribed something different. I have always been competitive. The competitive nature has always been, I think, born in one part confidence and one part insecurity. The confidence at times was I would see other people who either had more materially or stability. So, you know, people that came from like a nuclear family or people that had wealth or people that traveled to fancy places or people that had cars and things that I materially did not have. And I would look at them and say, wait a second, they're not smart, or they're not smarter than me. And so competitively believing in a system that was meritocratic, um, you know, that I should— that the smartest people should succeed or do better, that you should get more points, you get higher grades, that kind of stuff. So I think, I think part of me has always been hyper-competitive in being confident that relative to certain other people, I felt I was more intelligent. And, um, and so I had a sort of, um, chip on my shoulder from that, uh, and just not being born into wealth. And then the other piece of that, which is sort of a toxic combination if in the wrong hands, and I think a productive one if in the right hands, is you need confidence to be able to believe in yourself and go and do something and persuade other people, you know, that you can go do something. But you also need insecurity. And so there's a ton of stuff that I was insecure about, whether I was short or familial situation or not having money, like those same things that I was confident about, intrinsic ability relative to other people, I was also insecure about. And so that to me was one blueprint. That just sort of motivated me. Now, in terms of like map of reality, you know, I don't know, the first 20 years of your life, more or less, you're being indoctrinated by everything that you're learning. And then I think it was probably around 13 that I questioned, uh, you know, I basically took my bar mitzvah money and ran. I was raised Jewish, but I'm atheist, and none of that stuff made sense. That gave me the confidence to basically just start questioning authority of all kind. And, I was never a kid that was questioning legal authority or getting into trouble, but just I would look at things and say, "Why is that the way that it is?" And, just sort of questioned everything.

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So, that to me was always not presupposing, you know, as some people talk about like a Chesterton fence, like sometimes something is there for good logical reason, you just don't know that reason. But many times things are there just for ridiculous reasons. And I'm always fond of the story of tradition. Where a guy and a girl are dating. They end up getting married. Years go by. Every time Thanksgiving comes, she cuts the two ends off the turkey and he comes to her and he says, why does— why do you do that? She says, well, my mother did it and it was tradition. And her mother before her. Well, next year, you know, he gets to meet the parents and he asks the mother, why did you do that? She says it was because of tradition, you know, thwap, thwap. And then the grandmother the next year, and then the great-grandmother miraculously is still alive. And then, she is queried, "Why do you guys do this?" And, she just matter-of-factly says, "It wouldn't fit in the pan." And so, something that once made sense 3 generations ago for an arbitrary or very specific reason then just gets passed down for tradition. Just like in religion, you have kosher laws and eating shibboleths and all these kinds of things that today, back then would have saved you from trichinosis and today make no sense. So, I started to just questioning things, which I think for me was then an embrace of science, because science is not, you know, contra religion other than being contra dogma. But a scientific worldview is basically trying to come up with better explanations, and at best they can be tentatively held until a better explanation yet further comes along. And so part of that is a— is that similar mix, right, of arrogance that you can know better than the other people but also this humility that somebody else is going to come and disprove that. And so, um, that has always been sort of a pursuit. And then that led me—

that one is so interesting. Sorry to, sorry to interrupt you. That one is such an interesting one that I think about a lot because there are things in every era of history that are scientific truths, quote unquote, or truths, societal truths maybe more so than scientific truths, but scientific as well. Like if you think back to, you know, Galileo or Copernicus being ostracized, like, there are things that, um, we are hilariously wrong about in every point in, in history. And so I often think about that. I had a discussion, I think, recently with Tim Urban from the Wait But Why writer, who's amazing, about this exact thing of like, what are we hilariously wrong about today that we're ostracizing people that are saying the other side of? But it's interesting the way you frame it and the way you talked about that of constantly adapting, constantly changing, and, you know, kind of thinking like, what are those things in real time? And being, you know, having the humility around it in real time is a, is a really interesting pursuit.

But remember, just like being intellectually honest, it is not just humility, it's also arrogance, right? It's arrogance to say like, those people are idiots. Like, I can't believe that they believe that thing. Like, there has to be, you know, better And so I posted something on Twitter the past few days that I was just absolutely obsessed with. And it was one of these things like, my God, we're, I don't know, many millennia into humanity and we don't understand why we dream. I mean, endless fictions have been written about it, beautiful prose, wonderful movies, incredible art, lots of scientific speculations, and there's like 5 main theories. But There's this fascinating paper that basically came from observing deep neural nets and saying, wait a second, these deep neural nets that train on a narrow segment, like looking at a picture of a cat all day, have a problem generalizing because they just narrowly train on that one thing. And so, researchers end up introducing noise purposefully, intentionally into the training set so that they can generalize. And then, this researcher was basically hypothesizing, well, what if That's the evolutionary purpose of dreaming. You are receiving stimulus all day from your senses. You store that as memories. And, if you narrowly learned what you just experienced, then you would be less adaptive than somebody that had noise injected. And so, what a just amazing hypothesis. I mean, obviously, still sort of a Rudyard Kipling Just So story. But yeah, so I'm constantly just insatiably curious about pretty much everything, which is a manifestation of Lux itself is looking at all of these different disparate fields. Post facto, we can often find this nice connective narrative thread, but it's what I call randomness and optionality. So randomness and optionality is another— so this mix of being insecure and being intellectually arrogant, and then this idea of randomness and optionality is absolutely part of the map of reality, which is again, a mix of humility and confidence that I have no idea what the next thing that I'm going to receive from somebody that's going to spark some intrigue or interest, what random person I will bump into. I always loved an excerpt from the David Geffen book, The Operator, where he's talking about Ahmet Ertegun, who was sort of his mentor. And, he's walking in his office and he says, "David, sit down." And, they sit down across from each other and then Ahmet just starts to walk very slowly to Geffen. And he repeats this like 3 or 4 times. And Geffen is like, "What are you doing?" And he's like, "I'm trying to saliently make a point to you that you should walk slow because you never know who you will bump into that will change your life." And like the history of David Geffen's life was like meeting all of these incredible artists, but many of those things post facto were totally random. It's just the same thing for us in venture capital and entrepreneur. You never know That's how you and I met.

I mean, it's the— I call it engineered serendipity, but that same concept of like engineering environments and situations where lucky things, quote unquote lucky things, can happen. And like in that case, you know, it's walking slowly because you never know who you're going to bump into. But there's, you know, a thousand ways that you can do that. Like rather than sitting on the couch at home one night, go out and, you know, go to the event that you were not going to go to, and you might meet 5 people and maybe you end up talking about something with one of them that changes your life. You don't know, and you wouldn't know if you didn't go into it. The dream thing you said is fascinating. So the dream state hypothesis, I think, is so fascinating because more broadly it just makes sense, right? That like it's sort of the whole idea of like Taleb's idea of antifragility. You like inject chaos. Like if humans are kind of pro-entropic, you know, in our ability to benefit from chaos, like that injection of chaos in the form of noise, intellectual noise, whatever it might be, is beneficial to your ability to adapt and become more adaptable during your waking state. It's such an interesting theory of—

Yeah, I mean, why would you do that? The person that is walking on constant straight, you know, unfettered ground is at a disadvantage from the person who's walking, you know, on crags and uneven, you know, surfaces. And, and so you've injected some randomness in, you know, a path instead of just walking on a city street. You know, if you can find the quote unquote off the beaten path, then you will arguably be neuromuscularly more adaptive when you encounter that kind of surprise. And so, yes, the same thing intellectually where if you're narrowly training on one thing and then you wake up the next day and the brain has, again, maybe it's engineered serendipity but has injected noise, it would make sense that biologically that was actually adaptive. For organisms that could do that, whereas the ones that didn't have that, you know, just narrowly trained, and then there was an outlier stimulus or situation in the real world, those people perished. So, um, provocative hypothesis. They, they, they, they— the guy calls it— it's Eric Hoel— he calls it the, uh, overfitting brain hypothesis, which is, um, uh, in data science and machine learning, you know, statistics, just the phenomenon of overfitting to a data series and, um, hewing too perfectly to it.

I think about it a lot in the context of— I write about and think about cognitive biases a lot. I know it's something that you think about. I've seen you write about it in different investor letters in the past. I think about it in the context of context switching over millennia or over hundreds of years, because a lot of the cognitive biases that we have today that we bemoan were evolutionarily highly effective. Like, I think about fundamental attribution error as a big one. Like, we cut ourselves a break and hold others to the fire. That was probably a good thing that kept you alive. Like, if someone did something that was kind of an asshole move and then you were like, hey, you're an asshole, I'm never going to talk to you again or go near you or— and just completely avoid you, probably kept you alive in certain instances because maybe on the off chance that person was thinking about killing you, you would have avoided them. And now in a workplace, if someone does something like that and you act that way, it's actually not a great thing to do. On the first instance. And so, you know, I often think about it because several of the, you know, a lot of the cognitive biases we have were evolutionarily quite effective in a different era and now will hold you back from, you know, achieving things or getting different places, meeting people. Maybe you, you know, you kind of slow down your progress in a lot of ways. And so that context switching and being able to adapt over shorter periods of time than our evolutionary ability to adapt works is actually quite interesting.

Well, that is correct. And everything from fear in our ancestral environment to fear today, the things that stress in our ancestral environment, stress today. There's a wonderful book you may have read, but Robert Sapolsky, Why Zebras Don't Get Ulcers. And the basic premise of Sapolsky, who was really a primatologist, was studying the stress response and the hormone response in chimpanzees and bonobos and ultimately humans. And we get stressed about, I've got this deadline, I have to write this, I got to record this podcast, I've got this company that might be failing, I'm going to lose this deal to a competitor, whatever it is. Those modern stresses, our ancestors would have been like, wait, you're freaking out about what? I don't have food, or my God, a tiger is chasing me, or a lion is chasing me. And many of those things that Kahneman has cataloged and colloquially we know as Type 1 or Type 2 errors. And, you think about if you heard, as Led Zeppelin would've said, a bustle in your hedgerow, it was adaptive to get alarmed now and not to sit and think and ponder and be reflective because if you sat and thought when there was a bustle in the bushes, you got eaten by the tiger. And so, yeah, the things that you were talking about too about If somebody cheated you in our ancestral environment, you go to a Dunbar's number of, I don't know, 150 people, you had a smaller group of people, and so it was more effective to punish a cheater and they would be publicly ostracized from a small group. Today, a cheater can go and just find a different tribe. The mobility is much greater. It's not as effective. Similarly, evolutionarily, bludgeoning somebody if they went after your mate was effective. We have this new invention called civilization with societies and laws that are meant to bring out, you know, the better angels of our nature and suppress the sort of innate savageness that we have.

Yeah, absolutely, absolutely. So much to unpack there too. Um, I do want to go back to something you said at the very beginning. Um, one of the quotes that I think I've seen you tweet about, write about in the past, and say is this idea of like, "Chips on shoulders put chips in pockets." And you talked about it at the very beginning, how growing up, you had this chip on your shoulder, whether it was about, you know, being short or not coming from money or whatever it was. Um, you kind of used that and used that insecurity as fuel to motivate you to go and build.

Did that play out, like, as you go—

went to start Lux, which I want to talk about, and, you know, what you've built today? Uh, did that continue to play out in your life? Because at that point, you had clearly achieved quite a bit. You know, you had gone to school, you had started to, you know, have the early signs of being a successful person, quote unquote. Did you feel that same energy and that same insecurity when you were starting and building Lux in the early years?

Yes. And by the way, you know, we've achieved a lot more success. I've made a lot more money.

I—

my reputation has grown, and I still have that same insecurity and drive. And so this is something, by the way, that I feel very strongly about, that society benefits from everybody being plagued by these kinds of things because it leads to human progress. And, you know, woe to the Bay Area, you know, adherent to mindfulness and meditation, you know, to find calm and peace. Like, we don't get peace from progress. You need tons of disaffected individuals that are like super bitter with something to prove. And so it's good for the individual. It's not good for society to find, you know, your breath and meditate and be peaceful and be stoic. Um, one of the big chips for me was broken family. My parents split when I was 2 and a half. Um, my father was sort of the inverse of everything that I, as a husband and father, sought to be. I wanted a big nuclear family. I was an only child. My mother and I moved in with my grandparents in Coney Island, Brooklyn. My grandma was a meter maid and my grandpa was a, um, a night delivery man for the Daily News. And my mother was a public school teacher teaching special ed. And so the 4 of us lived in a 1.5, I mean, 2-bedroom apartment with 1 bathroom. And it was a loud household. Everybody's screaming and yelling at each other. There was a lot of debate and a lot of just— but also very high expectations for me to do well. And that was probably the luckiest thing in my life is I had a mother and a grandmother in particular who just absolutely smothered me with love and had very high expectations. But I grew up very bitter and envious of other people around me. I grew up bitter of people that had nuclear families. I resented the absence of my dad. And so, yeah, I mean, one of the proudest moments, I would later sort of rekindle a relationship with my father that is a little bit to this day, just antiseptic and cold and controlled by my choosing. But I remember he telling me that he had met somebody and that person was like, oh, are you Josh Wolfe's dad? And that reframing of his identity relative to mine was such a win for me. And so, yeah, that idea of chips on shoulders, put chips in pockets, I could see very early on my highest performing peers, the people that I admire the most, even the most famous people. When you look at Larry Ellison, Steve Jobs, Elon Musk, Oprah, they all came from backgrounds you really wouldn't want to wish on your worst enemy. We celebrate these people in part because of their successes, but their actual process versus those outcomes— I mean, Oprah was raped, lost a brother to AIDS, just horrific. Most of the others were adopted or had abusive parents that they were trying to escape. And so if you are the only minority kid in a mostly homogenous white neighborhood, if you are the obese kid in a Friday Night Lights Texas town, If you are the gay kid in a mostly religious community, whatever it is where you feel ostracized, that is real physical, not just psychological, but physical pain. And, either you get fortunate that you find a mentor or somebody that is an escape valve or a group of people that might be similarly disaffected or they're sort of misfits and outcasts. And, that oftentimes give people the permission to continue to be these outsiders and embrace that identity. Sometimes, you know, it goes deviant and really negative. And sometimes it has this fuel that I just have found in those people, it never gets put out. And that fuel is basically, "I'll show them." It is looking at the people that are in the masses or the mainstream or the popular kids and basically just saying like, "I will show them." And it started, you know, I mean, it started forever ago, but in modern times, It was Steve Jobs and Bill Gates. It was the revenge of the nerds. It was the rise of the technology guy as a hero. I always think the underdog is always the most interesting to root for. I mean, literally, I'm a New Yorker through and through. I joke New York for life is tatted on my stomach. I love the Nets and I like the Knicks and I'll root for all the teams, but You bring me to a game, whoever is the underdog in every situation is who I'm rooting for. And so it's the same thing. Like, I love the, the odds of the entrepreneur who just— it's completely improbable. The incumbent has all the resources, they got all their reputation, they got all the attention, they got the best people. And then somebody comes along and is like, this thing sucks, I'm going to do it a better way, which is arrogance of the highest order. And I want to root for her or him that's doing that. And so I just love that ethos. And I have found that those people, no matter how much money they make, no matter how much reputation they get, that fire never goes away. And sometimes they lead productive lives and have good families. It's what I hope I'm doing. And other times, you know, society— like, I mean, look at Steve Jobs. And I used to have this debate with one of my best friends. Like, Steve Jobs is celebrated by all of these strangers, but hated by the people that loved him, that we're supposed to, you know, he's supposed to love the most. And so there's these weird paradoxes in that. And I want to be loved by the people, you know, that I love the most. But I'm also, you know, petty and vainglorious and jealous and competitively motivated. And I want to be celebrated by other people reputationally.

You're a human.

Yeah. All of those things that you just said.

I mean, so what actually motivates you?

You know, you mentioned you're an atheist. Um, I'm always deeply fascinated by people that are, uh, incredibly high achievers, uh, you know, hard-working, driven, um, post-economic in a lot of ways, right? Like, you don't need more money. I mean, you could— I don't, I don't know how much money you've made, but I'm sure you could go live out the rest of your life and be fine, um, on a, on a global scale for sure. Um, so what motivates you on a daily basis? Like, is it continuing to prove people wrong and go build the most amazing, you know, investment franchise in the world? Like, what is it that actually gets you out of bed and gets you energized?

So materially, it's interesting because I've never been into cars. I've never been into watches. I've never been into boats or houses. Money matters because it gives you freedom. And so, you know, probably for me, you know, just being able to go wherever you want, wherever you, you know, whenever you want. And, um, and, and, and provide for your family in a significant way. There's a paradox of that, is which is you want your kids to have the same sort of grit and scrappiness. And I, I don't know, right? People ask like, how are you? I don't know if we're doing it right. Um, there are people that lie to their kids about money. There are people that are straightforward about it. We've generally been very honest about a lot with our kids. Lauren and I don't always agree on, on, on that, but you know, we talk about death and sex and money and, um, And so anyway, the things that, that drive me are more ideas. And so I'm very intellectually competitive. When I find somebody else that like knows something that I don't know, I either want to be that person's partner or I want to beat them. And so it's a little bit psychotic, but I just psychotically competitive in anything. Like you play chess, you know, we race, we play basketball, like whatever it is, like I want to beat you. And, and, or I want to respect you because I admire, like, there's no way I can beat you. And so I really like just people that are driven by excellence and competitiveness. Um, here we don't play to play, like we're not doing this for charity. The, the scoreboard here is results for our LPs, but we are playing to win. And so playing to win means that we are the partner of choice beating out another firm to lead a company's round. It means, um, that we have a target to recruit a particular woman as CEO and we land her, to get this particular board member to join, to win a particular deal, to open a door, whatever it is, you're basically trying to fight somebody from saying no to you. And so being influential to me is a driver, being able to pick up the phone and access somebody and make a call and for them to say yes. And then the most important for me, which didn't exist when I was younger because I didn't have them and didn't know, I could intellectualize all I want, but is my kids. And I want them to be proud of me. I see the antithesis. I see people whose parents are financially successful and the kids resent them, want nothing to do with them, don't want to follow in their footsteps. It is just like utter pride and joy when, you know, our kids are like, I mean, I'll give you an example. My middle was like— so we got 2 girls and a son. And my middle was like, "Dad, I want to do what you do," because she's very STEM-oriented, good time on task, totally into engineering. She's like, "I love biology and robotics, and we make stuff on 3D printers." And then a few weeks ago, she actually came to me. She said, "Dad, I thought I wanted to do what you did, but I was talking to Mom." And it took you almost 20 years to make $4 billion? I'm like, no, no, no, I didn't make $4 billion. We managed $4 billion. And she's like, but it only took mom like 2.5 or 3 years to make $3 billion. I'm like, no, no, no, she— oh, okay, forget it.

She learned about leverage.

Yeah. So she thinks mom's more successful right now. And so she wants to do what mom's doing. But just making the kids proud. I love— and it's actually a lens that I look through when we fund companies. Is this something that is going to make the history books? Is this something that somebody's going to look at and be like, my dad funded that? My dad put that guy or girl in business. Like, that to me feels just super meaningful.

So cool.

You know, the three things you could really make— you can make money, and that can lead to gratifying things if you spend it wisely, whether it's philanthropic. I started a school in Coney Island where I came from, driven by some personal principles. Wanting to root for the underdog and make them competitive against the kids that were born in Greenwich, Connecticut with a leg up.

Wow.

And you can make money, you can make meaning, and you can make memories. And the memories piece for my kid is, you know, adds to the second one, which is meaning. And then funding people that are literally inventing the future and coming up with the craziest shit that you can imagine is super meaningful.

So I want to get into that last point because you guys are doing something so ambitious?

I mean, as an investment fund, doing something that just looks so different and ambitious relative to most. I mean, when I think of venture capital, and I assume most people that are listening to this, when they think of venture capital, they think of people funding software companies and when you think of Atoms Bits, funding the bits, all of these technology startups, et cetera. When you look at the Lux portfolio, you see this unbelievable array of like seemingly ridiculous things, uh, you know, like a sail drone, like, you know, a massive drone, uh, sailboat, uh, all of these incredible space-related companies. I mean, it is truly remarkable. I would highly recommend people go check out luxcapital.com and go to the companies tab and just go tick through it. But it is this amazing physical infrastructure big swing, unbelievable things in the atoms world. What inspired that focus?

Has it been a deliberate focus?

And what, what is getting you most excited to be investing in the world of atoms?

So historically, it started with that same competitive spirit, looking what everybody else was looking at. And when we started Lux, it was coming off of the last— well, you know, 20 years ago now— um, dot-com boom bust, which was, you know, optical networking and dot-coms. And, um, nobody was really physically funding the physical and material sciences. So I was like, look, the two areas that actually 20 years ago intrigued me the most were artificial intelligence, uh, and then conception. This was pre-CUDA, pre-NVIDIA, pre-GPUs, pre-deep neural nets, pre-anything that would, you know, lead to insights for novel researchers on dreaming, and, and nanotech. Nanotech was interesting because that was my first purview of really being able to delineate between the doers and the bluffers. There was a whole cohort of people in nanotech that were like these sci-fi fringe people, these extropians. I mean, they just like— the stuff that they were talking about was like out of science fiction, but it just didn't obey the laws of physics. But at the same meetings, you would have people who were like Nobel Prize winner Rick Smalley from Rice University who discovered the buckyball, the fullerene carbon nanotubes. And these people were just like way more scientifically credible. And what was interesting at the time back then was they were chemists, material scientists, physicists, biologists, and they started to rename what they were doing nanotech because it was getting money from the government. And so I remember writing this piece a little bit cynically for Forbes again, almost 20 years ago that, you know, a nano rose by any other name is still a rose. But that became the nomenclature, and it led us into this field where there's these incredible serious scientists distinct from the BS people that are like speculating about the future, which are important, and they were actually at the same meeting. But you don't want to fund these people, and you do want to fund these. And these people were at the intersection of disciplines. Uh, they were computer scientists that were doing, uh, in silico modeling, so using a computer to model new materials so that you could actually then produce it on a wet bench. And then during that process, interestingly, I met a guy, Larry Bach. And Larry had a tremendous impact. And it's one of these things, I don't know if there was a different person that I would've met that could've shaped me. I can't run the counterfactual, but Larry was a serial entrepreneur. He was employee number 50 at Genentech. He mostly focused on biotech through most of his career, but then ended up founding a company called Illumina, which we now know is the prominent gene sequencer. Illumina was not focused on gene sequencing when they first started. They were doing chemical sensing and other kind of random stuff. That was the intersection of microfluidics that were based on a microchip and biotech, and then ultimately genetics. And, that synthesis at the intersection of disciplines was something that Larry was interested in because other people weren't. Larry had founded this company Nanosys, and he had gone to all these universities and government labs. He had in-licensed intellectual property from MIT, Harvard, Berkeley, and elsewhere. He and I were both on the circuit speaking at these same conferences. He was super credible. As people would later describe him, he was this mensch on a mission. He was probably 10 or 12 years older than me, maybe a bit more, and I just admired him. Then I met his family and I saw how he lived. And this was a guy who had made hundreds of millions of dollars and had founded 17 companies from scratch, taken 14 of them public, cumulative market cap over $50 billion. Illumina, Pharmacopia, uh, Ida and Athena, Neurocrine, just incredible. And had the credibility, and he was a complete prankster and, and jokester and just like had the best sense of humor in the world. Wife and two daughters. And I just admired the way that they lived. It was humble. Like, you'd meet him, you'd be like, this guy made that amount of money and did all these things. It was just a wonderful character, huge inspiration for us at Lux in doing company creation and looking where other people weren't looking. And so Larry gave us a little bit of gravitas and credibility because people had no idea who we were. Um, when we went out to fundraise, I always joked that we went after friends and family money. And, you know, we had a reasonable amount of family and a bunch of friends. None of them had any money. I went and met a guy, Bill Conway, and Bill was one of the three founders of the Carlyle Group, and it was the luckiest day of my life. And again, don't know the circumstances of his preceding 24 hours, whatever influenced him, you know, good meal, good news, whatever. Meet him and he's like, I hope you make a billion. And, you know, to this day he is our patron saint. I just saw him here at Lux last week. He's just an absolutely incredible guy. He really invested the money. He was like the chief investment officer. For Carlyle, David Rubenstein's the more famous one who raised all the money. Bill asked us the two most important questions, why should you exist? Why does the world need an incremental venture fund? What's going to be your competitive advantage? We spent a lot of time thinking about that, ended up building the firm really based on answering those questions. In that process, met this other guy, Larry Bach, that I was just describing. Those two men just played an absolute critical role. Larry, sadly, maybe 7 years ago, passed away. From cancer. But both I think of every day. I literally think, again, I'm not a religious, but in the same way that people say, like, what would Jesus do? Like, I think, what would Bill do? And he's a deeply religious guy. And his ethics and morals, it never mattered what the deal docs said. Like, he just, he did the right thing. And I've never met anybody that has not said, like, Bill, what an incredible guy. Same thing for Larry. I've never met anybody that was like, that guy's an asshole. Everybody thought this was a guy that was a mensch on a mission. I don't have that personality, Nate, because I'm competitive or because I have these insecurities or this chip on my shoulder. There are a lot of people that are like, "That guy sucks. I hate him." Thankfully, I've got a partnership that is more balancing for me, but I just admired both of them immensely. That's what set us on this path to go after some of these crazy areas that nobody else was and to have the conviction that funding these crazy scientists that had real work that other people weren't looking at. If we were right, could be really successful.

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Well, for what it's worth, I have never heard anyone say anything but glowing things about you.

So I can push back on that one piece of data.

I haven't talked to Elon Musk.

He might not like you.

Uh, but, uh, but other than him, I've never heard anyone say a negative thing about you. Um, and, and no, I mean, I think I have learned an immense amount from you from just being around you a little bit and reading your work. So I, I thank you on behalf of, of everyone who has had a similar experience to me. Um, you know, one of the things that I've seen jump out recently from your work, you know, as, as an extension of what we were just talking about and some of your big bold bets for the future is this whole idea of nuclear energy and the future and where energy creation is going. And you hit on something that is a, is a really good lead-in to that point, which was the nanotechnology point where you kind of talked about how it became a branding thing, like nano became this positive branding thing that all of a sudden accelerated capital coming into that space. And I think about it now in the context of what you've been referring to as Elemental energy, elemental power, and this rebranding that needs to take place around nuclear. So can we talk a little bit about that and what is getting you excited about that space and the potential for a rebrand to accelerate it?

You know, this goes back— credit to, um, two, two guys, Mark Mills and Peter Huber. They wrote a book called Bottomless Well, and Mark is a friend. Peter's since passed. Peter was a polymath. I mean, just brilliant lawyer, scientist, engineer. I mean, super rare individual. Not a lot of people like this exist today. Marc lives on and just came out with a new book, I think, called The Cloud Revolution. But they wrote this book, I want to say '06 or '07 or thereabouts, maybe it was '08, and The Bottomless Well. And it was at a time when oil prices were rising and they were basically making this point that energy was abundant. And it was also at a time when Al Gore's movie had come out and everybody was talking about climate change. And that we need to get off fossil fuels. And they were sort of taking the Julian Simon, uh, Paul Ehrlich bet, and they were taking the Simon end of that. And as you know and others know, you know, the basic bet here was that there is one inexhaustible resource, and that is human ingenuity. And that in the presence of problems, people— and more so than ever today because we're interconnected and we can have both adversarial collaborations and we can amplify good ideas and suppress bad ones, particularly in institutions that support that construct, like, like science, um, that, that you had this bottomless well, uh, and that people would figure it out. And when they looked at the physics of energy density, you know, you had lots of famous people that were talking about building fields of fuel where you would have biofuels, you know, to replace, um, uh, fossil fuels in, in liquid fuels. You had people that were talking about, um, uh, solar, you know, and having large farms of, of solar energy. But the, the densest form of energy, just looking at the simple physics of this, was nuclear. And so I got enamored with nuclear in part because this was the signal where everybody else was talking about, you know, solar, wind, biofuels, ethanol, batteries, electric cars, which mattered. But the thing that I heard, sort of like Sherlock Holmes, you know, the curious incident of the dog in the night, the thing that nobody else heard was, was nuclear. And so the absence of people talking about it, you know, John Doerr was giving his famous TED speeches, Vinod Khosla, was writing op-eds, and these were like famous venture capitalists garnishing, you know, huge amounts of money behind their reputation. And none were talking about nuclear. So then I dug in and I started looking at every part of the fuel cycle. We started with uranium miners, mostly we found were hucksters and fraudsters in New Mexico and Nevada. We then looked at modular reactors. Great idea for society. I mean, instead of a gigawatt power plant that might cost you $1 billion to serve 1 million people, you could have, you know, 30, 30-megawatt plants, each, you know, smaller and built out. And we already have modular reactors. There's 104 Navy nuclear subs that are going around with, with small modular Navy nuclear reactors. Then we decided that that was not going to make sense because it was going to take too much money, too much regulatory risk. You had this weird chicken and the egg problem that in order to get the NRC, the Nuclear Regulatory Commission, to actually say yes to a reactor, you need to have a sponsor. But to get a sponsor, you needed pretty high assurance that the regulatory commission was actually going to say yes. So we thought that's probably best for sovereigns or billionaires But, you know, you got all these existing reactors. Then we said, well, what about the waste? Everybody's complaining about the waste. And that is another prime, you know, going to your sort of models of reality. Like, I look around all the time and I listen very carefully for like, what sucks? What is the thing that people are complaining about? And, and people were complaining about, about what do you do with the waste? And it turns out that there's two kinds of waste. There's low-level waste, which is inside of the nuclear power plants. And there's 104 domestic reactors, just like our nuclear, uh, subfleet. And there's 440 globally. And then there's, uh, all this pre and post-Cold War bomb-making waste from, uh, uh, places like Hanford, Savannah River, Idaho National Labs in the US, Sellafield in the UK, La Hague, Italy as well. And so I ended up looking around for a high-tech company to fund, couldn't find one. We ended up creating one from scratch. We named it Curion after Madame Curie, in-licensed intellectual property from universities and some government labs. And then hired a team. Amazingly, there was this massive labor arbitrage in nuclear. Everybody was like over 60 and not entrepreneurial at all. And the super young, smart people all went to D.E. Shaw and, you know, Two Sigma and Renaissance and the quant shops. I was able to field a team that was under 60, but in fairness, they were like 56, 57. They were not, you know, that, that young.

It was close.

And we, we put a total of $3 million of invested capital, a million and a half from the fund, a million and a half from a few of our LPs. In a fund that was, um, a $100 million fund. It was our second venture fund. Uh, we also took founder stock because we, uh, conceived of this. It was a brain fart here in our New York office. And, uh, you know, hired the first 20 people, populated the board, the advisors, and licensed the technology. Did all the company building work. And then, you know, things are going good. It would have been a great business. But then all of a sudden, March 11th, 2011, you know, just, uh, 11 years ago, earthquake, tsunami, Fukushima disaster. 3 weeks later, I'm on the Upper West Side of Manhattan and the CEO is like, "I'm flying to Tokyo. The TEPCO government, Japanese government and TEPCO, which is the authority overseeing the Fukushima disaster, saw our technology and wants to buy it." And anyway, we end up going from $1 million in revenue to $40, $80, $120, $160, $40 million of EBITDA. We sold that for 10 times EBITDA to Veolia. Just an amazing experience of truly matter that matters. I mean, this thing that was just conceived in our New York office ended up removing 99% of the radiation from the Fukushima disaster, particularly around cesium and strontium. And it's crazy, the technology, without going into it, between material science and isotope separation and robots and chemistry. And it's just absolutely wild. We, we had a giant—

sci-fi shit. It is unbelievable.

We had to spend $1 million a day just to rent a a giant Ukrainian airplane, many of which have actually been blown up during this current war.

Oh gosh.

By Russia. That we're shipping our crazy engineer systems over there. Anyway, that was very gratifying. And so I really was just absolutely obsessed with nuclear. And in particular, what I studied was that in 1979, you had Three Mile Island in the US. This was a disaster, you know, little d disaster versus Chernobyl, in the '80s, which was a certifiable disaster. Uh, there was no radiation leaks, there was nobody that died in Three Mile Island. But two things happened. Number one, there was a movie called The China Syndrome in 1979 that came out. Movies are very powerful for influencing people, and it negatively influenced people against nuclear. The third thing that happened was a No Nukes concert in 1979, which was really important because they were really protesting nuclear war. I want to protest nuclear war. Nuclear war is terrible. Nuclear power is amazing. And so you had, you know, Joni Mitchell and James Taylor and all of these like post-Woodstock, you know, folk singers that my mom grew up on or made me listen to. And, and they were all protesting nuclear and it just got conflated. Nuclear war, nuclear power. The environmentalist movement rose up in part because they were no nukes. And, and it just, you know, this has persisted now for, for 40 years. And so I started looking at this and I'm like, seeing all these people that are well-intentioned, that are funding new reactor designs and new technology. And I'm like, you know, it's not really so much even a technology or an engineering problem. It's not— we have hundreds of reactors that are working globally and we have decades of safety experience and know-how. And even though you have an aging workforce, there's just like tremendous talent. What we have is a PR problem. And so I was just kicking around and I'm like, you know what, It's, it's literally elemental energy. Like you're talking about an element, in this case uranium, that you enrich. Zero carbon. You use it to heat water. The water produces steam. Steam turns a turbine. The turbine spins and you get electricity. Elements are also, you know, the sun, solar, wind, wind, water, hydro. So the environmentalists should love that. And so if I could put nuclear in this tent and rebrand the entire thing, you know, Elemental Energy, Element Power, maybe you get this uptick. And it seems to have been taking off. Last week, The Washington Post had a feature piece on it. And so, you know, if you made you a new friend in Jeff Bezos—

yeah, I saw that he followed you on Twitter. That was great.

Help, help spread the word. You know, Elemental Energy, there it is.

I mean, it's a fascinating case study of like storytelling in action, right?

Like a story perpetuates so much more than the reality. And with nuclear, I mean, it's just people, as soon as they hear nuclear, they think about mushroom clouds and they think about Chernobyl and they think about disasters. They don't think about the potential for, you know, small amounts of water to literally provide the energy, an energy source for the entire country. And they don't think about the potential for this to completely transform how we think about the survival of humanity over the next, you know, several centuries or millennia.

Right. The element— elemental— if elemental energy or nuclear power were discovered today, people would be running around being like, oh my God, this is magic, this is the most incredible thing. It would be on every— it would be, you know, Time's Person of the Year would be the atom. Uh, I mean, it would just be the most magical thing. And you are correct that if you have cheap electricity, unlike the degrowth people that want to send us into the Dark Ages, the cheaper your electricity and the more power you have, you can desalinate water, you could have abundant water, you could have abundant crops and agriculture. But it all starts with how do we get clean, abundant energy? And to me, the answer is elemental power, formerly known as nuclear.

And it's interesting too, when you just think about, you know, geopolitically as well, the impact that this might have if, you know, if one country, you know, and honestly, the US, like if the US continues to be obstinate about this, we will literally fall behind the rest of the world and you will see the global order dramatically shift. Like if China decides to be really proactive, if India decides to be really proactive, if other large global powers decide to be proactive about this and progressive about it, and the US gets held back by, you know, nimbyism and, and whatnot, there will be a massive shift in the geopolitical order in the next really, I mean, 10, 15, 20 years.

Well, it already has happened. And so China is building dozens of nuclear power plants. They're also building, despite their jawboning on green, enormous numbers of coal plants. But they are focused on how do we get low-cost energy for our people. They're also looking into, you know, Pakistan and other regions where they're basically making sure that they capture hydro. But the geopolitical order did get reshaped in part because you had Germany, which was one of the few nuclear powers alongside France. You had the rise of the German Green Party over the past 15 years. If you were Putin, the smartest thing that you could do, the lowest cost, highest leverage thing that you could do to deliver Europe to you, who controls an enormous amount of gas for the world as a major exporter, particularly to you, Europe, providing over 25% of their electricity needs, is just get the Green Party to shut down nuclear. And that's literally what they did. You had an engineer as chancellor in Merkel, and the political opposition to nuclear grew and grew and was fomented. Let's say it was mostly organic. And mostly domestic, with a tinge of foreign information operations to foment it. That's all you had to do. And Germany started shutting down their nuclear power plants. The first thing they did was import electricity from France, but the next thing they did was become dependent on Russian gas. And so the geopolitical order has changed, in part because of the aversion to nuclear. And I hope that people wake up to this, and quickly.

Yeah. And it was immediately after Fukushima, right? Germany made some pretty dramatic decisions immediately after that. They basically fell victim to this, you know, PR event rather than continuing to think about the science behind it. So it is, it is pretty shocking. Well, one of the things that I want to talk about before I, before I kind of wrap my time with you is, is your willingness to be vocal about things that you, you believe in. Elemental Power has been one of those. You know, you've been very vocal. You know, the crisis in Ukraine and the war and Russia's involvement, etc. You've been vocal. The other one, which is very top of mind right now, is Elon Musk and, you know, his recent kind of foray into buying Twitter and involvement in the social world. It kind of merges several things that I've seen you talk about at length, one being like the Jonathan Haidt article about the kind of downfall of society over the last 10 years and social media's influence in that. And The other one being, you know, Elon Musk and his, uh, I don't know what you would call it, all, you know, his capital raising efficiency and, um, you know, his ability to weave really powerful stories in that, in that vein. So would love to just hear you, um, speak a little bit on how this all comes together in your mind, why you're worried about or not worried about Elon Musk's involvement with, with Twitter, with free speech, um, and your general perspectives on that.

Let me say Elon on the whole is a net positive. There's no debate that pushing forward electric vehicles and beating the incumbents, I mean, literally a chip on his shoulder, um, is a net positive for the world and it will force all the other brands and all the OEMs to play catch-up. And they all, whether they end up beating him in the end or competing with him in the end, um, or not, yeah, that will drive the world forward. So net positive. SpaceX, absolute net positive. I mean, returning the ability for launch capability to the US, particularly with what we see now with Russia, a net positive. So one would say, what's my quibble? And the quibble is with his relationship with the truth. And I look at Gates and I look at Bezos, both of whom I admire for different reasons. Bezos in particular, who I consider one of the greatest and most rational capital allocators, the amount of capital that he raised in an initial IPO You could add stock-based compensation into the mix to say another source of capital, early debt, um, that, you know, today is a fraction of what it was. Uh, this is somebody who compounded enormous amounts of internally generated capital and earned incremental returns on that incremental invested capital that are truly worthy of studying as a business. So if you are a business student, if you're a student of businesses, to look at what Amazon has done is just absolutely incredible in the way that you would study many of the other, you know, classic operators or the outsiders like a John Malone or a Buffett. People that have compounded capital and rationally allocated, I think, deserve to be admired. Elon has not done that, and people believe that Elon has. And so part of my frustration is the same way that you might see incredible wealth from a Sunday preacher. And I always rail against this, but, you know, Joel Osteen and Ted Haggard and all of these sort of megachurch preachers, they do a service. They, they provide people a sense of meaning. They provide people a following. They provide people a sense of community. And they bilk them from their money. Okay, and so there's just such a— and maybe this is growing up in Coney Island squinty-eyed and watching the carnival barkers and, you know, run their game and con people— but I see so many people conned and fleeced. And so far it has been working because the stock has been going up. But, um, you know, from the SolarCity shenanigans to Full Self-Driving, um, a lot of people say, well, look, you know, this is just a guy that exaggerates or has very high standards, and will hit them. It just might take longer. There's something that, to me, has a witting misleading of people that he's just been exceptionally good at. He's one of the great storytellers. He's created an absolute cult following. Anytime you criticize, the fanboys come out in mass. It's, in fact, protecting not only him, but in many cases, their identity as being a fan or associate. It's really just what I consider to be the mendacity. And, um, it's the same thing when you get frustrated at a politician or you get frustrated at a preacher. When you see that otherwise credulous people are innocently being duped, I just look at it and I'm like, there's no reason, you know. He could just say, hey, we're going to lose money for a long period of time, we're going to do something hugely important, you know, uh, I need to raise billions if not tens of billions of dollars. But it's like the subtle dishonesty over so many years that he just keeps getting away with it. That's the part that to me I don't want my kids to celebrate that part. The ambitious part, absolutely. You know, the, um, the high performance or, um, uh, high pressure, you know, culture of expecting more, the chip on the shoulder going up against it— all of that is wonderful. But it's just the honesty piece. And, and there's other heroes that have been incredible company builders. I mean, you look at Henry Singleton and Teledyne, like, that should be celebrated and, um, this sort of cult aspect of it just invokes the sort of, um, Monorail Man from The Simpsons, or sure, your Sunday preacher. And, and that's the thing that I just— I see it and it just— there's that like hustler, huckster piece of it that just rubs me the wrong way.

Yeah, I guess the question is, I mean, you alluded to it at the very beginning, the net positive of some of the things, um, you know, with the electrification of vehicles, with SpaceX and what it's done for the space economy, you know, all of these different projects he takes on. The question I guess I would have in the back of my mind is net of everything, assuming, you know, assuming there is negative intent or there is, you know, open dishonesty in his own mind around things he's saying, is it a net positive in the aggregate behind all of it that, you know, people are inspired to go take ambitious swings because they see him and the wealth he's accumulated You know, an incremental entrepreneur is born, uh, on the back of his boundless, you know, kind of excitement and, and energy around these things. And does that offset the negatives of all of it? The people who've been screwed over, the people who bought Doge at a dollar or whatever the hell it went to, you know, on the back of his pumping around it. Um, that's the question, I guess I would— I, I don't have an answer to it.

I don't know the answer.

I'm a fascinated observer, but it's interesting.

You can point to, you know, Jobs as well, who is renowned for a reality distortion field, you know, and all kinds of sort of tricks when he would go out on stage for products that maybe weren't fully functional or didn't exist yet.

We've glamorized that as a society, huh? I mean, ever since Jobs, like, the reality distortion field is a weird thing to glamorize in a sense. Well, it is, you know, like even Elizabeth Holmes.

But it doesn't exist. It doesn't exist. In a siloed vacuum. It can only exist because of the belief of people. And so, you know, people want to believe in big ambitious things. And that's, that's a beautiful thing. People wanted to believe that, you know, this, this phone or the capability that Jobs was showing off would exist. And so, you know, people want to believe that we're going to go to Mars. People want to believe that full self-driving is going to exist. And so there's a part where he's just selling people what they want to believe. And so can you fault him for that? And there's just this subtle line between the, again, the honesty and the humility of just saying like, you know, we're not there yet, but we're going to get there is so different than like, this already exists, you know, send your money. And, you know, I think history will probably show that it's a distinction or, you know, difference without a distinction. To me, it's just a line of of like, it's like somebody looking at the floorboards when they're telling you, you know, uh, you know, you mentioned Twitter, like the free— I don't believe that the Twitter thing is at all about free speech.

Yeah. And it's, it's a, um, it's a line, as you said. And it's like, it's a very, very fine line. And you could see it if you'd like find that archetype of personality. You can see it cut one of two ways, and there's really no middle ground. And in the end it falls on one side of the line one way or another. So yeah, I mean, it will be interesting to see the next, you know, 5, 10, 15 years how this all plays out. I mean, I think the Twitter thing, frankly, if I was a Tesla shareholder, I'd be pissed, um, because like taking out a $12.5 million margin loan— I mean, I spent the first 7 years of my career— I think it's not fun.

Just announced today that he's looking at other financing packages so that he doesn't have to mortgage as much, you know, of his Tesla stake.

Yeah, I mean, I'm assuming there's a bunch of private equity funds and large institutional investors who would get on board with a, uh, you know, private Twitter plan, um, if it means that they can do, you know, take bigger swings around monetization and get away from the traditional ad model. So maybe something will work out there.

But man, look, anything is possible. You could believe— I don't know what the implied odds right now on the merger or above this was, but, you know, it was down to like 85%. 15% likelihood that the deal is, you know, still very high, but 15% probability that it wasn't going to actually happen. You know, he has sold $8.5 billion of stock. This is a wonderful way, just like his Twitter poll before, to sell stock, to get out of, uh, Twitter. Now you could— I mean, sorry, to get out of Tesla.

So again, he's a master of diversion, right?

You don't— I mean, the ledger domain and the magic tricks and the illusion, the prestige, is it's, it's, it's, it's admirably done. If you, you know, are a student of magicians and illusion, like it's, it might deserve criticism for the dishonesty. It's sort of the difference, by the way, between Penn Teller and David Blaine. David Blaine will actually tell you that what he's doing is real. And Penn Teller will show you with clear cups and balls that they are completely tricking you. Okay, and I just have more admiration for the Penn Teller approach. To, uh, magic, or, or the Bezos approach to the magic of technology than I do the Elon approach. So again, to me, it's a very big distinction, uh, but, but I would watch to see if this deal ends up happening. And if it does, if you truly care about free speech, is the answer really to saddle this company with tens of billions of dollars of debt? I just— it doesn't make sense.

Well, I thought that that was the funniest. Jack Dorsey tweeted, um, something about like taking, taking Twitter back from Wall Street is a great first step. And I thought about replying. I didn't want to and I didn't reply. I should have. And I was like, I don't know how— I must have missed how like $25 billion of new debt is taking it back from Wall Street because like, I— it was over my head.

If they were taking it back from Wall Street, who owns Twitter? You know, actually, I mean, your point is a really strong one, which is The people that own Twitter are BlackRock, Fidelity, retirement plans, like my mom's pension plan, you know, the United Federation of Teachers. Like, the people that are going to own the syndicated loans are going to be Barclays, Morgan Stanley, like the banks. So you're delivering senior capital structure to Wall Street, you know, that you're demonizing it with covenants.

But, but real covenants.

But it'll return the light of consciousness.

Yeah, yeah, absolutely.

Well, look, I know we're running up against the end of time.

I do have to end with one kind of bigger picture question. So you're someone that thinks about the future a lot. Give me your like one or two big bold predictions for the future and what it looks like.

Well, I'll tell you the thing that I'm obsessed with, and I finally found the team, and I hope that I can share more very soon. But you know, I've talked about publicly, which is actually a strategy, right? I throw a thesis out there. The digitization of human scent is coming. It's very—

Shazam for smell.

Shazam for smell. The ability to identify a single molecule in a room is coming. The ability, not all, and single molecule that has meaning to you. I mean, literally a molecule, a structure actually conveys to you a good smell, a rose, a wine, a food, a perfume, a cologne, and a bad smell. From— I mean, you know, if you ever ride the New York City subway, you know lots of bad smells. But, um, that is coming, and I think it's going to— the ability to give machines that sense, a sense of smell, I think is going to be a really big deal. So absolute undeniable arrow of progress that that will exist. The other thing which I increasingly am really inspired by is— and, and I think I think there will be fierce debates that almost are like Keats' accusation of scientists unweaving the rainbow. I'm in the firm camp that the more we know, the more mysteries you unfold, you know, the more awe we feel. Um, you know, when you finish a mystery book, you never read it again, right? But when you learn something about the cosmos or the universe, like, it just creates more awe and wonder. So, so I'm firmly in that camp. But the, the area I'm talking about is this intersection, alluding to what we were talking about before about dreams and deep neural nets. I think we are going to learn more about human consciousness as we interrogate the systems and try to understand how much of the modern approaches in AI are working to sense, make models, make predictions on those models, iterate, and learn. And I think that it's going to reveal some of the mysteries of consciousness and, um, I think that that will unsettle a lot of people because in the same way, to learn that dreaming is not this mystical— and again, not to say to learn is not fair because it's a theory, but to have a believable or plausible hypothesis that dreaming is not some mystical entrance into this other realm of hallucination, but actually something that biologically was adaptive to introduce noise into your daily pattern to make you— I mean, those are the kinds of things that we're going to start to understand and suddenly be like, oh, uh, the reason we do that, you know, actually had this evolutionarily adaptive function. And for some it will seem, you know, unromantic, and I think for others like me it'll inspire more, more awe.

So, well, I, I am going to sleep very differently tonight after, uh, after having learned that. So I, I appreciate so much your time. This was Fantastic. I look forward to getting to do it in person soon, um, post-baby for me, um, but, uh, but looking forward to seeing you, and, and you'll see a few more gray hairs on my head by then. So thank you. Congratulations, man.

It's, it's the most important thing, I think. So huge congrats to you guys.

Thank you. Thanks so much for listening to today's episode.

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Don't let them steal your joy 'cause they just want you in that same old predicament. Misery loves company, think on it, pray on it. Sip a cup of tea, never let the world smoke it in the borders.