Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476)

"The long tail of funds that are subscale, I have predicted that you would see a 50% involuntary exit or extinction rate. They're under-reserved, they've over-invested, they have too many portfolio companies. Those companies are going to have to come back to the well and raise money, and they're not going to be able to find investors. There's going to be a lot of down rounds, broken fund raises, broken syndicates, and those guys are going to go out of business." And that large LP looked at me and laughed and said, "Josh Wolfe, that's ridiculous." It's not going to be 50%, it's going to be 90%.

I'm Ted Seides, and this is Capital Allocators. My guests on today's show are Josh Wolfe and Brett McGurk, partners at Lux Capital, a $5 billion venture capital firm that specializes in emerging science and technology companies that turn sci-fi into sci-fact. Josh Wolfe co-founded Lux and is a repeat past guest on the show. His first appearance from 2018 discusses his story, including phrases, chips in shoulders put chips in pockets, failure comes from a failure to imagine failure, and directional arrows of progress. Brett joined Lux last year following a 20-year career in public service where he advised 4 US presidents and helped shape national security strategy across the Middle East. Our conversation kicks off with Josh Wolfe's state of the venture industry and Luxus positioning within it. Brett then describes his background, sovereign ambitions, and geopolitical risks. We discuss directional arrows of progress across AI, CapEx maintenance, biology, defense systems, and space. Before we get going, you might be wondering why we've added these humorous little anecdotes to encourage you to spread the word about Capital Allocators. Our first thought was that each of Hank and Morgan on my team and my wife on the home team find that I can be quite funny, which doesn't really come out during the interviews. I could try harder by amping up the energy of my questions, like asking, "Hey, what's your investment strategy?" Or maybe not. Now keep in mind, their sentiment about my sense of humor is not universal. Each of my 3 teenagers, my stepson and my stepdaughter, question the quality of my humor from time to time.

Or in the case of my kids, most of at a time.

So these clips give you a little window into my sense of humor, uh, for better or for worse. Thanks so much for spreading the word. Please enjoy my conversation with Josh Wolfe and Brett McGurk.

Josh, Brett, thanks so much for joining me.

Great to be with you, Ted.

Great to be here.

Josh, it's been a couple years since you came on the show. I thought it might be fun to start with your overview of the venture industry today.

State of play at a macro level is you're coming off of a 10-year boom cycle that largely was SaaS enterprise software driven, and you're seeing a big shift into real assets, physical assets, which doesn't mean real assets in the classical allocator sense, but real assets in the form of semiconductors, energy, compute, silicon, steel, data centers, all of that seeing a huge wave to the point that it is reaching an apex of absurdity. Defense and aerospace as well. Those are areas where hard material is going into the ground and infrastructure behind all that stuff. Within the fund level stuff and the allocators, you have this bifurcation that I call the minnows and the megas. What I mean by that are a very long tail of subscale funds, funds that are basically, call it $500 million or under. Normally that was the average size for a venture fund, But you have a lot of people that have been tourists in venture. They benefited from an environment with low rates and an abundant amount of follow-on capital. That follow-on capital was 6, 7, 8 years ago, SoftBank and Tiger. At first, those were coveted firms because they would turn you into unicorn, and now they're almost taboo. And in many cases, adverse selection of founders saying, why would you take money from those folks? The long tail of funds that are subscale, I have predicted that you would see a 50% involuntary exit. Or extinction rate, that they would go out of business. And why? Because they're under-reserved, they've over-invested, they have too many portfolio companies. Those companies are going to have to come back to the well and raise money, and they're not going to be able to find investors. There's going to be a lot of down rounds, broken fund raises, broken syndicates, and those guys are going to go out of business. And I was sharing that with a large LP, and that large LP looked at me and laughed and said, "Josh Wolfe, that's ridiculous. It's not going to be 50%. It's going to be 90%." I'm accepting a premise that you're going to have this long tail of involuntary exits from the minnows, the small subscale funds. At the other end of the spectrum, you have the megas, and the megas are the very large funds. Andreessen Horowitz, Lightspeed, Insight. These are all funds run by great people, but they're playing a different game now. The fund sizes are increasing. The total AUM is approaching $80 to $100 billion under management. They will take a page from the playbook of Apollo, Blackstone, Carlyle, TPG, KKR, all of whom went public during the 2009 to 2014 period. And I believe that at least General Atlantic, General Catalyst, Andreessen, maybe Insight, maybe Lightspeed go public. They are making global acquisitions. They're buying up other asset managers. They're going into wealth management. A whole slew of decisions that are creating this bifurcation venture between the small guys who are under-reserved and likely to go out of business and the big guys that are doing later-stage deals, becoming more like the Fidelities of venture capital.

If you take those two theses together, so the shift into a form of venture real assets and this bifurcation of the minnows and the megas, what does it take to fund the generation of companies that have real assets that can't massively scale through the internet?

We went from this belief of hyper-efficient software. The virtue of that was that you didn't need a lot of money and you could figure out if your product was working and users would adopt it. The reality is some of the most successful software businesses have actually raised billions and billions of dollars. Snowflake and Datadog and Databricks, quite capital-intensive businesses. They've also created a moat around them. It isn't always bad when something is capital inefficient if you create a moat and can get dominant market share. We do everything at Luxfrom, about a third in biotech and robotic surgery and med devices, and another third in aerospace and defense and industrial. The other third on core technology, which is everything from non-invasive brain-machine interfaces to everything we do in the AI/ML compute infrastructure stack and semiconductors and edge inference chips. The defense space takes a lot of capital. Anduril has raised several billion dollars now. There are few companies that are competing with them. There's a long tail of wannabe next-gen defense tech companies, but Anduril is the 800-pound gorilla next prime.

You do need capital, Historically, if you take rule of thumb of asset management, size is the enemy of performance. Firms get big, they live off their management fees, not their incentive fees. I'm curious, as these changing dynamics of what you see the needs of venture-backed companies are as they grow and scale and stay private, how does that change the different incentives of a GP, an LP, and a founder?

There are a lot of people that are just trying to asset gather, The smart employees at those funds know that they will likely never see a dollar of carry. The larger the fund you raise, the harder it is to return in venture. To get a 3 to 5x cash-on-cash return, we've gotta return $4.5 to $6 billion of gross proceeds. If you're owning 10% to 20% of your companies on average, you've gotta have between $40 and $100 billion of aggregate market value. There aren't that many companies that end up like that. We have companies today that are approaching a trillion dollars. If you're a realist about this, fund size increasing is the enemy of returns. The incentives for the founders who want to have great investors that can be early-stage investors that can scale with them over time, that's harder to do when you have a much bigger fund. The other guys that are going after these larger funds are recognizing the market wants to see these multi-asset diversified alt managers. And if you can reach $100 billion plus AUM and be a diversified player like that, different fund strategies, different thematic funds, different geographies. There'll probably be demand for the players like the Dayals and the Neuberger and Peter Thiel and Goldman and people that are doing GP stakes. That's the incentive difference. Build for AUM and franchise value or manage for returns and being the most desirable for founders.

In a landscape where venture historically was high return, high risk, from the LP perspective, how does that change when companies go from that early-stage founding to something like a multi-billion-dollar business that's still private?

There will be outliers where you can still underwrite these companies and they can be deca-billion-dollar outcomes, but that historically in venture was not the case. You were looking for $1, $2, $3 billion outcomes, and ideally you were funding them at sub-$100 million, and you can have any individual portfolio company giving you 10x in under 5 years. If you think about venture portfolio construction, there's 2 ways to cut this. One company will return the entire fund one time. For a $1.5 billion fund, we need to own 20% of a company for it to return $1.5 billion. It has to be a $7.5 billion outcome. There's a long tail of those, but it's hard. Another way to look at it is that the next 5 or 10 companies in your portfolio are going to return the entire fund another turn. And then the long tail of everything, including all of your losers, would return it a third time and you'd end up with a 3x cash on cash. The other way to think about it is about a third of your companies might be 10x, a third might break even, and a third are basically total losers and you end up with a 3x cash on cash. More capital intensive on average, harder to return capital. There are exceptions and that's what everybody is trying to do is find the outlier exceptions where they could still use capital as a moat, generate deca billions of enterprise value based on billions of revenue. But few and far between companies that can do it.

As that landscape has changed, you have competitors who have decided to be large and therefore they have big balance sheets that they could attract founders at all stages. How have you thought about changes in Lux's model over time?

It really is try to be the first institutional investor in. The difference in this ecosystem between those minnows and the megas, we like the megas. We want them to be in the cap table. We always say we're contrarian. We want people to agree with us later. We want these funds to come in later at a lower cost of capital and higher valuation where we've assumed some risk, we've killed those risks, product, people, finance, technology, market, and therefore created value. And a later investor should come in and demand a lower quantum of return. That is the way that we think about it. That has really not changed. It also serves us well because then you have a product that you're generating that other investors want to invest in. The other thing we're doing is hiring a young bench of investors who— I'm 47 years old. My youngest partner is 24. Her name is Lan Zheng. She's a killer. Amazing network of young, bright, brilliant math Olympiad winners in high school that have gone on to computer science at Stanford and MIT, went to work at OpenAI at 19 years old, and then at 22 years old are leaving and starting a company. And our goal is be the founding investor in those companies. That is what has changed is go earlier, benefit from this ecosystem where there's an abundance of later-stage capital, They're in many ways indexing across the venture landscape, but it benefits you if you can be in early.

As you've grown and brought in this next generation of talent to your team, how do you structure the organization to get at those early-stage opportunities before others?

We are relatively small, 40-plus people, 10 on the investment team. Everybody is a partner. We're comping everybody on a few things. One is capital formation. A small group of people do that here. That's the lifeblood of every firm. The second is, can you source and win deals? The right to win is the most important thing. It gets easier as our reputation has got better. It gets easier when you back amazing founders who you can call on your behalf to come in and help you win other founders and compounds. Adding value to the companies, can you help them with syndicate formation, competitive intelligence, customer introductions, beta design partners, hiring and recruiting, building out a board governance, then corporate development to be able to line up exits. Can you introduce them to capital market folks early on? Can you introduce them to crossover investors early on? Can you get potential M&A heads at the major tech companies? Our best outcomes, as an aside, have always been an oligopolistic industry structure where there's 3 or 4 players who are going to irrationally compete to own the asset because they want it and they don't want their competitor to get it. Leads to the best outcomes for us, even better than IPOs. Knowing those core dev heads of those different companies, being able to play them off each other in a good ethical way is really important. And the fifth is firm building, people thinking about how do we build the brand? Some people might do that by kinetic networking. Some people might do that by hosting dinners with thematic ideas around certain founders or technology areas. Some people are talking on campuses. Some people are going on brilliant podcasts like yours. Whatever it is to build the brand of the firm is another way that people get comp. Over time, the org has gotten flatter and flatter. You have one end of the venture ecosystem that is institutional hierarchical, almost like a Goldman partnership, Lots of gradations. You have others, Benchmark, which I've always admired, that is a total equal partnership. You're in the partnership or you're not, and that's it. There's not a lot of junior people, there's not a lot of staff, a real craftsman-like kind of thing.

How have you incorporated the value-added piece, which often comes from partners and venture partners, people diving into companies to help them grow? How's that evolved over the last few years?

Andreessen that I admire that have built out an entire platform team where they have dozens of folks that are helping with these different attributes. We try to do it individually as a partner, and then we add on venture partners who add something unique that the partnership doesn't have across the entire firm. It's true in our accounting and finance department. It's true in our operations group, our legal group, our platform group, and the partnership itself. If two people are the same, one of them is unnecessary. I want people thinking differently. I want people able to add different value. Ted, if you were starting a company and we were backing you, I might be the one that finds you, sources you, helps win the deal. The entire partnership is going to smother you, consume all your time, prevent you from going to see our competitors, do everything we can to lock you up. Once we're invested, somebody might be helping with recruiting, somebody might be helping with syndicate intros, somebody might be helping with competitive intel, somebody might be helping with PR marketing. We operate as what you call unum lux. Brett was on the board of one of our companies, between two of the administrations that he served, past four White Houses, starting with Bush II, and then Trump, built a counter-ISIS coalition there. Between Trump and Biden, where he would then be the main Mideast envoy responsible for some of the most high-stakes negotiations that our country faced, he was on the board of one of our companies that was focused on signal intelligence and AI. We got to know him, respected him, admired him. When he left the Biden administration, he came and joined us some weeks later. The relationships that Brett has developed, particularly in the Mideast region, of geopolitical significance, of capital economic significance, are extraordinary. We have our portfolio lined up to spend time with Brett to get intros that many people can't get. It's been a real unlock and a hack for us. It delivers value to our companies, delivers values to long-term partners that Brett knows in the region, particularly in UAE and Saudi and elsewhere. That is the major unlock. And thinking about the scale of that, value from a single individual is really beautiful.

There's this interesting polarity of talking about finding some niche technology that you can invest in, maybe you're creating from scratch, and then someone like Brett, geopolitical relationships around the world. How do you think about the importance of macro? In your investment process at such early-stage technologies?

Some of it is this old joke that I used to tell Scott Bessen, a mutual friend of ours, would say, why do you care so much about macro? And I would say the act of venture is the most micro thing you could do. You're analyzing a little technology or you're analyzing an individual. If you were to imagine trying to do this downward selection, not just of a security selection, but an individual or a company, It's the same thing as picking the best dish on a menu, having selected the best menu from the best restaurants in town, and having picked the best neighborhood in which to dine from the best city, and all these concatenated decisions. And you're about to take this delicious bite of this delicious morsel of food, and then all of a sudden Godzilla comes and just steps on you. Ignorance of the macro is no virtue. It plays another way. There's themes and theses that we've developed thinking about what if we bring this technology Globally, what if we bring it to the rest of the world? One in particular fits this theme that Brett and I have been working on that we call sci-tech diplomacy. And you think about the diplomatic vectors of military and economic and political, science and technology is another vector for diplomacy. A breakthrough that happens at an American university or a breakthrough that happens with an American entrepreneur and the ability to take that and scale that globally and introduce them to sovereign partners who might say, wait a second, we can get a competitive advantage relative to our regional peers, or our domestic population needs this, or we can put money into it and help to be a major distributor in the region of the world. Those are big deals.

Brett, that's probably a good opportunity to bring you in. Josh Wolfe told a little bit of your background, but would love to hear it from you, what that path was to lead to this seat.

First, it's just great to be here. I could listen to you guys talk for the next hour. I've learned a lot from your podcast. Last 20 years across 4 administrations, as Josh Wolfe said, which is pretty unique. I first came to Washington in 2001. I was a law clerk for the Chief Justice on the Supreme Court, William Rehnquist. That was right after Bush v. Gore was decided in the Supreme Court. I remember Washington feeling very divided, very polarized. It feels kind of quaint now. Then I was also on the Supreme Court, fast forward a few months, on September 11th, 2001. On 9/11, which changed the course of the world and so many lives tragically, and ended up changing the course of my career. I wanted to find a way to be involved in our national response. I got an opportunity to go to Iraq and help with, at the time, their constitutional process, trying to figure things out. No clearly defined mission, but I signed up for it and I landed in Baghdad in January. About 8 months into the war. Remember vividly how cold it was driving into downtown Baghdad and seeing hulks of burned-out vehicles, driving as fast as we could. It was such a dangerous road, feeling immediately that our country had gotten ourselves into something we did not fully anticipate, understand. I spent almost the entire year there in 2004, defining experience for me. It still shapes how I think. That led me into the Bush White House in the second term. I worked closely with President Bush and the team on resetting the strategy in Iraq because we had a debate about whether we had the resources, whether we were achieving our objectives. The president's hearing one thing from his chain of command at the time, Don Rumsfeld and that team, and hearing something else from us and his senior White House team. He actually wrote about this in his memoir. He called us a band of brothers because we were honest that we did not think this was going the right way. That led to in 2007, a surge strategy in Iraq and resetting our ends, ways, and means and resources and redefining our objectives. That strategy, as difficult as that was, did produce the results we had hoped. So by the time President Obama came in, despite running on a campaign that I'm going to get out of Iraq, he actually kept on senior members of the team, including me, who were working on that policy. I stayed with Obama off and on, worked closely with President Obama during the counter-ISIS campaign. When Trump came in, who had run saying, I'm going to fire all the generals, I have a secret plan for ISIS, it was going pretty well. The campaign was working. He kept me as one of the few political appointees to cross over. That's how I ended up staying on with the Trump administration for a couple years. I was then at Stanford. I was writing a book, I was teaching, I was on the board of a great luxe company. When President Biden was elected, he asked me to come into his White House. So that's the last 20 years. It's been an incredibly challenging, intense, difficult experience. I joined Lux shortly after the most intense period in government service I'd ever had, particularly after the October 7th attacks in Israel, negotiating two ceasefires. We got a ceasefire in Gaza. I worked that with Steve Witkoff, who was Trump's incoming envoy at the time, which is an interesting story of how foreign policy should work. You should have more of a bipartisan spirit of problem solving. It's an incredibly intense, difficult period. Since joining with Josh Wolfe, it's an incredible portfolio of companies, entrepreneurs, a window into the extraordinary American ecosystem of tech and advanced tech and everything happening. Honored to be on the team. That's the short story to a pretty long story.

Brett, there's so many threads to pull through this. As you were working in the Middle East, one of the things in building great relationships is understanding cultural differences. What are some of the things that you learned from your time that an investor in the United States might not understand about the region?

If you're face-to-face with anyone senior, try to understand what he or she across from you wants to do. Every country's different. The way Saudi Arabia is developing its data center buildout, its ambitions is different from what Abu Dhabi's doing. Trying to find that fit is important. It's not the easiest environment to raise capital right now. They are looking for opportunities that benefit themselves domestically as they're looking ahead with a young population trying to create jobs, particularly in Saudi Arabia. I've been in and out of the region for so long, I have a decent sense for where these different leaders are trying to take their countries. And that can be Kuwait, Qatar, UAE, Saudi, Iraq, Israel, Egypt. It's important to understand their objectives and then trying to find where interests can align.

Brad, I'd love to hear one example of how understanding the country's objectives lead to an insight that you got.

I've negotiated with the Iranians. I've done very difficult backchannel with them during the crisis in the Middle East in the past couple years and warning various things that are leading to military confrontations. If you're making a hard demand, say with Iran on whatever it might be, whether it's on the nuclear file or the hostage negotiation or warning them against ongoing attacks against us or else type demand, they point to our constant turnover in Washington. The anecdote I heard across the table was, if I'm taking a bus from Tehran to Isfahan, and it might be a 3-hour bus ride and someone gets on the bus that is obnoxious, making a mess of things, I'm going to stay on the bus. I'll get to my destination. And he said, United States, you're that obnoxious guy on the bus. You're going to have a new president in 4 years. You're going to have a new administration, totally new policies. Whether I like 'em or don't like 'em, we're to stay in the course. That's how Xi Jinping thinks. That's how Putin thinks. That's how a lot of leaders around the world with longevity think. That's why it's important for us as a country to get back to some sense of things stop at the water's edge. And when we're out there in the world, we try to speak generally with the same voice. That's an ideal, but we've kind of lost some of that. That is how A lot of leaders around the world see us. It makes getting things done difficult, particularly when you have these wild swings between one administration to the next. I've spanned those administrations. Some of it I say to foreign counterparts is exaggerated. Our interests still are, generally speaking, within a zone of agreement between both parties of whatever comes into office. That is not just a cultural difference, but a geostrategic difference that we have to grapple with. As the United States, as an American official, as an American business person sitting across the table from somebody in one of these countries.

I'm curious of the transition from public sector to private sector in this period of time you've been at Lux. What are some of the contrasts that you felt most acute?

Looking back in the last 10 months, I've done a few things. First priority has been my family. I have a second grader, a little girl, I missed much of her last 4 years. I've sought to reconnect and it's been great. Family is beginning, middle, and the end, as President Biden used to say to us all the time. Very much true. I'm writing a book about the last 20 years. Might come out next year. I'm a CNN analyst. I keep current with things. Joined Lux and have become a full integrated member of that team, and I'm learning so much. What's so fascinating about it is the thought process. I've developed a disciplined way of approaching problems. Strategy, Ted, is the most overused word in Washington. What is strategy? The essence of it is aligning your objectives with your resource and how you're going to do it. And if that's not aligned, you're going to find yourself in trouble. I've found if you're in the Oval Office or in the Situation Room, asking those hard questions, what exactly are we trying to achieve? How are we going to do it? What's our resource base? What are unintended consequences, risks, assumptions? I mean, all that, especially in military-type decision-making, war and peace decision-making. The way Josh Wolfe described venture, it might look like you're painting such a broad canvas. You can make a lot of bets, some of which don't pan out. And yet the same thought process comes to bear. I have found we've had examples of a founder coming in with crazy ideas, that at first brush might sound nuts. Then you get to know the founder, you get to know their background. Counter to what I just said about that more disciplined strategic thought process, take JFK's moon speech in 1962. People say, look, a leader's got to point to where we want to go. If you study JFK's moonshot speech, before he made that speech, he had on his desk a commission study completed Overseen by LBJ's vice president with the best rocket scientists in the world, Wernher von Braun, and these Nazi scientists who came over to work with us. That's another lesson of history. And they said, we can get to the moon. Here's what it takes. It's going to take bigger engines. It's going to take big resources. Not without risk, but you can do it. When JFK set that objective, you had an ends, ways, and means.

You could—

way to tell that story. That's very important in making investment decisions. It's got to be grounded in the founder, the team, and where it's going to go. Reflect Orbital's a company that is launching satellites to redirect the sun to the dark side of the Earth for all sorts of applications from solar to military applications. They're launching their first satellites here in the second quarter of the coming year. That's just one example.

This is a great example to what Brett said. Half or more of the team, when they heard the pitch, they're like, "That's ridiculous." We want to be at the cusp between what seems impossible, and then you hear the pitch from the founder, "Oh no, no, this is inevitable." That gap from impossible to inevitable is powerful. Believing in this founder who came from SpaceX, got these extraordinary people who were some of the best and brightest material scientists, Satellite builders, rocketeers, et cetera, it all made logical sense and it was all obeying the laws of physics. The way to think about this simply is you have those Mylar birthday balloons, those mirror-like, super thin but super reflective. If you could have that unfurl into a giant mirror on a big boom that sprawls out and redirect the sun to flash and have a satellite hovering, shining a flashlight in the middle of darkness, anywhere you want in the world, tasking a satellite, sunlight as a service, solar cells could be performative 100% of the time instead of 50% of the time. Yes, you can shine it on something trivial like a concert in the middle of the desert at night or search and rescue for military operations when you don't want the cloak of darkness. If it works, it could be huge. There's a lot of countries where Brett and others have relations that might really care about this. We are a priori thinking about how could we light up, no pun intended here, their business by opening doors that they might themselves never have access to.

Brett, I'd love to ask under this thought process of the duration of venture investing, long-term, and the macro perspective you have, what do you think are the biggest geopolitical risks that you're now thinking about as part of Lux over a long period of time, not just the next year or two?

Counterterrorism keeps me up at night. I go back to that foundational experience. I'm on one track and the world's on one track, and then we got hit out of left field. There's still groups out there that want to do that again. We got to stay on top of that in a smart, sustainable way. There's increasing nuclear risk. We're entering a world of all the guardrails of arms control are eroding if you project ahead 10, 15 years, particularly as the Chinese build up their arsenal. And of course, AI and where that's heading and military applications of AI is something that jumped to the top of our national security agenda when I was in the White House in the last 4 years, particularly starting in 2022. And that intersected a lot with the Middle East because of the advancements and the ambitions of some of these Middle East partners. The risks out there particularly the risks I've been associated with are quite acute. However, the opportunities are massive. We've been talking a lot about the Middle East and we at the G20 back in 2023 rolled out this initiative called the IMEC, India Middle East through Jordan, Israel into Europe, overseen by the dynamic American entrepreneurial ecosystem. It is a ship-to-rail transport. It's tech, it's trading ideas and technology. That is very much the wave of the future. Trading relations between, say, UAE and India, how they've spiked since they closed a free trade agreement a few years ago. Once we emerge from this horrific Gaza crisis, that agenda is very much the direction of travel. I hear it on almost every capital. That's where they want to head. People want to build stuff that's going to change the world in the heart of our national security space. There is a recognition that We have to have our best minds in tech, our best companies, our best startups working seamlessly with our national security sector and the advancement and protection of our country, working with allies, partners, strengthening them as our comparative advantage against China and others adversaries.

The other vectors that are interesting, space as a vector is going to be hotly geopolitically contested. There's great opportunities for collaboration, also great near-peer competition. The ISS was this technological and scientific diplomacy. That has now fractured. China and Russia are out. China has gone to the dark side of the moon. Russia's going to the moon with China. US is going back and we've got our internal competition between SpaceX and Blue Origin and others. Space is going to be a contested domain in a very big way. Huge opportunity, but huge risks. There's gonna be sabotage, counter-sabotage, detection, deflection. It literally is going to be Star Wars and there's gonna be a lot of contested battle space there.

Josh, I'd love to turn to the other side as Brett's talking about progress and trends. The fun way to ask you about what you're seeing is your line of directional arrows of progress. Everyone talks about AI. You just threw out early on this apex of absurdity. Please go on with that.

Wind me up. We've known each other for a very long time. I think it was back in 2015 or 2016. We were in a company called Zoox, which was doing self-driving cars. It was inside of the doors of Zoox where we recognized that they were training these cars outside, ingesting all this sensor data, and they were processing it at the rate of 1 second per second, what we call reality. I got upset because I thought that they were messing around and playing Grand Theft Auto. It looked like they were literally playing video games. And they said, "No, no, no, relax. What we're doing is training the vehicles in silico on computers using physics engines." "Are those supercomputers?" I asked. They said, "No, they're NVIDIA chips that aren't even on the market yet." Now, this was at a time when NVIDIA was a $15 billion market cap company. NVIDIA was ascendant and it made a ton of sense to see with convolutional neural nets and the rise of the transformer and ultimately what we know as large language models, transformers being the T of GPT, all of that made sense. Fast forward to today, the amount of money that is being spent and encouraged by Jensen and NVIDIA, that you need hundreds of thousands of H100 chips in these clusters of data centers, which in turn fuel a demand for next generation energy of people funding modular reactors, speculative companies that I think are borderline fraudulent. All of that is premise that you need all of this. I use 5 different large language models at any given point in time. I open up 5 different tabs in the browser, or if I'm on my phone, I'm using 5 different apps. I've got Grok, Gemini, Perplexity, ChatGPT, Claude. They're all competing for 100% of my mindshare. I'm allocating them 20%, but they're spending 500% on CapEx. When Anthropic trained Claude, the first model was $100 million to train. They got $100 million of revenue. Amazing. Then they spent $1 billion to train the next model, got $1 billion of revenue. Still amazing. Then they spend $10 billion. Now they have $7 billion of revenue. The asymptote of revenue growth starts to hit this plateau. It will continue to grow, but the pace and the rate of it slows down while CapEx is still going super linear. You have a scenario where what one company does individually and rationally collectively becomes irrational. What are the things that will break it? There are at least two major things. One of them in preview is memory and one is Google. On the memory side, I feel the same way today where Jensen wants you to believe that you need all these chips for training and inference. You do need them for training, but for inference, meaning the prompts that you do, I'm of the belief that 50% of your inference and your queries will be on device. They will not be on device going to the cloud. They will be on device locally hosted on models that are either etched into the silicon or using flash memory. There was a paper a year ago that gave me that insight. The paper said we could do large language models on small devices using flash memory. I immediately went and looked and said, okay, you've got SK Hynix, Samsung on the Korean side. SK Hynix has been delivering through the roof backlog for the next 2 years. Samsung will probably come in and take some of that. Micron, US, I was worried that they were gonna face some export restrictions from Trump. So far doing well and thriving. 2 main markets for all these memory guys, high bandwidth memory that's attached to the GPUs and is needed. And then this next cycle of on-device small chips, flash memory, being able to run locally. That's the first thing that cracks the consensus narrative of endless demand for chips and data centers and power. The second is Google. Google can Microsoft these large language model players and the presumptive revenue growth at OpenAI and Anthropic, et cetera, would get hit. Today, roughly $13 billion of revenue at OpenAI, 70% of that revenue is from $20 a month paying subscribers like me. Google, 20 years ago, looked at Microsoft's main cash cow of Office, PowerPoint, Excel, Word, and Outlook, and they gave it all away for free because they could, because they have this advertising model in search. Google can give away Gemini, which was the laughingstock when it was called Bard about 2 years ago. Today, Gemini is the most performative model, largest context window. Young companies run on G Suite. I allow it and trust it to search my Google Drive and my files and my Gmail and so forth. I don't trust OpenAI to do that in the same way I didn't trust Meta and many of their products. I did trust Apple, I did trust Google, I did trust Amazon. Trust is a feature of these companies. Google can give it away for free and completely undercut, and people will say, why am I spending $20 a month for this when I'm getting it for free? They've got Nano Banana for images, they've got VEO-3.1 for video, they've got NotebookLM to be able to put in hundreds of PDFs and audio files and be able to generate stuff. It truly is getting better and better and more cohesive from what seemed a bit chaotic 2 years ago. Those are my 2 bets that both public market and private market, you'll see edge inference chips and memory chips becoming more and more important. And then the second is Google is a sleeper here. Apple is a little bit of a sleeper. I was sharing this with an LP, this thesis around Google, and they're like, Josh, I got to tell you, I just got a Bloomberg alert that said that Apple had just chosen Google to be the main AI as replacement for Siri. That's a big deal. Google was paying Apple $10, $20 billion a year for search inside of Safari. That ecosystem is a lot more vulnerable than consensus linear predictions will make. The other adjacency that I talked about is something that we call at Lux Life cording. There will be lots of little devices. They will start with third-party pendants and rings and necklaces. Hardware microphones recording passively 24/7 every day. The young people will be comfortable with this as digital natives. You can start to see the breadcrumbs. Some people when they're on Zoom, they have Fireflies or Granola or Otter that are recording things. You can then summarize the transcript, you can unearth insights. There's going to be more demand for the flash memory in addition because there's going to be so many devices, whether they're integrated into watches, jewelry, wearables, 24/7 recording. Same thing with glasses. Glasses will be able to detect if a scene is changing, you gotta record every 3 seconds, little snapshots, little videos. If it's static and not changing that much, you only have to record every 3 minutes or 30 minutes. You will have entire daily archives of your daily experience ingested, processed by AI, unearthing insights that you didn't realize. And there's gonna be a whole new demand for the components that go into all that stuff. Those are some of the contrarian takes on AI.

If we're at the apex, where does it go?

On the capital market side, you see hundreds of billions of dollars destroyed of people that play the same game that you did back in 2000 with fiber optic cables. The counter to that, if you listen to some of my friends, would say, well, back then you had dark fiber. Today there's no dark GPUs. I still beg to differ. What the individual company does rationally, collectively is irrational. There's going to be a glut. And there's going to be a collapse. Debt has not really entered the system until now. Debt is the thing that causes bubbles to collapse. You've got Facebook issuing $25 billion of debt. You have this crazy structure with Groq and xAI from Elon. You've got CoreWeave. These things are messy. Dave Einhorn had a good recent snippet in one of his recent quarterly letters that was talking about how a dollar of OpenAI revenue results in $8 of seeming revenue. It's $1 to OpenAI, then they pay Microsoft $2, so they're losing money, 50% negative margins. Microsoft then pays CoreWeave, CoreWeave then pays NVIDIA. That $1 that I'm paying translates into $8 of revenue and $100 of equity market. That's a house of cards that's going to collapse. The next wave that I'm bullish about is going from two-dimensional AI in this current wave which is pretty much saturated. That is everything from voice, video, images, text, code, anything that's popping off a screen to thinking about the next wave of three-dimensional AI. What that means is going into biology and robotics. Biology and robotics are interesting because there is scarce datasets. If I wanted to raise money and train the next large language model, I could take the repository of the internet, everything on Reddit, everything on X, and be able to train the model. If I wanted to train a new robot, there is no repository that I can go to. I have to create it. What is scarce becomes valuable. There's a company called Physical Intelligence known as Pi that is the leader doing that. We had a company called Evolutionary Scale. It's a quick, amazing story. I backed this guy 10 years ago in a biotech company. His name is Alex Reeves called Calliope, focused on the gut-brain axis. Alex then goes, gets a PhD in computer science at NYU, Why? Because he believed that the future of AI was going to be computer science and AI meeting bio. Amazing, prescient. He goes to Meta, builds a group, has $50 million a year of budget, builds a 12-person team, is competing with AlphaFold, DeepMind, publishes a paper on protein structure prediction. Amazing. You should spin this out of the company. He says, Josh, love you. I'm getting a lot of budget here at Meta. I'm good. 6 weeks later, he comes and visits me with Eric Lander of the Broad Institute. He says, Josh, they're shutting down my group in a few weeks. I offer him money on the spot. He does the right responsible thing, says, "Thank you very much." Goes to market, gets me to pay a higher price and own less. We bring in Nat Friedman, Daniel Gross, Amazon, NVIDIA, and a bunch of other investors, and CZI just bought it. We funded them, and then the nonprofit arm ends up acquiring them. Why? Because Mark is so competitively motivated to beat Demis Hassabis and DeepMind and wants to win a Nobel Prize, and he thinks that this is the group to do it. Crazy story. Bio and AI is going to continue to be a big deal.

What are some of the other directional arrows of progress that are leading your mindshare?

One of the big ones is maintenance. Why am I excited about maintenance? The past 10 years, driven by the cost of capital, was an abundance of growth CapEx. Everybody was funding new buildings, new HVAC systems, rail, train, planes, automobiles. They were putting data centers, military installations, satellites, Anything that you can imagine, people were deploying. Now, if you are a good CFO or a good capital allocation committee or a good activist investor or good governance, you were like, enough with the spending. Why don't we take the assets that we've put in the ground for the past 10 years and maintain them? If you are a student of accounting or financial statements, there's two parts of CapEx, growth and maintenance. The pendulum is going to shift. Maintenance is going to be in high demand. That means that there's an opportunity for new technologies to help maintain existing assets. Software for asset maintenance, low-hanging fruit. Software plus sensors for acoustic detection, aberrations of machines that might be breaking down. You start to hear a rattle, a fan belt, something's off a little bit from its normal pattern. Robots for remote repair. We're not going to send astronauts up. Remember, there's only 8 people up in space to maintain these satellites. We're going to send robots that can go and wayfind, detect them, manipulate them, and in some cases prevent or conduct sabotage. That's another directional arrow of progress for maintenance. On the AI and bio side, there's one that I feel very strong conviction on. And the thing about these directional arrows of progress, you don't know who the entrepreneur is, you don't know who the company is, but you have high conviction it's inevitable. That thinking led us from seeing an energy— we went from carbohydrates to hydrocarbons to uranium. Directional arrow of progress, more and more energy density per unit of raw material, I got excited about nuclear. What's the big unsolved problem with nuclear? Nuclear waste. We start a company called Kurion, big success for us in Japan. Green machine interfaces. Idea here, we went from standing up next to a giant ENIAC computer 50 years ago, then 25 years ago having desktops and towers, 12 years ago having laptops where you give rise away from the mouse to a trackpad. You're still tickling the keys, but now it's touching your lap and your thighs. Then phone held in your hand 18 hours a day, first thing you touch in the morning, last thing you touch at night. Then watch and AirPods. The next thing was gestures. I'm sitting here gesticulating wildly while I'm talking. The ability to go like this and turn a computer on or off or change a song by swiping in free space without a camera, that became the basis for our investment in Control Labs. Coincidentally, Meta bought that for a little under a billion dollars, started by this guy Reardon. He joined along with Brett as a venture partner about to start his next company. Another directional hour of progress. My newest directional hour of progress, the way that science itself is done. If you are a musician, you take your instrument and you go to a studio and you play guitar. If you want to write a song, you don't need to get the instrument. You can go onto GarageBand and Pro Tools and Logic. You can put a virtualized instrument into the machine in a temporal sequence and play the song, collaborate with others, digitize the entire experience. Turned it from a physical CapEx decision to basically paying a cloud fee to access these instruments. Biology and science are going to experience the same thing as happened in computing. Compute used to have to go have a data center, then you went to co-located, then you went to cloud, going from a CapEx decision to an OpEx decision, treating it like utility that you can get off of Amazon or Azure, Microsoft or Google Cloud. Today, if you are a scientist, you have to go to a scientific lab, a wet bench, a white lab coat, You're working with pipettes and beakers, centrifuges, shaking tables. All of that is going to be done by robots. Completely automated labs operated in the cloud where a scientist can pick up the iPad on the beach in the Bahamas, dial up the experiment, it runs, the results come out, they are immediately published in a paper. The AI scientist then contacts the scientist who came up with the experiment and says, "Hey, a paper from 2 years ago, a paper from 20 years ago, these might be spurious correlations. Would you like to rerun the experiment tweaking these parameters?" And you just having been reverse prompted, click yes. And then you go back to sleep, wake up in the morning, new scientific paper. The companies and the countries that get that right are gonna produce massive amounts of knowledge in materials, in drugs. They're gonna produce massive amounts of wealth and they're gonna have competitive advantage. So there is going to be a race, but that is an absolute directional arrow of progress of decoupling the scientist from the wet bench and putting them in front of the computer.

Brett, as you've gotten exposed to Josh Wolfe's way of thinking of directional arrows of progress over the last 10 months, I'm curious, as you put that lens onto the perspective that you bring, what have you seen in your world as some directional arrows of progress?

A recent experience, we had the largest aerial attacks Iran launching against Israel, 200 ballistic missiles in the air at the same time. That was a worst case scenario to get that many missiles in the air at the same time. They launched them in waves of like 30 to 40. You're in the Situation Room with the president. On screen is General Eric Kurilla, our CENTCOM commander, our Secretary of Defense, all the way down to commands in the theater. We had built a coalition of destroyers and aircraft to coordinate the defense. It's a 13-minute flight from Iran to Israel. For the first 8 or 9 minutes, you can see the streaks coming across the screen, like the movie WarGames back in the '80s. There's nothing you can do. You're captive to what's about to unfold. And as the defenses engage, the screen lights up white. You're just hoping that the technology that's been developed over decades works. In that fog of war, our first report that came into the Situation Room was that we had a direct hit on a dormitory at Tel Aviv University. That turned out not to be true, but that was what we were facing. When the dust settled, the defenses we had set up and established and things that are known and not known were extremely effective. I was thinking in that moment, all the work that went into Anti-missile systems, radars, technology, being able to coordinate across multiple militaries in real time. All the practice that, that took, not knowing if they were going to be used, it worked. The missiles will get better. The drones will get better. They're going to get smaller, faster, more lethal. If we don't keep up with this threat, the world is going to be a more dangerous place. That's why I feel so strongly about our defense tech sector and investments in that sector, making sure we are doing everything we can. One thing that always attracted me to Lux was their early investment in Anduril and our great neoprimes and everything that is happening in that space. But that directional area of progress, adversarial systems are going to get better and better and better and harder to defeat. We need to keep up with that and live that in real time, that sinking feeling. I've been in the Situation Room a lot over 20 years. That's the one time I bowed my head and said a little prayer because you just didn't know what was about to happen. It was complete silence. That ended up being a fairly successful defense. The Israelis responded by taking out all of Iran's air defenses this last October, which set the stage to what happened this past June. Progress is not the word. Directional arrows of threats and having to keep up with them.

The very attack that Brett was involved in helping to defend, massive coordination amongst multiple countries, multiple technological layers, drones, cruise missiles, ballistic missiles, the speeds at which they move, the heights and the altitudes. You think about Israel's different systems from Iron Dome, Iron Beam, David's Arrow, Sling. This is a long arrow, pun intended. People used to punch each other. And then they threw rocks at each other, and then they threw arrows at each other, and then they shot bullets, and then rockets, and then missiles, and then hypersonic missiles. Mankind, unfortunately, has been throwing projectiles at each other since the dawn of time. What's different now is economic and technological asymmetry. Economically, to fire the drones, which take roughly, Bret can correct me here, but 9 hours maybe to get from Tehran to Israel, whereas the cruise missiles are maybe 90 minutes and the Ballistics are like 9, 10, 12, 15 minutes.

Cruise missiles, 90 minutes. The drones, a few hours. The ballistic missiles, yeah, about 12, 13 minutes.

The cost is not just the time asymmetry of having to react quick to something that's 15 minutes away. It's crazy. That's why they have shelters and they can rush to the shelters and set an alarm, assuming that you can do early detection. Then to be able to counter that, to scramble jets with missiles or to fire missiles that can counter decades of technological development. The cost of those things, if you're talking about $1 to $5 million a missile to shoot down something that's $500,000 is a big problem.

Josh Wolfe, if we bring this back to when you're discussing bringing in venture partners that have a different perspective from anyone else on the table at Lux, I'd love to get your perspective on how your eyes have been opened over the last 10 months by Brett coming onto the team.

First and foremost, Brett is a diplomat. He just has a really nuanced appreciation for things that aren't black and white. Some of that is over a timeframe, thinking about something in a 10-year period versus a 1-year period. Some of it is a deep understanding of history, of the personalities, of what's motivating them. I have a nuanced appreciation in the same way years ago when we did all kinds of family therapy that made me just a better person in interacting with partners at work, having an appreciation that you can't just be zero-sum on these things. You can't be black and white, that there's a lot of nuance, that these things are really complex. Enemies yesterday can be allies tomorrow. There are coalitions and alliances that form understanding interests and means and ends and capabilities. Who has leverage and where and why? Having an appreciation for the distinctions of the assets and the liabilities that many of these countries have. All these groups have leverage in different ways, and they all have different interests to have geopolitical power. Some of that is going to be through economics, some of that is going to be through information and media influence, some of it is going to be through religion, some of it's going to be through technology and trade. So having an appreciation for how complex the world is and not taking what I would consider very naive black and white views is really important. And then seeing the primacy and value of relationships. We had venture partners early on that were Senior people when we were younger, they had gravitas. We wore suits instead of t-shirts because we were trying to show we're adults. Brett is a real doer. I get off the phone with a sheikh in one of these regions, within 4 hours Brett has a document ready to seize the moment in the window. Time is not our friend. We don't want to let this slip to entropy. Let's get it done. Let's move. He's biased towards action in ways that create win-win-win for everybody. He's helped people in ways that the public will never know, that I will never know. He has created a lot of goodwill and trust. That is a really valuable currency. I admire that a lot about Brett.

Josh Wolfe, I'd be remiss as we get closer to wrapping up, since we only get to do this publicly every so often, what else is on your mind that we might not have talked about so far?

On an economic vector, we've got an extraordinary guy in Scott Bessant, Treasury. I have no idea what's going to happen with the Fed. The cost of capital is going to rise in venture. When you have so much money, 60-something percent of venture dollars went into AI, you have to start looking at where's their scarcity of money? Because the number one determinant of future returns is never the hockey stick curve that the banking sell-side or the consultants put out. It's how much capital is going into a sector. The more capital that goes in, the lower the future expected returns. Biotech is interesting. 91,000 people laid off in Boston alone in August from pharma and biotech companies. Higher cost of capital, stock prices down, working on 10 different programs. They got to shut it down to one. Even if you just take 1% of that 91,000 people, you've got 910 people who are absolutely brilliant and amazing that you can put into companies and start new things and spin out. Bullish on whatever others are bearish on. Personally worried about private credit. It gets overdone. What wise do in the beginning, the fool does in the end. Secondaries are going to do really well. It's part of our strategy to do these special situations, investing in a late-stage business at an early-stage price where somebody else took the risk but didn't get paid for it. There are some secondary funds that are going to do really well because LPs are overexposed, don't have DPI, don't have returns of cash coming in from their managers, are going to divest from some of the ones that are wrongly positioned. Worried about The horseshoe theory of the far left and the far right domestically. Why can't we have moderate candidates? They don't win elections. We need strong leaders that are proud Americans, but are not in the extremes. United we stand, divided we fall. We gotta find the things that bring us together, whether that's innovation, economic growth, common enemies. I am worried about the information vector. I'm worried about anybody that is able to weaponize the very things that we create. People did it with our commercial airliners 24 years ago. They're doing it with our information access today. The thing that is optimistic for me is I have no idea in 2 years where we're going to be investing. I know we will be at the cutting edge. A lot of it is finding people that have amazing vision and signal. Some of them are inspired by science fiction. Some of them have a chip on their shoulder. You look at Palmer Luckey, this is a guy who founded Anduril. He was 20, 21 years old, made nearly a billion dollars with the sale of Oculus to Meta, got fired because he was an early Trump supporter back in 2016, decided, "I'm going to start the real-life Stark Industries out of Iron Man." There is no secret lab that the US government has with DARPA or the Pentagon that is developing the James Bond Q stuff. It is going to rely on the next Howard Hughes type person, the next person that is going to build the General Dynamics and General Atomics. And that's what Anduril, and I hope many others will do. Palmer, 6.5, 7 years ago, was saying that the next domain that he wanted to pursue was subterranean warfare. I laughed. I'm like, "That's ridiculous. Underground boring." And you look at Gaza envelope and Israel, and this is real. Whether they're inspired by sci-fi or have this prescient speculation, that's the business that we're in. Find the low probability, high magnitude impacts, either identify them as threats and do things to thwart them, or get behind them as investors and get along for the ride.

Our closing questions are brought to you by Oldwell Labs, or OWL. OWL is the very best software I've seen for allocators to find and track managers, and I have seen a lot of them.

If you haven't seen OWL, check them out at oldwell-labs.com/ted.

That's oldwell-labs.com/ted. And trust me, it's worth the look. Brett, I've subjected Josh to this in the past, but a couple questions that we'll close with that people get to know you a little bit better. What's your first paid job? What'd you learn from it?

Well, I mowed lawns. That was the first dollars in my pocket. I learned to mow lawns in a square so that all the grass is in the middle and you can rake it up easily. I scooped ice cream at Baskin-Robbins. I was a lifeguard. The value and the feeling of doing something well. I still remember that smell of grass, mowing some of those first lawns.

Brett may not want to go here, but I'll just say we have similar family situations, relationships with dads. He to me is also the epitome of somebody that had a chip on his shoulder, put chips in his pockets in a different kind of way. Wrong side of the track origin, went to school and important schools with people that grew up very differently. I think he was probably rejected by some of those peers. I think the vast majority of them envy him, look up to him today.

I was in Jacksonville, Florida, program for the World Affairs Council. As part of the program they run with their local high schools and all these top kids who are interested in history and foreign affairs, they're high school kids, many of whom are first-generation families, about 80 kids in there. And I just spoke to them about this very point. One of the kids asked me, how do I not doubt myself? Such a revealing question. Cause I wouldn't even have thought to ask that question in high school. The attributes of discipline I got from football coaches or hockey coaches, you didn't realize you're developing your mind for the future. Don't doubt yourself. Prepare. You gotta work hard. Nothing beats hard work. I was a law clerk after Columbia in the Second Circuit for Dennis Jacobs. I remember him telling me, the secret to this job is ass power. You gotta sit and work. He was right. Ass power comes in handy. You gotta know what you're talking about. When I'm first in the Oval Office briefing President Bush a lot, I was talking to Josh Bolton, who was the Chief of Staff in 2006 timeframe. He had such a good rapport with the president. Good news, bad news. I remember asking Josh, like, hey, what's your advice? He just said, hey, Brett, it's simple. Tell the president the truth in 5 minutes every morning. To do that takes a lot of work. You gotta know what you're talking about. That was good advice. Now, as a father, I have a young daughter, thinking about how to instill that in her is something I think about all the time.

Brett, what's one thing most people don't know about you that you find interesting?

I picked up guitar in COVID. That has become my Little hobby drives my wife a little crazy because I like to play electric guitar.

I've got one more for both of you. What's a mystery that you wonder about? Josh Wolfe, why don't you start?

The default obvious one, how do you get something from nothing, is confounding. I still find human nature endlessly perplexing. Markets change and business change and technologies change, but human nature is a constant. What makes us tick, why we do the things we do. There are compelling arguments, evolutionary psychology, status, tribalism. Danny Kahneman was a friend and he would say that the reason you believe the things you believe is not because you reason through them and empirically calculate in your head, but because the 3 or 4 people in your life that you care about or respect or whose respect or caring you want, you believe what they believe. That's probably the most important thing in our business. And it's something that I don't think I'm ever going to feel like I solved is just understanding people. What drives them? What motivates them? Why they do what they do? How to get people to change their minds, really hard thing to do. When you're in a marriage, when you have kids, you learn these things all the time. You're negotiating with your kids and with your spouse. The origin of the universe, how do you get something from nothing without a theistic explanation? And just understanding people, it's still a confounding mystery.

Right.

Lots of mysteries in the immediate. The great thing about parenthood, you see the world through these very fresh little eyes. My daughter had a phase of planets and learned the planets, and we'd go out and look at stars, asking the basic question, where does space end?

Can't explain.

It's kind of infinite. How do you explain that? Not a physicist, not a scientist, but those basic human questions that people have always been asking are still unanswerable. And that to me is fascinating.

I'll give you two more quick ones. Do aliens exist? My answer is yes, but not extraterrestrial aliens. If you ever watch any of these NOVA shows, you see these underwater creatures. They are aliens. They're here. They didn't come from outer space, but my gosh, truly Darwinian, endless forms most beautiful. It's insane. And the last mystery, which I think I've solved, and I'm going to upset a lot of people, I am convinced that tiramisu, which dates back to the 1960s, here's what I think happened. They ran out of chocolate powder. They were trying to make a cake and the guy was like, oh shit, let's just use coffee. They won't know the difference. We'll give it a fancy name, charge 'em more money, and we'll convince 'em that it's really a delicacy. I think that tiramisu is one of the great hoaxes pulled on us, and I'd like to know the mystery of where it actually came from, 'cause it's disgusting. All right.

With that, Josh Wolfe, Brett Thanks so much. Always a pleasure.

Great to be with you, Ted.

Thanks, guys. Thanks, Ted.

Thanks for listening to the show.

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All opinions expressed by Ted and podcast guests are solely their own opinions and do not reflect the opinion of Capital Allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions in securities discussed on this podcast.