Josh Wolfe, co-founder of Lux Capital, discusses US-China tensions and defense tech investment. He's skeptical the Chips Act will deliver what it promises, and sees geopolitical pressure pushing technology toward decoupling from China.
Is Josh Wolf, co founder of Lux Capital. Josh, it is great to have you on the show.
Great to see you. Great to meet you.
The other thing that has been happening this afternoon is you have the speaker of the House, Kevin McCarthy meeting with the President of Taiwan at the Reagan Library. You and I first came in contact there at the Reagan National Defense Forum a couple of years ago. So I do want to get your thoughts on the dynamics between the US and China and how you think about that as, as an investor, an investor who specializes very heavily in something like defense tech.
You know, it's interesting because it was right before COVID that we sat together on stage, I think was you, myself, Peter Thiel. And we actually raised China before this was a very serious national concern. And it is a national concern. We have to make a distinction, one that requires a mix of vigilance, which is that this is a very serious issue with a bit of nuance. And the nuance is this isn't China at large, this isn't the Chinese people. This is certainly isn't Chinese Americans. It is the Chinese Communist Party and the tactics that they have been hard at work over over a decade with information operations and a form of warfare that is in financial, technological and social terms that we all have to be very wary of.
So what does that mean in terms of where technology is headed, how you're thinking about making investments and this decoupling that we keep talking about between the two countries where tech is concerned, I.
Would categorize it as really two things. One is national resilience. So looking at our domestic manufacturing, and that's everything from chips and novel ways to manufacture chips, we spent a lot of money on fabrication facilities and we've got a chips act. And I, I'm not too optimistic about it, actually. I'm much more optimistic about some of the entrepreneurs that are going to take a different novel approach at how we manufacture critical chips. We have important things like a company of ours, national resilience for biomanufacturing. How do we make sure that the critical medicines and biologics and proteins that we all take as drugs for life saving medicines, we're not beholden to a foreign adversary. And then you've got other aspects which are just a decoupling of systems. You have mobile systems and 5G, you have software systems, you have alliances being formed between countries where infrastructure is being put in, in some cases to help surveil or suppress the rights and freedoms of people. And so it really is going to be a battle, a cold war of sorts that unfortunately is becoming the case. I wish it weren't, but it is a very tightly coupled system globally between us and China. We are the two primary adversaries. What it means for tech investing. We're spending very heavily on two areas which I would consider hard power and soft power. On hard power, Lux is funding all kinds of companies in hardcore defense. So this is companies like Anduril which are all domain focused on providing the warfighter with cutting edge technologies. Air, land, sea and space. It's companies like Saildrone that are going out and producing autonomous systems to reshape the fleet of the navy. And how we intersect threats, whether it's with allied nations like Australia and Taiwan or or other peer countries. It also involves surveillance in communication systems in space. It is quite literally a new Star Wars. There is a space race. It is to get assets up into space to be able to monitor, surveil, communicate and prevent disruption or sabotage, of which there are many efforts underway and many have been revealed publicly. This. Then there's a soft power piece which a lot of people don't talk about. Now. Historically, soft power, we won the hearts and minds of people by getting them to buy our fashion and our movies and watch MTV and listen to our music and then winning big medals on stages. And what I mean by that of course are Olympic gold medals and Dream Team usa. But there's another kind of gold medal that matters and that's Nobel prizes. And when you think about how you win a Nobel Prize, it's by having the scientists and having the scientific technology, the tech of science, the tools that allow people to make big breakthrough discoveries. And I believe that there is going to be a gold rush that.
