The Knowledge Project – Inventing the Future with Josh Wolfe

Check out The Knowledge Project Episode Page & Show Notes

Key Takeaways

  • “The best way to predict the future is to invent it”
  • There are so many variables governing the outcome of every human interaction
  • Fitzgerald, Twain, and Schopenhauer – Josh’s Framework on Information Processing
    • Each of the above was a famous literary giant, who had a quote, which Josh says defines where we should direct our attention:
      • Fitzgerald – “The test of a first-rate intellect is the ability to hold two opposing ideas in your head at the same time, and still retain the ability to function”
      • Twain – “It ain’t what you don’t know that kills you, it’s what you know for sure that just ain’t so”
      • Schopenhauer- “Talent can hit a target that nobody else can hit, and genius can hit a target that nobody else can see”
  • Ask yourself – “What sucks?”
    • “Almost everything that we use, almost everything that was ever invented, started with somebody saying, ‘Huh, that sucks. I’ve got a better idea.'”
  • One directional arrow of progress that Josh doesn’t think a lot of people are paying attention to – “The half-life of technology intimacy”
    • This is a trend about how we interact with our computers
    • “The undeniable arrow of progress, that directional trend, is more and more intimacy”
    • Tech is slowly starting to become more natural/intimate with the human body
  • “Failure comes from a failure to imagine failure”
  • “The first thing I tell people when I make an investment, or I join the board, is, ‘I want the bad news.’ Good news – you’re going to get applause from me…but I am your partner, I am invested in you, I want the bad news. I want to know what happened, what’s going wrong, because that’s where I can actually help.”

Books Mentioned

Intro

  • Josh Wolfe (@wolfejosh) is co-founder of Lux Capital, a venture capital firm that backs entrepreneurs and scientists tackling real problems, in unconventional ways.
    • Lux has funded a variety of emerging tech and science ventures, including: 3D printing, machine learning, artificial intelligence, flying robots, surgical robots, synthetic biology, satellites, space, drones, smart homes, and virtual reality

What does Lux Capital do?

  • “At root, we are trying to find brilliant people and back them, and get really, really lucky”
  • “The best way to predict the future is to invent it”
    • Lux focused heavily on people who follow this creed
    • “In essence, we are trying to fund the future, and trying to bet against the past, as well as find the people that are inventing it”
  • Lux tends to fund a lot of “entrepreneurial scientists”
  • Josh brings up the book Bad Blood with regards to how to tell whether someone they’re investing in is, or is not, a fraud
    • Shane actually just read it – it sounds like the book really explores much of human nature
    • “Technologies change, businesses change, and markets change, but human nature is a constant”

What does Lux Capital do differently?

  • They understand what everyone else is looking at and try to specifically find the white space (aka what people aren’t looking at)
  • “If you accept the premise that the best way to predict the future is to invent it, the people who are inventing it are asymmetrically distributed”
    • Josh says his job is to find entrepreneurs and scientists, and persuade them that he’s the best partner for them, as they persuade him that their science/vision is the real deal – the hope is to do this before anybody else does
  • “We’re trying to find something that we think nobody else has discovered or found….and we want people to agree with us, just at a later time”
    • “It’s really about finding these people, asymmetrically distributed, and then being the midwives to get it out to the masses…later”

What are some characteristics of successful people?

  • Great storytelling ability
    • Somebody who’s a great storyteller is perfect for a startup because they can recruit really well
    • BUT – the best storytellers are also the best con-men/women, so be careful
  • “People who understand people, and are really influential with people, are almost always predictive of great success”

What patterns emerge when things start going wrong with a company that Josh has invested in?

  • Josh advises to look out for the control freaks – those people that have to be involved in/control every decision
    • They do this for a variety of reasons:
      • Their standards are too high
      • They don’t really trust the people working for them
      • Or…they have something to hide
    • Signs of a control freak:
      • They do all the talking during a group presentation
      • Josh also finds that older CEOs, who’ve never had children, for whatever reason, also tend to be VERY controlling
        • Josh acknowledges this is a weird observation, but he’s seen it many times
        • “There is something that is very humbling about having children. I find that the best operators tend to be able to manage their employees better when they manage their kids well.”

Randomness and Optionality

  • “So many things that have happened in my life, for better or worse, are largely out of my control”
  • When you really think about it -“When you look at the panoply of things in life, there is so much randomness”
    • Where you live
    • Who you marry
    • Whether or not you have kids
  • “There are so many things…a chance meeting, whether someone you met with was in a good or bad mood,…where it could have turned out to be a totally different situation on a singular pivoting turn of events”
    • Think about it – there are so many variables governing the outcome of every human interaction
  • “If you really are humbled to how much luck there is in the world, and in whatever pursuit or domain you’re in, then it opens you up to the possibility that there’s randomness and optionality, and you should try to maximize that as cheaply as possible”

100-0-100

  • What does this mean?
    • Josh has 100% certainty that Lux capital will be investing in the most cutting edge/crazy stuff over the next 2 years
    • He’s 0% certain what those things will be
    • But he’s 100% certain where he will find the things/companies to invest in – at the edge of their already cutting edge companies
      • One investment gives them insights/connections that lea- to the next investment
      • “I’ve got 5 or 6 different companies, and the only way I found them was because we were invested in another company, where I got some secret insight inside of a board room, that led me to them”

How can you maximize randomness and optionality?

  • “It’s a constant trade off between exploration and exploitation”
  • Josh tries to read as much as he can
    • What does he read?
      • The Financial Times, The New York Times, The Washington Post, The Wall Street Journal, USA Today
    • He focuses on “angles of information”
      • For example, he reads USA Today because – “I need to know whatever X million Americans that are waking up, in Marriotts, are being influenced by”
      • “I’m reading these papers, not for what they say on page 1, but for what the editor puts on page C22 of the newspaper, that they decree to be less important, and I have a different weighting of the magnitude of its importance – that to me, is the meta insight”

Fitzgerald, Twain, and Schopenhauer – Josh’s Framework For Information Processing

  • Each of the above was a famous literary giant, who had a quote, which Josh says defines where we should direct our attention
    • Fitzgerald – “The test of a first-rate intellect is the ability to hold two opposing ideas in your head at the same time, and still retain the ability to function”
      • Josh says most of the front page news is Fitzgerald situations – “There’s a smart person saying gold is nothing but a shiny piece of metal, and then there’s also a smart person saying it’s a great store of value.”
    • Twain – “It ain’t what you don’t know that kills you, it’s what you know for sure that just ain’t so”
      • What is the thing that everybody is predicting linearly is going to continue? And then boom…there’s informational surprise
      • Ask – What do people know for sure, that might be wrong?
    • Schopenhauer- “Talent can hit a target that nobody else can hit, and genius can hit a target that nobody else can see”
      • This goes back to Lux Capital trying to find companies/scientists that feel they have a secret, that nobody else knows

Information Processing and Josh’s Routine

  • Josh says he’s most productive in the late evenings
    • “That’s a long-standing thing because I’m a psychotically competitive person, and I’ve always felt most productive when everybody else is sleeping”
    • Another example of this – Josh likes to read on Sunday afternoons while everyone is watching football
  • What does Josh’s morning look like?
    • He first checks his email, then Twitter
      • “I follow a lot of people on Twitter. There’s a lot of engaging conversations…a lot of rich content, it’s total randomness and optionality.”
    • Then he reads the newspapers mentioned above
      • By “read,” he really means skimming headlines/articles to find patterns and trends
    • He then reads a few blogs, including Farnam Street
      • He focuses on the ones that he finds information rich, which give him a lot of ideas
    • When he gets to the office, he reads Nature, Science, Chemical Engineering News, The New England Journal of Medicine as well as a few other scientific journals
      • He mainly skims – but the main thing is, he’s looking for interesting trends
  • Josh really tries to find and discover information that no one else is thinking or talking about
    • An example – not crypto

“What sucks?”

  • Josh likes to frequently ask himself this question
  • “Almost everything that we use, almost everything that was ever invented, started with somebody saying, ‘Huh, that sucks. I’ve got a better idea.'”

Some Thoughts on Risk

  • The worst-case scenario often isn’t as bad as you think
    • “When we started Lux, people told me that I was taking the biggest risk. I looked at it and said, ‘What’s my risk? I come from no money. My mom’s a school teacher in Coney Island, Brooklyn. The worst case scenario is I fail, and I go back and join the mainstream.'”
  • When you start a company, everything is a risk – financing risk, technology risk, product risk, management risk…
    • “But I think of this like the first law of thermodynamics – energy is neither created or destroyed. Risk and value themselves are just changing form. Every time you can kill a risk, subsequent value gets created.”

Great Ways to Learn About an Industry

  • It sounds simple, but talk to as many people in the industry as you can (when exploring certain sectors, Josh has gone so far as to interview/chat with 20-30 people per week)
    • Try to triangulate – Josh is a fan of the app Populate
      • It’s a “mapping” software, which allows you to visually change the “weight” of who you think is more valuable 
    • “With every person you talk to, you become a little more intelligent”
    • “Suck up as much as you can from every different person”
  • Read VORACIOUSLY

What is no one talking about today in tech, that people will be talking about in 5-10 years?

  • One way to find an answer to this, is to observe the “directional arrows of progress” of an industry
    • Example – In energy, the directional arrow of progress led to more and more energy density per unit of raw material
      • The industry went from carbohydrates, to hydrocarbons, to uranium
    • “When you discover the directional arrow of progress, to me, it’s almost like this universal principle…it’s trending in a certain way, regardless of who the people or the companies are”
  • One directional arrow of progress that Josh doesn’t think a lot of people are paying attention to – “The half-life of technology intimacy”
    • This is a trend about how we interact with our computers
      • 50 years ago, you had a giant computer the size of multiple refrigerators sitting in the corner of a room
        • The way you would interact would be to flip it’s switches, and pull plugs etc.
      • 25 years ago – we first got personal computers
        • How did we interact with them? – Mainly through a keyboard and a computer mouse
      • 12.5 years ago – the dominant form of computers became laptops
        • Now it’s physically on your lap, so the computer has gotten closer to you
      • 6.5 years ago – the iPhone
        • It’s the last thing we touch at night, as well as the first thing we touch in the morning
        • You “swipe” it and “tap” it
        • The only physical barrier with the human body is a thin film of fabric in your pants
      • 3.5 years ago – the smartwatch
        • This is constant physical contact with the skin, with no barrier
      • 1.5 years ago – AirPods 
        • People actually forget they’re wearing these
    • “The undeniable arrow of progress, that directional trend, is more and more intimacy”
      • Perhaps soon the tech will be inside you
        • It’s becoming more and more invisible…and more human
        • It’s starting to feel more and more natural
    • What’s an example of this?
      • Lux has invested in a company trying to engineer something like a wristband/bracelet, which you would wear on your forearm, and it would detect your neural signals as you move your fingers
      • What could this develop into?
        • You might wear this bracelet/wristwatch, and you’d be able to gesture, or flick your fingers, to turn on the lights, or change a song on Spotify, 

Another Cool Piece of Technology

  • Generative Design – it’s a 3D printing technique -Josh goes on to explain:
    • It’s a computational approach to making/designing stuff
    • Think – most of the objects around you are rectilinear (squares, rectangles, and straight lines)
    • This is very different from the way nature designs things (like a forest, a tree, or a flower)
      • Nothing is straight/rectangular in nature 
      • “It’s mathematical precise, but in a biological way”
    • So what might this look like?
      • You’d tell a computer – “For this material, which we’ll use to make X (like a door hinge), figure out the best structure”
      • The result will be something much different than the rectilinear stuff we’re used to
    • “I believe that in a decade, you will see architectural structures, product design, and components inside of vehicles that look way more biological because they were designed by a computer”

How does Lux’s office space influence Josh?

  • Josh likes randomness and optionality – he likes “bumping into everything”
    • To facilitate this, Lux has very open spaces with glass window offices 
    • The office design increases optionality – it encourages chance interactions

Tribal Leadership

  • Josh recommends the management book – Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization
    • There are different tribes of people in an organization/culture
      • Tribe 1
        • People who have the mentality that life sucks
        • They’re very bitter
        • This is usually a very low percentage of people in an organization (~2%)
      • Tribe 2 
        • People who feel like victims
        • This accounts for ~20% of an organization
        • These are the people who just can’t wait to leave work, go home, and crack a beer
      • Tribe 3
        • These people have the mentality – “I’m great, you’re not”
        • These people silo information
        • They are uber competitive – they’re fighting for promotion and status
      • Tribe 4
        • These people have the mentality – “We’re great, they’re not”
        • They’re internally collaborative, externally competitive

“Failure Comes From a Failure to Imagine Failure”

  • This is something Josh likes to continually remind himself of
  • He’ll often ask himself – “What is everything that could possibly go wrong with this company, and how can I allocate time, resources, and money to prevent those bad things from happening?”

When does Josh have his thinking time?

  • Late nights usually (11:30pm-1am)
    • This is when he also does a lot of reading
    • Josh says he wakes up around 6-7am
  • His kids are asleep by 8-9pm

What has Josh learned about parenting?

  • The most important thing you can give your kids – attention
    • Reward your kids with attention, especially when they do something you’re proud of
    • Josh says he spends about ~2 hours each morning with his kids
      • He also walks them to school every day
      • He tries to spend 1-2 hours with them at night as well
  • Josh has always taught his kids – “It’s better to have it and not need it, than need it, and not have it”
  • Josh encourages his kids to think openly and critically
    • For example – he’s tried to give them the freedom to choose what to believe in, in regards to religion, Santa etc.
      • Rather than saying yes/no when they ask if Santa is real, he’ll say – “What do you think?”
  • “Kids are natural inquisitive scientists, and I think over time, education systems, conformity…basically starts to stultify kids to stop asking questions”
  • Josh also tries to detail the dumb things that people do for his kids
    • An easy way to do this – find examples in the New York Post
    • Why does he do this? – So his kids can learn from the mistakes of others, and what not to do
  • Other things he tries to teach his children:
    • Never to make fun of other people 
    • Never to give up
  • Josh and his kids recently listened to The Magic Misfits audiobook by Neil Patrick Harris
    • Shane recommends The 39 Clues (the audiobook) – he recently listened to it with his kids and they loved it
  • How has Josh’s life changed since having children?
    • Overall, he’s a little more patient

Having Difficult Conversations

  • Josh says he’s fairly blunt and direct, so difficult conversations have always come easy to him
    • “I really feel you waste so much time if you’re not direct and honest”
  • “The first thing I tell people when I make an investment, or I join the board, is, ‘I want the bad news.’ Good news – you’re going to get applause from me…but I am your partner, I am invested in you, I want the bad news. I want to know what happened, what’s going wrong, because that’s where I can actually help.”

What has Josh learned working with Bill Gates?

  • Bill reads a TON and is able to get to the 90/10 of an issue very quickly (aka the 1 thing that matters)
  • He’s also extremely logical – on a level rarely observed in other people
    • Josh points out how simple and clear his logic often is:
      • “I’m talking about these other things…and he was like, ‘I don’t understand why you’re resisting A,  because I think it’s B and C, and if we do those things it will lead to D.’ It was just very clear.”
    • This has taught Josh the best way to win arguments – “Find the normative thing and the objective truth of a situation – and you can’t disagree with that unless you’re not seeing it clearly, or you’re lying to yourself”
      • Josh says Bill is VERY good at getting to the objective truth of a given situation
  • So perhaps a good mental model to have – “What would Bill Gates do?”
    • You could do this with a number of people
    • Where can you get these models? – Read a lot and listen to podcasts

Wrapping Up – Josh’s Favorite Old School Rap Song

These notes were edited by RoRoPa Editing Services

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