Josh Wolfe: This is Who You Are Up Against – Invest Like the Best

Key Takeaways

  • Josh has an investment philosophy of 100-0-100 (it’s a mix of arrogance, humility, and ambition):
    • Josh is 100% certain Lux Capital will be investing in the most cutting-edge tech imaginable over the next few years (arrogance)
    • He has no idea (0%) what those things will be (humility)
    • He knows with near certainty (100%) that the best investments will come from the edge of tech and as long as he stays curious and invests, he’ll be able to find the next breakthrough companies (ambition)
  • Josh believes passion is the best predictor of success
    • If someone is psychotically passionate about something, they’ll have the fuel and energy to make it happen
  • When no one is investing in a certain field, ask yourself: What sucks about that field?
    • Based on your answer, go create a company to solve it
  • “Failure comes from a failure to imagine failure”
  • The best advice Josh ever got – avoid boring people
    • Stay away from people that aren’t interesting, avoid boring people, and avoid boring people (don’t be boring to others)
  • Experience is usually overrated for entrepreneurs – the most amazing entrepreneurs in history had almost no experience in the field they were entering

Intro

  • Host: Patrick O’Shaughnessy (@patrick_oshag) – the CEO of O’Shaughnessy Asset Management
  • Josh Wolfe (@wolfejosh) is the 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
    • Check out the Podcast Notes from Josh’s appearance on The Knowledge Project

Books Mentioned

About Josh Wolfe

  • Josh Wolfe is the co-founder of Lux Capital, a venture capital firm that backs entrepreneurs and scientists tackling real problems, in unconventional ways
    • His company funds 3 main areas – energy & materials, healthcare, and core technology
      • Josh likes to find startups with high scientific complexity that most people don’t yet understand and invest in them before anyone else
    • Lux is Latin for “light”
    • To held differentiate Lux Capital from other VC firms, Josh created two separate entities:
      • A media business to help founders get exposure
      • A research firm that could provide scientific feedback and advice to founders
  • Josh describes himself as an insatiably curious person who wants to meet everyone and know everything

Lux Capital’s Investment Strategy

  • Josh has an investment philosophy of 100-0-100 – It’s a mix of arrogance, humility and ambition:
    • Josh is 100% certain Lux will be investing in the most cutting-edge tech imaginable in the next few years (arrogance)
    • He has no idea (0%) what those things will be (humility)
    • He knows with near certainty (100%) that the best investments will come from the edge of tech and as long as he stays curious and invests, he will be able to fund the next breakthrough companies (ambition)
  • Josh believes passion is the best predictor of success
    • If someone is psychotically passionate about something, they’ll have the fuel and energy to make it happen
  • Josh also looks for investments that go against the mainstream consensus – when everyone was investing in solar during the early 2000s, Josh was looking at nuclear energy
    • When no one is investing in a certain field, ask yourself – What sucks (about that field)?
      • The thing that sucked about nuclear was people didn’t know what to do with the waste – it was a real technological problem
        • In 2010, Josh gathered the best scientists in tech to create a company to tackle this problem – a year later, the Fukushima disaster happened and the company went from $1 million in revenue to $160 million in just a few years
          • Josh later sold the company for $350 million
  • Lux aims to have a 4-5 year head start on technology
    • About 5 years ago, they invested in a variety of companies in the AI, autonomous driving, and robotics spaces when everyone else wasn’t quite sure about the tech
      • Today, every VC firm is investing in these areas
    • What is Lux investing in today? – Tattoo technology
      • It cost about $60 to get a tattoo but $6,000 to get it removed – Lux is investing in tech that will make it easier to remove or make temporary tattoos
    • Since Lux tries to invest in futuristic technology, people often view the ideas as “batshit crazy”
      • Ex. – Josh thinks that in 10 years, there will be tech that allows people to understand the emotional needs of pets
  • On average – a third of investments will make zero money, a third might make their money back, and a third will make 10x the investment
  • Josh looks for a strong competitive advantage in the companies that he invests in
    • From a competitive advantage, you get a moat, and from a moat, you have pricing power and leverage over suppliers
      • “I think everything flows from competitive advantage”

Investing In People

  • Josh looks for entrepreneurs that are both storytellers and excellent operators
  • When thinking about investing, Josh reminds himself that – “failure comes from a failure to imagine failure”
    • If you can imagine all of the things that can go wrong, you’re more likely to be able to handle those scenarios
  • Josh uses an app called Popplet that allows him to populate a map with all of the scientists, entrepreneurs, executives, and other people he knows to see who knows who, and what each person knows about a certain industry
    • He also uses this app to help recruit people for companies and group scientists together to encourage them to start their own startup
  • Josh loves to back the “rebel scientist” – someone who may not have the most experience, but has passion and a deep drive to succeed
    • The best rebel scientists are usually people who have “negative energy” – they had a tough childhood or have something to prove to the world
  • Experience is usually overrated for entrepreneurs – the most amazing entrepreneurs in history had almost no experience in the field they were entering

Bitcoin

  • “I just think this is going to be a messy thing, no one actually knows what is going to happen”
    • Something great will come out of cryptocurrency, but it won’t be what everyone is talking about today

Additional Notes

  • Best advice Josh ever got – “Avoid boring people”
    • Stay away from people that aren’t interesting, avoid boring people, and avoid boring people (don’t be boring to others)
  • Both cycles of venture capital are beneficial:
    • When capital is expensive, there are fewer startups and capital gets directed to the best ones
    • When capital is cheap, capital goes to tons of startups, most go after crazy ideas and 99% will fail but a few will change the world
    • When capital is abundant, more people start VC firms which leads to higher valuations and overpriced companies
  • Josh believes SpaceX and Tesla will merge and be called X, that’s why Elon bought X.com
  • Josh’s mission in life – survive, have kids, and be a good role model for them
    • Happiness is not a permanent state – people need dissatisfaction for continued progress

These notes were edited by RoRoPa Editing Services

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