February 17, 2020

Can We Learn to Invest in the Future? – Josh Wolfe on the Hidden Forces Podcast, Hosted By Demetri Kofinas

Check out the Hidden Forces Episode Page & Show Notes

As an investor:
- It’s important to expose yourself to as many ideas and people as possible
- Sharing your ideas with others is also critical—you never know what or who someone may know
- Reading a wide variety of books is also essential
The best entrepreneurs (and athletes) are those with a chip on their shoulder
The best investments are in areas where no one’s looking
You can’t be a curious person without having information anxiety

Josh is currently reading:
- Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Taleb
- Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Steven Pinker
Two books that helped Josh reframe this thinking about death:
- A Guide to the Good Life: The Ancient Art of Stoic Joy by William Irvine
- Immortality: The Quest to Live Forever and How It Drives Civilization by Stephen Kane
To learn about how dying feels, Demetri recommends Mortality by Christopher Hitchens
Demetri also recommends Vladimir Nabokov’s autobiography Speak, Memory

Josh grew up in Coney Island, Brooklyn
Josh’s parents split up when he was a child; his mom pushed him to be a nerd
Josh was highly competitive as a kid—this led him to read as much as he possible
- “I was psychotically competitive … I wanted to know more than the next guy.” – Josh Wolfe
At just 13, Josh wanted to find a way to cure AIDs
- This interest led him to work with a Ph.D. researcher at SUNY Downstate who killed time while waiting for blood results by trading futures—this sparked Josh’s interest in finance
Josh went on to study finance at Cornell where he became fascinated with venture capital—the ultimate combination of finance and science

Josh’s venture capital firm, Lux Capital, focuses on the hard sciences: chemistry, physics, material sciences, etc.
Lux was funded by an early investment from William Conway, the co-founder of The Carlyle Group
Lux Capital has three entities that give them a competitive edge:
- One of their offices is close to Capital Hill—this allows them to influence legislature and stay up to date with government agencies
- Their media business with Forbes grants them access to key individuals
- Lastly, there’s Lux Research, a team of scientists that outside companies can hire to examine and verify technology claims
Lux Capital has $1.5 billion under management. To date, they’ve invested in over 100 companies.

Josh explains his well-known ‘100-0-100’ investing philosophy, which is equal parts ambition, humility, and arrogance:
- He’s 100% certain that Lux will be investing in the most cutting-edge technology
- He’s 0% certain what those things will be
- He’s 100% certain that Lux will find those companies at the cutting-edge of the cutting-edge
As an investor:
- It’s important to expose yourself to as many ideas and people as possible
- Sharing your ideas with others is also critical—you never know what or who someone may know
- Reading a wide variety of books is also essential

Steve Jobs stole a lot of his ideas from the sci-fi world
- The idea for the iPad, for instance, came from Star Trek: Next Generation
The best entrepreneurs (and athletes) are those with a chip on their shoulder
- Take like Michael Jordan, for instance, who was cut from his high school basketball team
- There’s just something special about these people—no matter how much they succeed, they want to keep growing
The best investments are in areas where no one’s looking
- You’re better off investing in 1/5 companies in a cutting-edge market than investing in 10/100 companies in an emerging market
- Further, in less examined markets, competition is reduced
- To help stay on top of the cutting-edge, Josh reads several obscure papers/journals
  - Josh also reads ‘USA today,’ but not for the same purpose—doing so allows him to know what the masses are reading

Josh looks for investments that go against the mainstream consensus
- For example, when everyone was investing in solar during the early 2000s, Josh was looking at nuclear energy
When no one’s investing in a certain field, ask yourself, “What sucks [about this field]?”
- With nuclear energy, for instance, the thing that sucked: 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 took place, causing the company to go from $1 million in revenue to $160 million in just a few years.
    - (The company was later sold for $350 million)
The world needs contrarian thinkers
- The best returns come from high-risk investments that pay off
- The brightest scientific minds discover things once thought impossible
- The greatest protagonists in movies are the ones the masses don’t believe

Startups are like insects: small organisms with high mutation rates, high reproductive rates, and a short-lifespan
According to Josh, technology is currently advancing so rapidly that humans are becoming like a species which cannot adapt quick enough to its environment
Josh doesn’t believe in God
All technology (social media, fire, nuclear power, etc.) can be used for both good and bad
- An easy example: you can use fire to cook food, but fire can also be used to burn down houses
An idea to ponder: If there’s no free will in the world, is it fair to punish criminals?
You can’t be a curious person without having information anxiety
- When Josh reads magazines, for instance, he gets anxiety if he skips a page—that page could have the gold nugget he was searching for
Josh’s favorite movie is Point Break
- He also loved Danny Darko
Josh’s best investment decision ever: marrying his wife
Avoid boring people and avoid being boring to people