Invest Like The Best #76 Josh Wolfe

  • What does Lux do? Lux does everything from seed-stage investing to spinning out a division of a large corporation to recapitalize. Generally in 3 areas: Energy and Materials, Healthcare (software, robotics, devices, Biocare) and Core technology. [2:46]

  • We are more defined by what we don’t do: Social media, internet, ad tech, video games. Basically anything other VC’s are doing. [3:27]

  • Avoiding investments others are doing is strategic: VCs either spray and pray or wait and pay. We try to find things that are high scientific complexity. Intellectual property that imposes a negative right on you. And then scarcity. [3:53]

  • Two important questions Josh was asked when starting Lux: 1) Why should you exist? Why does the world need this? 2) If your hypothesis is right and these are the new waves what stops [larger / more experienced] competitors from copying you? [6:49]

  • Embrace randomness: I’m highly confident that you just never know where the next thing is going to come from. [9:41]

  • We don’t worry about capital allocation: You can always make more money. You can reverse a mistake and be creative. Time is zero-sum. It is always running out. [11:39] 

  • Passion is the best predictor of success: If somebody is psychotically passionate about something then they have the fuel and the energy to go do it. [12:00] 

  • We have a very sophisticated way to try to figure out our next thing: Ask What sucks? [13:49]

  • We started a company that cleans up nuclear waste in 2010: In 2011 there was the Fukushima disaster. We were the only company picked. $3 million invested. Went from $1 million (revenue), $40 million, $80 million, $120 million, $160 million. Sold for roughly $400 million. [14:43]

  • We try to look at things no one is thinking about: How many people invested in Tattoo technology? 40 million Americans have tattoos. I joke that when you get a tattoo you are long regret. At some point, you want to reverse that trade. The asymmetry of tattoo: $60 bucks to get it. To remove it is $6000. You look at that and say there’s this really interesting market. [22:49] 

  • Great quote: Failure comes from a failure to imagine failure. [27:08] 

  • The reason we share ideas publicly: If any idea is really good you have to shove it down people’s throats. You don’t have to worry about people stealing it. [32:35]

  • Great quote: It is always better to make observations than predictions. [33:34]

  • The gap between sci-fi and sci-fact is shrinking: What was once imagined and what is real keeps getting closer and closer. There are endless examples of this in the Lux portfolio. [35:52]

  • Young outsiders come up with crazier ideas: You always hear That will never work from older entrepreneurs and executives. Younger people are more naive. You want some of that entrepreneurial naïveté. Sometimes that comes from an outsider who doesn’t know all the dogma inside a sector. [42:49]

  • People always tell me you should have this great, positive energy: I think amazing things happen with negative energy. With dissatisfaction. If you want to change and progress someone has to look at something and say that sucks. And then be motivated to change it. I think that comes from negative energy. [44:07]

  • I think for entrepreneurs experience is overrated: Look at some of the most amazing entrepreneurs in history - they had no experience when they started. None. [45:59]

  • What Josh is passionate about: Businesses. People that are corralling capital. Producing a product. Serving a market. To me is just endlessly fascinating. 💯 ✊[49:31]

  • Josh is short Tesla: Thinks it’s a terrible business. He thinks Tesla and SpaceX will actually merge. With the narrative of from space back to space. It will just be called X. [53:01]

  • I’m psychotic about competitive advantage: What can you do that will that no one else can do? From that flows good unit economics. [54:44]

  • Full podcast here.