Lessons Learned from Josh Wolfe
In the world of bold visionaries who are at the culmination of investing, science and technology few are having as great of an impact then Josh Wolfe. Josh Wolfe is the co-founder of Lux Capital, which supports scientists and entrepreneurs who pursue counter-conventional solutions to the most vexing puzzles of our time in order to lead us into a brighter future. The more ambitious the project, the better—like, say, creating matter from light. Josh is one of those people who’s had a tremendous impact on my ambitious thinking and approach to life and business. I’ve learned so much from Josh over the years but in this article, I’ll go over some of the frameworks and ideas Josh has used to discover his greatness and experience tremendous success in investing.
“The best advice that I can give, with regret to my older self, is to find a balance between having a chip on your shoulder and being mindful that for every relationship you have… at some point in the future that person is going to be a call option and you don’t want that to expire. So, be good to people.”
“The best way to predict the future is to invent it”
Great things aren’t achieved in life by sitting back and waiting on others. Bold, audacious creators like Josh take the bull by the horns and put their mark on the world by creating the future. This is at the core of Josh. “I believe there is a moral imperative to invent technology.” Without these inventions Josh believes people cannot find their genius, so in order to allow people that opportunity you must invent the future. “Technology increases our humanity.”
Josh says to “imagine a world: Where Mozart existed, but harpsichord doesn’t. Where Hendrix exists, but the electric guitar doesn’t. Where Spielberg exists, but the 8 mm camera doesn’t. Where Bill Gates exists, but the PC doesn’t. Every one of these things was an instrument for them to express a form of genius.” If we don’t understand the importance of inventing the future, the world will be in a much darker place. “There is someone out there today… who is going to encounter technology in the future that doesn’t exist today, that they will play as their instrument to the world and the world will be better off because of it.”
“Failure comes from a failure to imagine failure”
This is one of the fundamental questions Josh continually asks himself. Thinking through possible ways your company can fail is hard. It takes deep thought and the ability to face harsh realities you’d rather avoid, but without thinking these through it will inevitably lead to failure. Josh challenges the status quo and emphasizes the importance of thinking through the negatives. “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.” Easy choices, hard life. Hard choices, easy life. By facing the harsh realities, we can cut through the clutter and decide on the crucial elements that are required. This reminds me of the framework from Charlie Munger: “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” Oftentimes success can come from eliminating possible errors instead of trying to outsmart yourself. “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?” Prepare for the hole before the ship starts to sink.
Randomness, Optionality and the Role of Luck
Embracing the fact that luck plays a role in your success is a pivotal hurdle many visionary entrepreneurs must overcome. Josh has clearly embraced this and because of that he can understand the impact luck can and will have. “So many things that have happened in my life, for better or worse, are largely out of my control.” There are an infinite number of potential outcomes we can experience in life that could be different based on uncontrollable variables. “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 through some of these moments in your life and how your current situation may be different if it wasn’t for them. “If you really are humbled at 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.” Drop your ego and embrace the fact that randomness plays a huge role in our life, but keep your eyes open to it.
So how can one increase their chances of randomness and optionality? Josh does this by being a voracious seeker of knowledge and interesting ideas. Josh spends a great deal of time reading broadly and focusing on what he calls “angels of information.” Josh says 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.” This gets back to not following the herd mentality. Josh takes what the “herd” is looking at and applies his lens to filter out the signal from the noise. That’s when he uncovers the true insights. One of the key questions he asks is “What do people know for sure, that might be wrong?” Pause on that question for a minute. Think deeply on what people “know for sure, but might be wrong.” Many of the major breakthroughs started with someone poking holes in long standing ideas. “Almost everything that we use, almost everything that was ever invented, started with somebody saying, ‘Huh, that sucks. I’ve got a better idea.’”
Discovering Talent & Letting them Thrive
The most talented people exploring the most difficult problems are the people who are going to create lasting change. Josh and Lux Capital are constantly in search of those disruptors. “At root, we are trying to find brilliant people and back them, and get really, really lucky. 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.” Once Lux Capital discovers these scientists and entrepreneurs he needs to persuade them that he is the best partner for them and their ideas.
There are a few key elements he’s found amongst successful people and he’s constantly in search of those characteristics. “Anyone leading a startup must be a great storyteller. Recruiting employees, raising money, selling your product; this is all storytelling and great storytelling is indicative of success.” What makes a good story? Josh believes “a good story is memorable, has an element of surprise, is easy to repeat, and makes you feel smart because when you share with others, it adds an aha moment for them.” Josh also believes storytelling can be a trained skill and in order to become a great storyteller you must read a lot, watch a lot of movies, and talk to a lot of people with diverse backgrounds. Life experience adds to your ability as a storyteller and when you combine that with practice you become a force to be reckoned with.
A Diverse Group will Help You Think Different
Josh isn’t concerned with what everyone else is doing or looking at. “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.” Lux Capital has created an environment filled with people from different backgrounds and with different perspectives. Lux has 10 other investment professionals and everybody is intellectually, ethnically, and gender diverse. “We’ve got people that are Kashmiri, Pakistani, Iranian, Brazilian, Australian. Then you’ve got a bunch of white New York Jews.” The company has people with electrical engineering PhDs, stem cell PhDs, material science PhDs, as well as a few others with no technical background whatsoever but have their own unique skills such as capital raising. “It’s just a diverse group of people that all think differently. I would say that if we have two people who think the same, one of them is unnecessary.” Josh believes venture capital is about believing before other people understand. “Many VCs want to avoid feeling stupid, because they don’t understand something and will often invest in a company as a result of FOMO.” By being willing to feel stupid and then exploring your stupidity you can find undervalued companies.
100-0-100
Great leaders and visionaries tend to have simple frameworks they use in order to spot opportunities and understand their blindspots. This 100-0-100 is a simple framework Josh has created for what Lux Capital does. Josh has “100% certainty that Lux Capital will be investing in the most cutting edge companies in the future but he’s 0% certain what those companies/people will be, but he’s 100% certain where he will find the things/companies to invest in, which are at the edge of their already cutting edge companies.” Success begets success. Understanding that your opionality greatly increases with the insights and connections you already have is a key element to making future connections. Since Josh and Lux Capital have been investing in cutting edge companies and entrepreneurs for years, it leads to them getting connected with more innovators. This doesn’t only work for connections but for insights into what the future will be like. All of these ideas, people, innovations compound on top of each other to breed more ideas, people and innovations. “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 boardroom, that led me to them.” Don’t limit your thinking to what’s currently in front of you, but understand what can develop as these things compound.
Stay curious, never stop learning, and remember momentum breeds momentum.
Sean
Insights and quotes pulled from
The Knowledge Project Ep. #50 “Josh Wolfe: Inventing the Future”
Masters in Business with Barry Ritholtz “Josh Wolfe Discusses Innovative Investments”
The North Star Podcast “Josh Wolfe: The Magic of Science”
Invest Like The Best “Josh Wolfe: The Tech Imperative”
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