Jan 22, 2019 · 1h 36m · knowledge-project
#50 Josh Wolfe: Inventing the Future
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In this episode of The Knowledge Project, Lux Capital founding partner Josh Wolfe joins Shane Parrish to explore contrarian investing in deep tech, mental models for processing information, probabilistic decision-making, and foundational life lessons drawn from fatherhood.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shane holds 11.1% of the talking time here. How this is scored →
Shane as informed peer 4.5 Guest teaching 6.3 Guest disagreement 1.2 Shane pushing back 1.1
speaking balance: gold is Shane, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 12:32 Politically incorrect heuristic on older childless CEOs
Josh knowingly offers a controversial and provocative take, arguing that older CEOs who voluntarily never had children lack humility and end up as micromanaging control freaks.
Hardest push from Shane ▶ 1:33:57 Shane refuses Josh's hedge on favorite rap songWhen Josh tries to dodge picking a single favorite hip-hop track by saying 'it depends,' Shane firmly pushes back, demanding he commit on the record.
Biggest teaching moment ▶ 21:00 The Fitzgerald, Twain, and Schopenhauer mental modelJosh delivers a masterclass on information processing, categorizing market noise into contradictory debates (Fitzgerald), false certitude shocks (Twain), and asymmetric hidden truths (Schopenhauer).
Shane holds their own ▶ 45:39 Shane cites GCHQ as the original circular office designShane demonstrates domain knowledge on architecture by pointing out that Britain's GCHQ intelligence headquarters pioneered the circular mega-structure long before Apple Park.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shane as informed peer | Guest teaching | Guest disagreement | Shane pushing back | Why |
|---|---|---|---|---|---|---|
| Preview: Embracing Luck, Skill, and Optionality | 5 | 6 | 1 | 1 | Shane sets the stage and asks a sharp question about distinguishing real domain experts from BS artists. Josh explains the scientific method, peer review, and the psychology behind investing. | |
| Finding White Space and Scouting Academic Talent | 4 | 7 | 1 | 1 | Shane asks how Lux gains an edge in an ultra-competitive field. Josh articulates how venture is an inefficient market and outlines his playbook for scouting prolific postdocs in commercial labs. | |
| Identifying Patterns of Success and Storytelling Ability | 4 | 6 | 2 | 1 | Shane inquires about identifying patterns of success versus early warning signs of failure. Josh explains narrative storytelling ability and shares his provocative heuristic on childless older executives. | |
| How Having Children Cultivates Real-World Patience | 5 | 7 | 1 | 1 | Shane connects parenting lessons to behavioral psychology. Josh dives deep into luck versus skill, citing Michael Mauboussin and illustrating his '100 100' framework across portfolio discoveries. | |
| Frameworks for Processing Information: Fitzgerald, Twain, and Schopenhauer | 4 | 8 | 1 | 1 | Shane prompts Josh on how he balances exploration and exploitation. Josh lays out his three-part literary information framework: Fitzgerald, Twain, and Schopenhauer. | |
| Daily Reading Habits and Synthesizing Disparate Ideas | 5 | 6 | 1 | 1 | Shane asks for details on Josh's daily reading habits. Josh explains his skimming routine, nighttime reading, and synthesis of top scientific journals to spot non-consensus trends. | |
| Contrarian Theses and Kurion's Nuclear Waste Success | 4 | 7 | 2 | 1 | Josh recounts how he ignored the popular green tech wave to focus on nuclear waste, founding Kurion by asking 'what sucks?' and capitalizing on a positive black swan during Fukushima. | |
| The Process of De-risking and Building Companies from Scratch | 5 | 7 | 1 | 1 | Shane asks how Josh went from knowing nothing about nuclear energy to founding a company. Josh outlines his year-and-a-half diligence process, mapping experts like a neural net. | |
| Hunting for Rare Mutants and Directional Arrows of Progress | 4 | 7 | 1 | 1 | Shane asks about future blind spots and upcoming macro themes. Josh discusses searching for rare genetic mutants and tracking irreversible 'directional arrows of progress.' | |
| The Half-Life of Technology Intimacy and Neural Interfaces | 4 | 8 | 1 | 1 | Josh breaks down his thesis on the 'half-life of technology intimacy,' predicting invisible computing interfaces, and details funding Thomas Reardon's neural interface work. | |
| Generative Design and the Architecture of Human Interaction | 6 | 5 | 1 | 2 | Josh explains generative design in manufacturing. Shane demonstrates his own architectural knowledge by bringing up GCHQ's circular building pre-dating Apple's headquarters. | |
| Tribal Leadership and Open Information Flow at Lux | 5 | 6 | 1 | 1 | Shane probes how Lux fosters an internal culture where information is shared rather than hoarded. Josh references 'Tribal Leadership' and describes Lux's externally competitive, internally collaborative stance. | |
| Portfolio Collaboration and the Unum Lux Philosophy | 4 | 6 | 1 | 1 | Shane asks about managing internal communication streams. Josh explains the 'Unum Lux' philosophy where partners route candidates, share bank terms, and cross-help each other's portfolio companies. | |
| Managing Information Anxiety and Anticipating Failure | 4 | 7 | 1 | 1 | Shane asks how Josh manages cognitive overload. Josh admits his constant information anxiety and discusses his core risk principle: 'failure comes from a failure to imagine failure.' | |
| Optimizing Daily Routines, Evening Thinking, and Sleep | 5 | 5 | 1 | 1 | Shane and Josh discuss daily schedules, sleep patterns, and parenting lessons. Both bond over walking their kids to school and viewing attention as the most critical currency in family life. | |
| Cultivating Skepticism, Scientific Inquisitiveness, and Santa Traps | 4 | 6 | 1 | 1 | Shane asks how Josh teaches critical thinking. Josh shares how he fosters healthy skepticism with his children through scientific experiments, Santa traps, and open questions on the subway. | |
| Instilling Resilience, Delayed Gratification, and Family Identity | 5 | 5 | 1 | 1 | Shane and Josh discuss screen time, delayed gratification, and using bad news in the New York Post as teachable moments for avoiding human misjudgments. | |
| Family Entertainment, Magic, and Shared Audiobooks | 4 | 7 | 1 | 1 | After briefly exchanging audiobook recommendations, Shane asks about Lux's decision-making architecture. Josh explains partner voting, the danger of total consensus, and the 'one pass per fund' rule. | |
| Decision Journals, De-risking Milestones, and Discerning Knowables | 5 | 6 | 1 | 1 | Shane and Josh discuss the value of decision journals to prevent hindsight bias and separating what is knowable through diligence from true market risk. | |
| Navigating Market Distortions: Minnows and Megas | 4 | 6 | 1 | 1 | Shane asks how Lux maintains discipline amid market froth. Josh details market bifurcation between 'minnows' writing small checks and 'megas' like SoftBank pouring in billions. | |
| Process Over Outcome: The Cruise Investment Dilemma | 4 | 6 | 2 | 1 | Shane asks how to maintain discipline when feeling left out. Josh reviews Lux's decision on Cruise, emphasizing process over outcome even after missing a rapid 11x buyout from GM. | |
| Direct Communication, Culture Clash, and Embracing Bad News | 4 | 6 | 2 | 1 | Shane asks how Josh conducts difficult conversations. Josh emphasizes blunt, direct communication, contrasting Microsoft's sharp intellectual culture with Google's diplomatic consensus. | |
| Lessons from Bill Gates and Assembling a Mental Hall of Heroes | 5 | 7 | 1 | 1 | Shane asks what Josh learned from Bill Gates. Josh describes Gates's razor-sharp logic in negotiations and both discuss assembling a mental 'hall of heroes' to guide decisions. | |
| Shared Nostalgia for Early 1990s Hip Hop | 4 | 4 | 1 | 2 | Shane playfully corners Josh into naming a single favorite 1990s rap song. Both reminisce about early 90s hip hop and how teenage musical memories shape lifelong emotional connections. |
Statements from this episode (37)
Wolfe: The most important future companies lack historical precedents
“You have no prior comps that you can look at because the most important companies that are going to exist never existed before.”
Wolfe: Psychology drives 90% of Lux Capital's successes and 99% of problems
“All that's important, but what really matters is understanding human nature and psychology, and so, 90% of our successes and 99% of our problems in our companies are us playing armchair psychologist and trying to diagnose, why is this team not effective?”
Wolfe: Venture capital is highly inefficient because the universe is unknown
“In venture capital, it's a really inefficient market because there is no known universe. You and I could be talking in a private room, and we could decide that we're going to start up a company tomorrow, and nobody else knows that information.”
Wolfe: MIT's Bob Langer created billions in value through spinout companies
“So for example, Bob Langer at MIT is a prodigious output of PhDs who are very commercially minded. This is a guy who has made hundreds of millions of dollars, created billions of dollars of market value in companies, and attracts postdocs that want to be like …”
Wolfe: Only a dozen elite scientists generate America's deep-tech startup diaspora
“And there's probably a dozen such scientists in the war in the country. Where that you in the US where you can go and find these people and the postdocs and where they sort of, ah, traverse to and find that diaspora and develop relationships with them, stay cl…”
Wolfe: Early-stage startup genius is notoriously hard to distinguish from fraud
“Now, it's very hard in the early nascent embryonic stages of a business to really, and I'm being intellectually honest here, know if somebody is going to be an absolute genius or a total fraud. Because the best storytellers are also the best con men, or women,…”
Wolfe: Founders who speak over their teammates in pitches show poor leadership
“If somebody is there with three people presenting to us, and they do all the talking, and they are talking for the other people, it's usually not a great sign. If somebody sort of steps back and starts lauding, let's say a CEO is the founder, and they turn to …”
Wolfe: Childless CEOs over 50 tend to be overly controlling operators
“I have a really politically incorrect one, which is older CEOs that by choice, not biologically, because there's a big difference, never had children. I find that for whatever reason, they tend to be very controlling. Now, my sample size here is like five of f…”
Wolfe: Persuasion tactics from Cialdini, Munger, and Kahneman fail on young kids
“You can use every tactic that Robert Cialdini has come up with, and every tactic from Munger, and every behavioral psychology thing you've learned from Kahneman, and you still get tantrums and crying and dogmatic, you know, intransigent kids”
Wolfe: Children win negotiations through a willingness to publicly embarrass parents
“They're not using tactics of like, you know, I know that you know, and just like a willingness to totally embarrass you in public and scream and throw a tantrum. And by the way, when they do those things, they do them because it works.”
Wolfe: Lux Capital's future investments will sit at the edge of today's
“I am a hundred percent certain that Lux will be investing in the most cutting-edge crazy stuff that you can imagine over the next two years. The zero that follows is I have zero percent certainty what those things will be. No idea. Now I have an inkling, and i…”
Wolfe: Bill Gates only sits on Berkshire, Microsoft, and Kymeta boards
“Which led to this company called Kymeta, which I co-founded with Bill Gates. And I'm in a board room with Bill Gates, and he's on the board of this company. It's the only board he's been on besides Berkshire and Microsoft.”
Wolfe: Satellite imagery will commoditize while AI data processing captures the value
“All the imagery that's going to be coming off of these satellites is going to be commoditized, and the real value is going to be the processing of that using artificial intelligence and machine learning to look at different spaces over different times to make …”
Wolfe: Lux Capital seeks scientists possessing hidden technological secrets
“And then the final situation, which is where we spend most of our time, is the Schopenhauer dictum, which is talent can hit a target that nobody else can hit, and genius can hit a target that nobody else can see. And that goes back to the asymmetric informatio…”
Wolfe: Crypto is uninteresting because everyone is already interested in it
“To me, crypto today is not really interesting because it's so interesting to everybody.”
Wolfe: Kurion was the only US company selected for the Fukushima cleanup
“This little company became the only US company picked for the cleanup”
Wolfe: Startup risk and enterprise value operate like the laws of thermodynamics
“In fact, I always think of this like the first law of thermodynamics, that energy is not created or destroyed. Risk and value themselves are just changing form. And every time that you can kill a risk, subsequent value gets created because a later investor arg…”
Wolfe: Disreputable advisory board members signal a startup CEO's poor judgment
“But then I see an advisory board with one or two people, and for me, these are, like, red flag people. They're, like, total BS scientists or promoters or, like, authors that I think are full of it, and I just, like, shake my head, and to me, it's a It's a sign…”
Wolfe: Lux Capital is funding a genetics company to sequence rare mutants
“And so I'm doing this right now in the genetic space, you know, a space that I know a little bit about, but we started with this crazy thesis about X-Men. Could you find the rare mutants in the world and could you sequence them? And search for them, and then s…”
Wolfe: Technological progress follows inevitable directional vectors independent of specific actors
“If you look at a directional arrow of progress in energy, you went from carbohydrates to hydrocarbons to uranium, and the undeniable arrow of progress there was more and more energy density per unit of raw material. When you discover the directional arrow of p…”
Wolfe: Biofuels made no economic sense because they reversed energy density progress
“And so in energy, people were going back to agrarian economies where we were growing biofuels, and that made no sense.”
Wolfe: The directional arrow of computing progress is increasing physical intimacy
“The undeniable arrow of progress, that directional trend is more and more intimacy.”
Wolfe: Calliope reverse-engineers the gut-brain axis to understand human satiety
“We back one guy. He happens to be this brilliant scientist at Columbia who reverse engineered the neural correlates for taste, and we funded him in a company called Calliope that is reverse engineering your gut-brain axis to understand how you feel the sense o…”
Wolfe: Thomas Reardon single-handedly coded Microsoft's Internet Explorer
“Single-handedly codes Internet Explorer, and makes a lot of money, retires, does another company, retires, and then early thirties now.”
Wolfe: Users will soon control ambient technology using neural micro-gesture wristbands
“What that implies is that you will wear something akin to a bracelet or a wristwatch, and you will be able to gesture like Disney's Sorcerer's Apprentice to flick your fingers to turn on the lights, to swipe like you would swipe in three dimensional, three Rai…”
Wolfe: Computational generative design will make products look biological within a decade
“I believe that within a decade, you will see Architectural structures. You will see product design. You will see components inside of vehicles and industrial products that look way more biological because they were designed, interestingly, by a computer that a…”
Parrish: British intelligence agency GCHQ built a doughnut headquarters before Apple
“There is a building like the Apple building that existed long before the Apple building, which is GCHQ, which is the British version of NSA created the exact same building.”
Wolfe: VCs must privately anticipate failure while publicly cheerleading their startups
“Venture, by definition, is a cheerleader business. You're optimist. You're promoting the future. You're supporting companies who, against all odds, are likely to fail, and you know, you're cheering them on. But I think internally and privately, you have to ant…”
Wolfe: Lux Capital's unanimous consensus investments have typically been very wrong
“And so, when the team has total consensus, we typically make an investment, and we've typically been very wrong.”
Wolfe: Lux partners get one solo high-conviction override investment per fund
“If you have one partner that is dogmatically table-bounding, and everybody else has said, I don't see it, what we decided to do for the tribe is, Is everybody gets one of those. So if I'm the one that sees it. Shane Parrish: One per year, one per career. Josh …”
Wolfe: Formally recording deal judgments is essential to prevent hindsight bias
“The process of recording people's judgments and perceptions and observations at each deal is really important. Because what we observed before we started doing this in a very formal way was that people had very selective memory. They would say, oh yeah, no, I …”
Wolfe: Venture capital's core advantage is funding businesses to discrete milestones
“The great virtue in venture capital is you get to fund two milestones. So in a perfect world, we're able to put a little bit of money in, we can de-risk a set of things.”
Wolfe: Venture capital has more irrational actors than ever before
“Today, in the market environment we're in, there are more irrational actors than ever before just because there's more money than ever before.”
Wolfe: Lux would rather lose half its investors than their capital
“The typical mantra we have internally is I would rather lose half my LPs than half my LPs money.”
Wolfe: GM acquired Cruise for $1 billion within a year of funding
“Nine months later, or 11 months later, GM buys them for a billion dollars, nominally. A little bit less, actually, but nominally a billion dollars. That would have been 11 X. In under a year.”
Wolfe: Bill Gates and Nathan Myhrvold notoriously eviscerated dissenters at Microsoft
“And it's interesting because Bill Gates, in a sense, was notorious for that. You know Nathan Mervold, brilliant, you know, but would sort of eviscerate people if they were wrong.”
Wolfe: Bill Gates will aggressively eviscerate flawed ideas in the boardroom
“You know, publicly, he sort of has this Mr. Rogers persona, you know, sweater, and I think in the boardroom, you know, he'll eviscerate somebody. Somebody will say something, he'll be like, why would you possibly do that? You know, that's the stupidest idea, a…”