Link: http://investorfieldguide.com/wolfe/
About Josh: Founder of VC firm Lux Capital
- Core beliefs
- Confident that by being curious and following leads and being relentless will lead you to the next idea.
- Confident you won’t know when or how you happen upon the idea.
- Confident that the idea lies in the edges of companies that are doing innovative things, often from first principles or science, and very few people are looking there.
=> These principles propagate from a commitment to benefitting from optionality and positive convexity of non- linear relationships. When analyzing how they found deals it only made linear, narrative sense after the fact
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- Examples
- Studying meta materials with negative index of refraction led him to antennas without moveable parts which can lead to internet everywhere which led him to Bill Gates who was backing the guy will all the parents, which led him to Orbital Insight in SF and Planet which were mapping the globe with a huge network of inexpensive satellites.
- Looking at vehicle automation led him to a company modeling software on GPUs 5 years ago which led him to learn about NVDA and then they backed Nirvana which was later acquired by Intel.
- Examples
- Moonshots
- Exploring modalities to allow pets to communicate. Follows the trend of zeitgeist that animals are more than our possessions. This is based on observations, not predictions. The tech side leverages our expanding ability to sensor and detect signals.
- X-men: with 7b people in the world there are extremely rare genetic conditions. Hypertrophy, height, memory etc. Hacking these genetic anomalies to discover enhancements for the general population. Kind of like prosthetics led to military exoskeletons.
- Business Tips
- Learning rabbit holes: talking to people, getting leads following up. Quickly see who’s full of it and what’s valid. He uses a mind map to link the people.
- “Funnel wide, filter high”
- Drunkenmiller was early investor. Wolfe attracted to outsiders with a chip on their shoulder. Grit and outside view.
- Pay attention to the frauds and bad operators. Don’t short promotors and religions. They are good at fundraising!
- Amazing salespeople, amazing operators. A pitch only demonstrates the first.
- Best performing companies in the portfolio were the companies that were heavily disagreed upon but 1 person enthusiastically saw the value. Not surprising, outsize returns never follow consensus.
- Jim Watson (of double helix fame) says “Avoid boring people”. It has a double meaning.
- Keep track of people who make bad choices as opposed to people who have had success.
- Respect for Musk, Bezos, John Malone. Although says Tesla is a bad business. Much respect for SpaceX
- On business advantage
- Moat because of competitive advantage, low cost of production etc. That will lead to dominant unit economics.
- Focus on TAM is silly. It’s not predictive of return. How much capital goes into a sector is inversely correlated with future returns. Need to look where this few competitors and high barriers to entry.
- Ironically, a bad competitor can ruin a market if they are the first customers interact with.
- Is there more innovation or less depending on liquidity in markets?
- Slime mold is spore which expands in every direction when resource rich. Similarly, when financial conditions are loose, many businesses are started and speculated on. The detritus of the fallout ( Global Crossing was a major disaster for investors but a boon for the Third World which got connectivity for free) will provide the nutrients for the next seeds of growth.
- When capital is scarce, only the best projects get funded so an opportunity exists but it’s probabilistically rare to earn a return from in all parts of the business cycle.
- Random allusions
- Tattoo asymmetry: 60 bucks to get one and fast, but later regret and massive expense to undo
- Possessions as anchors
- Happiness comes in doses. Dissatisfaction is important.