Alex Danco – Scarcity, Abundance and Bubbles

**Patrick O'Shaughnessy** (0:04)
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_1** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:49)
My guest this week is Alex Danco. Alex is a member of the Discover team at Social Capital, has a background in biology and has written about all things tech and business. While Alex is only 30, it seems like he has spent decades thinking about all the topics that we discuss, from changing business models to railroads, to the shift from products to functions and the rise and fall of asset bubbles.
I hope you enjoy this wide-ranging conversation.
So Alex, we're going to kind of go all over the place. I've heard you before, I've read a lot of your work. We will cover some of the same topics, but hopefully explore a lot of new ground as well. Probably good framing is just your day job. Can you describe what it is that you do on the Discover team at Social Capital? And then we'll kind of transition into current investment opportunities, bubbles, scarcity versus abundance, all these kind of interesting topics.

**Alex Danco** (1:34)
Sounds great. Thanks again for having me.
I work at Social Capital, Silicon Valley, venture capital firm, and mission-driven business out in Palo Alto. Although I live in Toronto, where we are right now, so I make the trip back and forth on a fairly routine basis. But at Social Capital, I work on a team called the Discover team, along with my colleagues, Jay Zavaria and Nicole Engelhardt.
And we do something that I just think can only be described as really fun and very challenging, but that I'm very lucky to get to do, which is we try to, rather than see all the companies that are coming in and look at a whole bunch of deal flow and try to triage through companies and pick winners and manage them, we sit down and think, let's start with a problem we want to solve and then go from there. We literally have a list of 40 hard problems. It's in a Google Doc, but I'll put this in the show notes. If you have show notes, it's literally a list. You can go on to it and say, here are 40 problems that we are interested in building solutions for by 2045

**Patrick O'Shaughnessy** (2:26)
Give two examples just for fun.

**Alex Danco** (2:27)
Is the air we breathe clean? How do we know if the air we breathe is clean? Do we know that right outside this is safe for us to read? How do we know? And we have a company called Aclima in our portfolio that's working on this, for example.
Can we create, grow and eat food that is more nutritious and more safe for us in a way that still creates a safe and durable and resilient food industry for everybody? And food ecosystem for everybody. So all sorts of problems that really have to do with kind of the basics on Maslow's hierarchy. So what we do is we say, we'll start with an area. So right now we might look at something in, typically these are very hard technological areas like synthetic biology or in deep into technical infrastructure. We really like companies that are building sort of the guts down below where nobody has heard or seen of this stuff. And then say, okay, what is the one company we should help make?
What is the one company that needs to exist? We can't find it, and we feel like it's just urgently needed over the next many years.
So we'll go look for that company. We will go to spend a lot of time learning. And I think developing a respect for these complicated industries and developing a respect for the complexity. I think this is very important for entrepreneurs and investors. If you are tackling somewhere like the food industry or health care or education or anywhere where there are just layers and layers of complexity. And if you walk in sort of blindly saying, I'm going to go disrupt something, right? I'm going to go create a great business. You will miss out on, I think, a lot of both the challenges that are going to hit you, but also some of the opportunities there that just take spending a lot of time with people and really digging in your fingernails.