Josh Wolfe – The Tech Imperative

**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** (0:47)
My guest this week is Josh Wolfe, co-founder and managing partner at Lux Capital. I had Josh on the podcast last year, which was one of the most popular episodes in the show's history. This is a continuation of our ongoing conversation about investing in the frontiers of technology. My favorite thing about Josh and the way that he invests is the mosaic that he and his team at Lux are constantly building to understand the world and where new companies may fit in. We cover a crazy variety of topics from business model innovation, roles of a CEO, the military, the death of privacy and arrows of human progress. Please enjoy round two with Josh Wolfe.
One of the things that I'm fascinated about right now is just big coordination problems. You mentioned China specifically, which I think is part of the answer to this next question.
I'm curious about your view on our ability really as a species to tackle massive scale problems versus sort of like incremental innovation, optimization, efficiency gains that you see in a lot of business today and certainly in a lot of startups. How do you think about that kind of dichotomy of massive scale projects and our ability to tackle them and what you want to fund?

**Josh Wolfe** (1:52)
Well, on this, I'm the opposite of Robert Gordon, right? So I actually believe that it's just a failure of imagination, more so than a failure of productivity or technology because we don't know what the thing is that's going to be 10 or 20 years hence.
In terms of tackling huge large scale programs and projects, there's basically one overarching mechanism which exists at the moment, which is a low cost of capital. When you have a low cost of capital, I have equated it to a tractor beam for the future. And so you would take 20 year far out projects and basically pull them in Star Trek like into these 20 month frenzied projects.
Now, there's two ways to do that. One is state driven. And as you alluded to, that is China. China decrees in a five year plan, this is what we're going to do. And you see roads built overnight, you see bridges constructed while we lament, you know, that it took 11 or 12 years to build the Freedom Tower or rebuild the Freedom Tower. And so I think the ability to galvanize people, commandeer resources, in fact, command people to go do something is something that a state can do.
On the other end of the spectrum where you have free economies and democracies, you can't will people to do something here in the US per se. You can encourage, you can incent, you can disincent.
But the kind of person that can is not a China-like leader, but somebody like Elon Musk. And with all I publicly criticize about Elon, the one great virtue is I think he is the paragon of somebody who has been able to paint a narrative and get people to believe in it, almost like a religious leader, and follow behind. And what flows from that is human capital, people wanting to work for that vision or that mission, financial capital, people wanting to part with their dollars and support it. So you lower the cost of capital, you lower the slope for somebody to join onto a project. I think both of those things, whether it is state directed or story directed, it's human narrative. They're both powerful things. But I am hyper optimistic and confident, even though I'm generally a cynic. Our ability to do big grand scale things is greater than ever before, in part because our communication tools are greater than ever before. To be able to use Twitter and convince people that something is possible, to be able to use the technologies and mediums to communicate, whether it's something like what you and I are doing right now, to be able to broadcast ideas or video, it's super powerful. And 100 years ago, you never had that.

**Patrick O'Shaughnessy** (3:54)
The narrative one is so striking, something that's coming up more and more in my conversations, especially because just like capital is cheap, the cost to distribute a narrative is also cheap. It's easier than ever to do that if you've got a good narrative. It's a great bridge into this question that we had discussed a little bit ahead of time about some of the key roles of leaders, CEOs specifically, and that you sort of have an internal checklist of sort of the most important things that a CEO could be doing. So I'd love to explore that list because I know narrative is one of the key components.