The Second Cognitive Revolution: What AI Actually Means for Venture Capital

**Alec Litowitz** (0:00)
What entrepreneurs get paid for is not risk. They get paid for uncertainty, for resolving the uncertainty. You know, if you have incredible growth and you're still working out your model and you don't know if something is going to work or not, let's go to Airbnb when people may stay at some stranger's house or they may not. But I don't know the probability.
If it's high, I have a business. If it's zero, I don't have a business. Let's go resolve that probability. When someone does a startup and tests it, raises money, probes around it, and gets feedback loops, the answer is yes.

**SPEAKER_3** (0:39)
Opinions expressed by participants are their own, and do not reflect the views of LGT Capital partners, Asylum Ventures, Magnetar Capital, QStar Capital, or their affiliates. The content does not take into account your specific investment objectives, financial situation or needs, and is not intended as a recommendation, an offer, solicitation of an offer, public advertisement or recommendation, to buy or sell any investment or other specific product. Information is based on sources believed to be reliable, but no warranty is given as to accuracy or completeness, and it should not be relied upon. Alternative investments are speculative, involve complex instruments, and carry a high degree of risk. Investments and strategies discussed fluctuate in value and may not be suitable for all investors. Listeners should make their own independent investment decisions. No funds are being discussed on this podcast.

**Nick Chirls** (1:15)
Welcome to Origins, the podcast that dives deep into the business of venture capital, where we learn how the people behind the capital, both GPs and LPs, make decisions. I'm Nick Chirls, partner at Asylum Ventures.

**Beezer Clarkson** (1:27)
And I'm Beezer Clarkson, your LP co-host, managing director at LGT Capital Partners.

**Nick Chirls** (1:32)
Today's guest is Alec Litowitz, founder of Magnetar Capital, one of the most respected multi-strategy hedge funds in the world, and founder and managing partner of QStar Capital, his single-family office and investment platform. Alec has spent over 30 years in alternative asset management, starting at JP. Morgan, then as one of four founding partners at Citadel, as a global head of equities, and then building Magnetar from the ground up.
With QStar, he's an inventor in two distinct ways. As a direct investor backing companies like CoreWeave, GlobalSide, and SpaceX, and as an LP investing and top-performing VC and private equity managers through QStar's GP investments arm. All of it with no fund mandate, no LP constraints, and a genuinely long time horizon.

**Beezer Clarkson** (2:18)
Thank you, by the way. This is yet another awesome Nick guest that you brought on, so appreciate you doing that. And what makes this combination so interesting for me personally, and I think for this show, is that Alec has sat on every side of the table as a fund manager himself, as a direct venture investor, and as an LP evaluating and backing managers. That's a vantage point very few people forget about, very few of our guests bring, and the thread connecting all of it is a framework he's developed over 30 years called Adaptability Quotient, or AQ.
It's a process for making decisions under genuine uncertainty. How you think about your own thinking, how you map possibilities before committing, and how you test and adjust in real time. He applied it at Citadel, built Magnetar around it, and it's the foundation of how QStar selects investments today. He's also now written it down in a book, The Adaptability Quotient, out September 15th, and has been exploring the bigger implications through his newsletter, Early Adapters. We'll dig into all of this. Let's bring them in.
Alec, thank you so much for joining us. We're really excited to have you on Origins.

**Alec Litowitz** (3:31)
So excited to be here. Excellent. Thank you for having me.

**Nick Chirls** (3:33)
Well, I still want to hear, Alec, day one closing price prediction.

**Alec Litowitz** (3:38)
You know, we probably will get into some aspects of what I'm about to say, but I do think that the markets, whether they're public or private, are really about resolving uncertainties. And I think the fact that SpaceX has already resolved certain uncertainties from the time that I invested with it, right? So I invested and there was just a launch business. There was this possibility of Starlink, but they hadn't put any birds up at all. And the question was, could they get it up there? What would happen with Falcon 9? Would it reduce the cost of getting one kilogram up into space? Those things have been resolved. We're on the cusp right now of is, would you consider Starship fully resolved? It's partially resolved.
Elon Musk has done a pretty good job throughout all of history of resolving technical challenges. So I would say that people, even though some of these things are unresolved, it's people probably going to give him the benefit of the doubt that some of the technical aspects, if it's within the bounds of physics, it'll probably get resolved. So I think that it's appropriate to some extent for a company that, and I could be wrong, I think the total amount of dollars raised and is under $10 billion. Put another way, very few people have had access or exposure to the company. So I like the idea that going public in the sense that I like, that there's some pieces that are unresolved and the public gets exposure to that. What the right price for that is, is probably for someone else to argue. I think it depends on the timeline. So if you ask me to have a prediction about day one, which I'll come back to in a second, I'm not avoiding it totally. But if you ask me about that, it's harder to see that. Oftentimes, when you look out over long periods of time, it gets harder. I think it's harder to predict what happens on day one than it is to think further out, and what does this company look like, and whether it'll be long-term a good bet, and it will be a fun one to be involved in. I think the answer to that are both that long-term it'll be worth more, and it's part of supplying hope to humanity. So I'm bullish long-term on it.