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Episode reading list:  Forging the Industrial Network the Nation Needs Defense Fordism and AI Rebooting the Arsenal of Democracy The Return of Industrial Warfare America spends more money on defense than ever, with a budget that more than doubled in the wake of the September 11th terrorist attacks. Despite those dizzying appropriations though, America is now down to just 5 big prime defense contractors, consolidated from dozens during the Cold War. It’s a pattern of consolidation, higher costs, and diminished resiliency and flexibility seen in sectors throughout the U.S. economy. As the stakes have grown for American defense, however, there are increasingly acute concerns about what our diminished capacity for defense means for the country’s long-term security. Today, we bring on James “Hondo” Geurts to talk more about the crisis in the defense industrial base. Geurts most recently performed the duties of the Under Secretary of the Navy and formerly was Assistant Secretary of the Navy for Research, Development & Acquisition, in charge of the Navy’s more than $100 billion annual budget. Lux Capital is also deeply interested in recapitalizing the future of the defense industrial base and bringing more attention to emerging threats across all theaters of defense, including cyber, space, networking, and more in both state and civilian contexts. To that end, Hondo and Lux teamed up to create the Lux Security + Tech Index built on Thematic to offer investors a more methodical way to invest in the future of security. Also joining host Danny Crichton is Steve Carpenter, CEO and founder of Thematic. In this episode, we talk about the importance of the new “industrial network” era of defense, the consequences of the 1990s post-Cold War peace dividend, how large projects like the F-35 and the Gerald R. Ford aircraft carrier drive consolidation, the value of simplicity in defense acquisition, the failure of the Defense Department’s high research expenditures, the need to shift from “program of record” to “capability of need”, and finally, details about the new Lux Security + Tech Index and its construction. As a reminder, all investments are risky, and nothing in this episode should be construed as an endorsement of any specific investment product for any individual listener. Always do your own research.
Stanford University is at the beating heart of Silicon Valley and has become almost a rite of passage for generations of entrepreneurs. But how does each generation form, and what skills and mindsets should they be equipped with given our changing world? No one has thought more about how to shape that entrepreneurial spirit than Dr. Tina Seelig. Seelig is the Executive Director of the prestigious Knight-Hennessy Scholars program at Stanford among many other leadership roles, and she is also the author of Creativity Rules: Get Ideas Out of Your Head and into the World as well as What I Wish I Knew When I Was 20. Joining Seelig is host Danny Crichton and Lux Capital partner Grace Isford. We talk about Seelig’s class “Inventing the Future” and how she guides students in considering the utopian and dystopian aspects of the future technologies that are shaping our everyday lives. We also talk about generational differences between students over the past two decades, from the 9/11 generation to the global financial crisis and Covid-19 generations and how global events influence the approach of budding entrepreneurs. Then we walk through how to teach leadership, how to increase luck, and why there is such an important correlation between optimism and agency.
Agricultural commodities is a bit like accounting: you only hear news stories about it when things go wrong. And unfortunately for the world in 2022, a lot is going wrong in agriculture. Russia’s war on Ukraine has devastated one of the world’s great breadbaskets, and global climate disruptions are wrecking havoc on food productivity. That’s led to soaring inflation and increasingly contentious politics, particularly in the developing world. Sadly, that’s not the only problem the industry faces. Commodities are still traded predominantly on antiquated systems, with the UN estimating that more than 275 million emails are exchanged annually to ship about 11,000 vessels of grain across the oceans. That’s one reason why Lux led the $7 million seed round for Vosbor earlier this summer to build the first digital agricultural commodities exchange. I wanted to understand more of this extraordinarily complex industry, and so I asked two former CEOs of the largest agriculture commodities companies in the world to weigh in. Joining me (@DannyCrichton) on “Securities” today is Chris Mahoney, former CEO of Glencore Agriculture and now known as Viterra, as well as Soren Schroder, former CEO of Bunge. We’ll talk about the cyclicality of agricultural markets, the cost disease of infrastructure upgrades, the geopolitical strategies of ag firms, the increasing focus on logistics capabilities, and what the future of digitalization and technology have in store for this critical industry.
“Securities” podcast host Danny Crichton and producer Chris Gates talk about the latest newsletter issue, “Truth and reputations.” Reputations are always a trailing indicator of truth. When people and organizations are rising, reputations obviously lag — the public has never heard of these new upstarts, and its opinion remains unformed. Reputations gallop to catch up, and for a brief moment perhaps, the true quality and the perceived quality intersect. Inevitably decline sets in, whether in an individual’s career or in an organization’s penchant for adding listless bureaucracy and complexity. The public reputation remains robust, but the underlying quality has etiolated. Perception has now overshot truth.Last week, we saw three stories that illuminate the dynamics of truth versus perception: Adam Neumann’s $350 million fundraise for Flow; SoftBank’s historic quarterly loss and Masayoshi Son’s investment acumen; and then, the CDC director’s call for a complete reform of her beleaguered agency. We talk about these three stories, plus a Lux Recommends article.
Humans have been bartering and trading for millennia, building extraordinarily complex mechanisms of exchange centered on fiat currencies, contracts, and trust. As cryptocurrencies have emerged this past decade, economists and incentive designers have been forced to consider how to construct new forms of currency without the social lubricant of trust. How can we prove that every market participant is incentive aligned with market goals? What contributions can game theory, theoretical computer science, cryptography and microeconomics make to this newly energized field?  That’s the subject of this episode of “Securities” with Christian Catalini, the founder of the MIT Cryptoeconomics Lab. He and his colleagues fuse the fields of economics and computer science together with the goal of analyzing decentralized marketplaces and applications. It’s just the latest endeavor for Catalini, who is also a Research Scientist at the MIT Sloan School of Management, the co-creator of Diem (formerly known as Libra), and the co-founder and Chief Strategy Officer at Lightspark. Joining host Danny Crichton is Lux’s own Grace Isford, who invests in web3 and crypto infrastructure and is based in New York City. We’ll talk about the growing community of crypto infrastructure analysts, the now-famous MIT Bitcoin Experiment, how academics are translating their work into crypto, and how to think about stablecoins in the aftermath of Luna’s collapse this year.
Recently in the Lux Capital office, my colleague Chris Gates, the producer of the "Securities” podcast, along with biotech investor Shaq Vayda were talking about the global macro environment and venture capital. Tech stocks hit their zenith in November 2021, and now a lot of VCs have slowed down their investments over the last couple of months. That's led to something among limited partners and asset allocators known as the “denominator effect”, where portfolio managers move money from one asset class to another as each asset class performs relatively differently. And so they talked about the denominator effect, they talked about a couple of other different patterns that they’re seeing in the venture world, and I figured that since it's summer, and it's July and we’ve already have talked about enough terrible news on the “Securities” podcast the last couple of weeks, I figured we could do something a little bit different, which is sort of a Venture 101 on the denominator effect, and talking about basically what we're seeing in the world today. So here's Shaq and Chris, take a listen. Suggested reading: WTF is the denominator effect? by  Danny Crichton
There has been a massive expansion in data emanating from bio labs, and that means next-generation AI algorithms and machine learning models finally have the grist to transform the future trajectories of biology and health therapies. Yet, there’s a key translation challenge: how do  you get computer scientists and biologists — two types of specialists with very different training — to collaborate with each other effectively? Two groups, Bits in Bio and Nucleate, have independently spearheaded new ways of bringing all people interested in tech and biology together to share best practices and think through patterns of startup inception and growth. Today, we bring the founders and early champions of those two groups together for the first time in person to talk about their work. Joining us first is Michael  Retchin, a PhD student at Weill Cornell Medicine and the founder of  Nucleate, a free and collaborative student-run organization that facilitates the formation of pioneering life science companies. Second,  we have Nicholas Larus-Stone, the first software engineering hire at, a Lux-backed synthetic biology startup, as well as the founder of Bits in Bio. Finally, joining “Securities” host Danny  Crichton is Lux biotech investor Shaq Vayda. We talk about where tech + bio (versus “biotech”) is coming from, how the two community leaders launched and grew their respective organizations, the coming challenges in biology, and our speculative dreams for the future of what biology could look like in the years ahead.
“Securities” podcast host Danny Crichton and producer Chris Gates talk about the last two weeks of “Securities” newsletters. The first, from July 9th called “Dissonant Loops”, discussed the chaos and crises plaguing the world today and why our state capacity to respond to them is so limited. The second, from July 16th entitled “Scientific Sublime”, was a palette cleanser of sorts focused on the human achievement of the James Webb Space Telescope and how this accomplishment can be shared by everyone on Earth. We’ve got the lows and the highs, and then we talk about a few of the top Lux Recommends selections from the two issues, including: “Postcards from A World on Fire” from The New York Times last year showing the scale and diversity of climate devastation IEEE’s overview of the daunting data challenges that come from transmitting those gorgeous images to Earth CLIPasso, a Best Paper awardee at SIGGRAPH 2022, which uses machine learning to abstract complex photography into simpler sketches “Building an Open Representation for Biological Protocols” Daniel Oberhaus’s book Extraterrestrial Languages, which asks two provocative questions, “If we send a message into space, will extraterrestrial beings receive it? Will they understand?” Finally, Kit Wilson’s analysis in The New Atlantis on “Reading Ourselves to Death”
Welcome to “Securities” by Lux Capital, a podcast and newsletter devoted to science, technology, finance and the human condition. I'm your host, Danny Crichton, and today we're talking about the post-Roe world. Tomorrow, it'll be 30 days since the Supreme Court announced in Dobbs v. Jackson Women's Health Organization that there is no constitutional basis for the right to abortion, overthrowing several decades of precedent. It's a decision with huge implications for tech startups, which will now operate across 50 sets of state laws, covering everything from privacy and data governance to who gets to decide which patients receive women's health and who won't. Now that we've had a few weeks to digest the decision, I asked my Lux partner Deena Shakir to bring together a panel of guests to talk more about how startups are responding to Dobbs. Guests: Dr. Neel Shah is an assistant professor of obstetrics, gynecology and reproductive biology at Harvard Medical School and Chief Medical Officer of Maven Clinic. Halle Tecco is an entrepreneur and angel investor passionate about fixing our healthcare system. She is the founder of Natalist, which was acquired by Everly Health in October 2021, and she is also the host of The Heart of Healthcare podcast. Paxton Maeder-York is the CEO and founder at Alife Health.
Today we're talking about the future of American defense. And we have three of the leaders changing the trajectory of this important field with us is the leadership of Anduril Industries. First, Palmer Luckey Founder, also Brian Schimpf Co-Founder, and CEO, as well as Trae’ Stephens, Co-Founder and Executive Chairman, along with us is Josh Wolf from Lux. I want to start out by painting the least rosy picture I can of the American defense industry over the last year and 2021. In Afghanistan, we saw a massive pull out of the American forces there. After more than two decades of war, we saw Russia invade Ukraine, in which Turkish drones some of the cheapest on offer in the market today have become the unlikely hero instead of American defense technologies. Meanwhile, America is not producing anywhere near the hardware, or even the software required to supply Ukraine with javelins and other core defense needs. On Capitol Hill, the defense budget process seems to get more chaotic and confusing every year. And we also found in the last year that China appears to be probably ahead of the United States, on hypersonic missiles. And so when I look at the defense industry today, it seems to me it's just negative after negative after negative news. - Danny Crichton Recommended reading:  Rebooting The Arsenal of Democracy The new apex of “Entropic Apex”
Here is my dilemma, I want custom art for the podcast. Ideally, I would have a new image for each episode. Up until recently, my choices were to use stock photography or work with an artist. I now have a third option, AI art generators. As of late, my Twitter feed has been filled with these AI-generated images and I have become obsessed with them. On one hand, I feel like a superpower of visual communication has been unlocked and on the other hand, I am an artist and creative who wants other artists and creatives to get paid, I am conflicted.  DALLE-mini  What Kind of Sorcery Is This? Why code is so often compared to magic. Hieronymous Bosch fusion reactor #dalle2 - Josh Wolfe DALL-E makes some fantastic World’s Fair posters - Sam Arbesman "Interplanetary Space Empire by Thomas Cole" via DALL-E - Sam Arbesman
SpaceX has grown from nascent dreams of the final frontier into the world’s premier commercial space launch company, with dozens of successful missions that have continually become more and more ambitious. Now, there’s a budding ecosystem of SpaceX alumni who have left the mothership to build their own companies, taking the culture and values they learned and applying it to problems they saw at the front lines of space innovation. On today’s episode of the “Securities” podcast, host Danny Crichton interviews two of those alumni, Laura Crabtree, the co-founder and CEO of Epsilon3, and Will Bruey, the co-founder and CEO of Varda Space. Laura and Will shared a cube at SpaceX, and are now building software and hardware startups, respectively. We discuss how SpaceX’s culture shaped their perspectives as entrepreneurs, why they chose different problem areas of space to tackle, how the 2022 financial markets impact their approach to growth, and how they think about company building and the Los Angeles / Southern California hard tech ecosystem. Recommended reading for this episode: Liftoff: Elon Musk and the Desperate Early Days That Launched SpaceX  News: Startup Epislon3 hopes to expand Pentagon reach with launch ‘software service’ Epsilon3’s space industry OS powers more than launches as it brings in $15M in new funding Varda Space Industries closes $42M Series A for off-planet manufacturing
Vaporware skepticism

Vaporware skepticism


"Where marginal stupidity is about  “how there is a turning point where further information or complexity can befuddle us and simply raise costs without any concomitant value,”  what I am seeing in hard science investing is an outsourcing of thought,  a reliance on the splashy marketing one-pager instead of the agonizingly long technical research with the diligence to match. None of this bodes well for many of the new VC entrants who have suddenly become enamored by the capital return potential of science. We have a  view that real advances in science are relatively rare, that they are hard to produce, and they tend to be signaled by clear research evidence years if not decades in advance. Venture capital is not a fit for the needs of academic researchers who require long time horizons of open exploration without commercial considerations. Skillful diligence is critical to making thoughtful investments, and investors must have a  well of resilience to draw upon, since most diligence will come back relatively negative in the hard sciences compared to software. We need the right dose of vaporware skepticism. We can’t allow the excitement of science fiction to occlude the challenges of realizing it into science fact. Condensing fact from the vapor of nuance means finding the rare but tangible scientific advancements and propelling them forward on the path to commercialization. Otherwise, you’re investing in steam, and those returns on capital will just evaporate right through your fingers." - Danny Crichton Lux Capital's "Securities" newsletter edition: Vaporware skepticism by Danny Crichton "Securities" podcast is produced and edited by Chris Gates Lux Recommends:  The nuclear situation with North Korea has been transformed over the past few months, with changes that will ripple across the Asia-Pacific region and into U.S. foreign policy. Kim Hyung-jin and Kim Tong-hyung in the AP have a great explainer on the latest evolution of nuclear strategy emanating from the DPRK. Our scientist-in-residence Sam Arbesman brings us an article from Nature on the Long-Term Evolution Experiment (LTEE), in which scientists have saved tens of thousands of generations of E. coli over 34 years in order to improve our understanding of evolutionary biology. The scientists are retiring and the bacterial cultures are moving homes in order to continue their lengthy evolutionary run. Shaq Vayda recommends a podcast and attached transcript between Eric J. Topol of Medicine and the Machine and Demis Hassabis, founder of DeepMind. The two discuss the advancements that deep learning affords medical advancements Retired lieutenant colonel Alex Vershinin, writing a commentary for the Royal United Services In
Lazy tech analogies

Lazy tech analogies


"The world is incredibly complicated, and humans necessarily use heuristics and analogies to process that complexity into simpler forms. These mental shortcuts are never perfect, but they should broadly summarize the complexity they represent while affording their user a sense of their limitations. In that vein, I want to call attention to two lazy tech analogies that I’ve seen lately as examples of the kind of impoverished analogical thinking that the industry needs to actively avoid." - Danny Crichton Lux Capital's "Securities" newsletter edition: American national security and startups + Lazy tech analogies by Danny Crichton "Securities" podcast is produced and edited by Chris Gates
"GPT-3 was trained on is so large that the model contains a certain  fraction of the actual complexity of the world. But how much is actually  inside these models, implicitly embedded within these neural networks? I  decided to test this and see if I could examine the GPT-3 model of the world through the use of counterfactuals. Specifically, I wanted to see if GPT-3 could productively unspool histories of the world if things were slightly different, such as if the outcome of a war were different or a historical figure hadn’t been born. I wanted to see how well it could write alternate histories." - Samuel Arbesman From Cabinet of Wonders newsletter by Samuel Arbesman Great tweet thread summarizing his post "Securities" podcast is produced and edited by Chris Gates
Marginal Stupidity

Marginal Stupidity


"One of the most important cognitive tradeoffs we make is how to process information, and perhaps more specifically, the deluge of information that bombards us every day. A study out of UCSD in 2009 estimated that Americans read or hear more than 100,000 words a day —  an increase of nearly 350% over the prior three decades (and that was  before Slack and Substack!) It would seem logical that more information is always better for decision-making,  both for individuals and for societies. Yet, that’s precisely the  tradeoff: humans and civilizations must balance greater and better  information with the limits of their rationalities." - Danny Crichton Lux Capital's "Securities" newsletter edition: The marginal returns of information by Danny Crichton "Securities" podcast is produced and edited by Chris Gates
The ESG Mirage

The ESG Mirage


"The activities of an extremely complicated phenomenon like a  multi-national corporation cannot be reduced to five-star ratings,  particularly on a definition as squishy as “Environmental, Social, and  Governance.” Rather than trying to strengthen definitions or improve quantification, the industry needs to come to terms with a more basic reality: the mission is impossible, and its failure began before it even started. With this much moolah at stake, the world deserves better."  - Danny Crichton Lux Capital's "Securities" newsletter edition: The ESG Mirage by Danny Crichton Produced and edited by Chris Gates
Speech and the right to it has become deeply contested across America in the 21st Century. What is free speech, what are its limits, and what norms should apply to both give everyone a chance to speak while also respecting the needs of a democratic society to function? Investigating these and other critical questions has been Jonathan Haidt, professor of social psychology at NYU’s Stern School of Business and the author most recently of “The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure,” which he co-wrote with Greg Lukianoff.He recently wrote an article for The Atlantic headlined “Why the Past 10 Years of American Life Have Been Uniquely Stupid,” and in this first part of a two-part series, Josh Wolfe and Danny Crichton discuss with Haidt his thesis of American “structural stupidity” and why the classical metaphor of the Tower of Babel describes the current political and social environment for Americans.
In part one of this interview, Jonathan Haidt described his recent article in The Atlantic on America’s structural stupidity and why the classical metaphor of the Tower of Babel describes the current political and social environment for Americans.In this second and final part, Josh Wolfe and Danny Crichton discuss with Haidt the potential directions that the tech industry can take to ameliorate the worst aspects of our current toxic social media environment. We’ll also discuss the mental health of members of Gen Z, how corporations can nurture their youngest employees, norms and social contagion as well as why content moderation isn’t the answer to social media’s problems.
Speculative fiction is a long-running but increasingly popular genre of science fiction that uses a variety of imaginative techniques to envision alternatives to our present and coming society. One of its craftsmen is Eliot Peper, a novelist whose tenth book, Reap3r, was just released. Reap3r follows a diverse cast including a quantum computer scientist, a virologist, a podcaster, a VC, and an assassin as they unlock a mystery key to the whole plot. Peper along with host Danny Crichton talk about how Reap3r sheds light on our current world, how Peper thinks about launching a new book as an independent novelist, and how travel and wanderlust can come together to generate innovative ideas, plots, and characters.
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