(Transcript) Peter Kaufman Q&A at the Redlands Forum

If you’ve visited my compilations page, you’ll know that Peter Kaufman was one of the people responsible for my compilations. He encouraged me to take copious notes, organize them, and write them up. He doesn’t write/speak publicly often, but when he does, you’d be wise to listen.

For those who don’t know him, Peter is the longtime chairman and CEO of Glen-air, a multi-billion-dollar aerospace company that creates and distributes mission-critical interconnect solutions. He is also the editor of Poor Charlie’s Almanack (which I have based many of my compilations on), one of the greatest books of all time, and recommended by people such as Warren Buffett, Lu Li, Bill Gurley, Bill Gates, Naval Ravikant, and Josh Wolfe.

This is a transcription of the Q&A session after Peter’s speech at the Redlands Forum on 1/16/2020.

A transcript of the speech can be found here.

*Transcribed 7/11/2020
**Lightly edited; any errors should be attributed to me

And if you want more from me, you can follow me on Twitter @kgao1412, or subscribe to my substack A Letter a Day, where I share some notes on one of the letters from my compilations each day.

Peter Kaufman Q&A ft. John Dorsey

Emcee: I think that Peter will take some questions, right? If there are some questions. And do we have our fine mic runners, Dr. Walker and Mrs. Burgess? Thank you.

We didn’t get the word out to our students tonight. Not their fault, our fault. But these guys love to run stairs right, Shar? Okay, we got a question right up there, Shar.

Please introduce yourself and then ask your question.

Q1: Hi, my name is Anne. I’m just curious to know how long he lived and where he ended up. I mean, did Mr. Rockefeller, you know, honor him till the end of his life? I mean, I’m sure it’s in your book, but I want to know now.

PK: Well, it’s not in the book. It’s actually kind of sad. Because Rockefeller’s son, as sons tend to do, thought that he ought to be in charge of his dad’s foundation. And… he kind of got pushed aside.

He wrote his memoir, called Chapters in My Life, which hasn’t been in print, for you know 80 years or something. I bought the rights to that book, and I’m going to reprint that book. Because I think this is a story that needs to be told.

And I’ll tell you something else. I sent copies of this book to Warren Buffett, Bill Gates, several university presidents that I know with a note to each one of them. And I said, if you’re looking for a model for large scale philanthropy, how to do it right, it’s here in this book. This is how to do it right. It’s not just top down, is it? It’s bottom up. You have to know the details or you actually do more harm than good. So actually, it is rather sad. And perhaps it’s because he never promoted himself.

Any other questions? Yes.

Q2: Have you run into any other people that, similar to this, that perhaps we’ve not heard of, or have you–

PK: Well my best example I mentioned, is George Marshall of top down and bottom up. He’s been nominated by Stephen Ambrose, a historian, as the greatest man of the last 100 years, and I think that’s

correct.

Let me tell the D-Day story. I love telling the D-Day story. Top-down, bottom-up.

What’s the top down understanding of D-Day? Well it’s very simple. We have to stop Adolf Hitler. We have to. He may enslave the world. Millions could be killed. That’s the top-down understanding. So is D-Day necessary? Absolutely necessary.

What’s his bottom-up understanding? My stepson is one of the soldiers that’s going to be in harm’s way. I could lose my stepson, my wife could lose her son. Okay? Is that bottom-up understanding? You bet it is. What decision did he make? Got to go ahead.

When you combine top-down and bottom-up, you make correct decisions. So I’m sorry I can’t give you more names, these are very rare people – exceedingly rare – but boy do they leave their imprint on human civilization and we should be very grateful that they did so.

Q3: Okay, he was a very unusual man, but is this something that institutions, colleges, organizations can teach people? Or is this something [that] just has to come naturally?

PK: Well, let me ask you. What do you think? Do you think if you’d have heard this story when you were in high school, in college, do you think it would have made any impact on you? would it would you have lived your life any differently?

Q3: I think I probably would have, if I couldremember it – [I think] that you have to have a vision, I mean,you – you can learn – we all can have tools, but if we don’t have the creativity to know how to implement them, it doesn’t go very far. So as I sat there listening, I thought, well, what can I take from this, or what can we all take from this? He obviously was a detail man, but he was also a visionary. He obviously probably could write and communicate in a manner that the people he needed to convince understood him. So I’m just thinking, like you know, where can we go with this to improve what we do in our own organizations.

PK: Well, I mentioned earlier today an African proverb that’s one of my favorites. It says if you want to go quickly go alone, if you want to go far go together. And if you’ll notice, every single thing that Frederick Taylor Gates did, involved going together, didn’t it?

We’re going to stop and take the time to go talk to all the Baptists and find out what do they think the educational structure in Minnesota should look like. And then he said, and then we’re going to fundraise from all the Baptists, even the small donations. Why? Because where your treasure is – that’s where your heart is. He did a fantastic job of always staying together with the group.

So I think we can all learn from that. I speak at a number of different universities every year, and I can tell you they’re not all the same. And one of the great compliments I’ve given Shelley and her group on University of Redlands, is they are a go together, go far group. And some of the Ivy League schools I talk to, they’re not that way. They’re go fast, go quickly, go alone. So, hopefully, these things can be taught.

Now, this story has had an influence on at least one person, certainly influenced me. You know, grab my Apple again and hold it up. I want to live a life like Frederick Taylor Gates did. I want to do things that are additive sum, potentially infinite in nature.

Now this gentleman, stand up John – John  Dorsey’s visiting from Greensboro, Alabama, and he has a program there that we’re currently having conversations with the University of Redlands regarding his program. It’s a Medical Fellows Program that perhaps Redlands students can participate in. And it’s one of the ways that I’m trying, in my own life, I’m supporting John to try to be like Frederick Taylor Gates.

I hope that one day we can scale this program across the whole United States, and deliver medical care as it should be delivered:  community-based one-on-one. We’re moving in the exact opposite direction. I don’t need to tell anybody in this room that that’s what’s going on – digital files, artificial intelligence, doctors via Skype.

But our motto is that the only true remedy for whatever ails a human being, is another human being. John has a fabulous model for doing exactly that, and I hope after our work matures a little bit, John will come back and give a talk here to you and report on our progress.

Thank you.

John, why don’t you share?

[Can] we have the microphone?

John’s never going speak to me again after this.

JD: I was not prepared. Can you hear me? I really wasn’t prepared to speak tonight, so… But basically, I think most people in the room would agree that, sort of, healthcare is a mess right now and everybody’s looking for a solution.

And I don’t know that there is a silver bullet that sort of fixes it all. But one thing – when I came through medical school, I was extraordinarily frustrated and felt as though there were these good people: medical students, residents, nurses, [attendants] all working very, very hard – but there just seemed to be this odd disconnection where everybody seemed frustrated, and the patients seemed frustrated. And I had a hard time sort of understanding what was going on. Why was it that we were doing what we were supposed to be doing, but it just didn’t seem to be making such an impact?

And so I ended up doing a residency and community psychiatry – and how many of you guys know what community psychiatry is? So community psychiatry is basically taking care people are down and out, people who are in and out of homelessness, people who are in and out of incarceration, people are living in a lot of turmoil – drugs and alcohol – and that really crystallized to me what was the disconnect.

Was we were trying to provide technical solutions for things that were much broader than technical solutions could really address. And so I started to think about how could we develop a system that actually met the needs of the bulk of patients.

Because if you look in any emergency room setting, or family medicine setting, or almost any hospital, most patients, they may not be as extreme as that, they do have a lot in common with those sorts of patients. And I really wanted to sort of not only develop a system that address their needs, but really mobilize the next generation of community health leaders, college students, and medical students to really be part of shaping that future solution.

And so I moved to Greensboro Alabama about 14 years ago. Small town from Orange County. Made a trip across the country and landed in a small rural town down there and started a fellowship program for students who are between college and medical school to really begin to shape this and develop this model.

And basically, what we do is, as a psychiatrist or a family medicine doctor, you see 25 30 patients a day. they come in with a lot more going on than you can fix with medication or other things. We assign them to – assign fellows, we call them – students between college and medical school. Each of them are assigned around 10 health partners and they work with the patients and actually extend what I can do into the community and into the home and actually address the broader issues.

And it takes me from a position of where I feel powerless to actually empowered to actually make a difference in patients’ lives. And as the students really learn about this sort of – the human side and the community aspects of healthcare – and we extended that same idea not only into healthcare but looking into education.

So there’s very – there’s actually weird parallels between what’s going on in healthcare and education. If you think in elementary school you’ve got, let’s say take a third grade teacher, you’ve got 30 kids in your classroom, all at different academic levels, all different behavioral issues, all different attention spans, and they all end up in my office because they need medicines for attention deficit disorder.

And I’m like maybe that’s not entirely the answer for this. Instead, why don’t we take these same students who are working with health partners, and have them work in pairs in teachers’ classrooms to provide the one-on-one, sort of small group attention to the kids so that the kids who are behind can be caught up the kids who are ahead can be pushed forward and the teacher’s actually set up for success in managing the different sort of issues that the teachers are going through.

And what’s been remarkable, is if you think about it – Shelley and I were talking earlier – If you think what’s happened, I think broadly across the country, is these community-based, citizenship-based, non-professional initiatives, used to be by talented women who sort of ran sort of educational initiatives and healthcare initiatives. But the world’s changed, obviously, women are working and so you don’t have that infrastructure.

And so, really, my thought was, let’s take the next generation of students and really teach them about community-based citizenship where they can actually participate in reshaping and supporting that sort of structure in that community-based structure and actually make a difference within the healthcare system, in the education system.

So that’s kind of what we’re doing.

Q4: Can you describe… [inaudible]

JD: Yes. Yes. So we started out – so it’sincreasingly – when I went to medicalschool the idea was you graduate fromcollege and you went straight to medicalschool. That was just kind of the commonpath. More and more I think collegesRedlands and most schools across thecountry and most medical schools – areencouraging students to take a year ortwo to gain a little bit of real-worldexperience and life experience. [There’s] more tobeing a doctor than just being a goodstudent. And so we – there reallyweren’t that many – or aren’t really anycommunity health gap year programs.

There’s Teach for America which focuses on education, but nothing really focusing on healthcare or community health. So 10 years ago we launched this program with three students. They spend one year with us, some stay on for a second year and take on a greater leadership role. We started with the three students. Over the last 10 years, we’ve had 90 students come through, with Peter’s generosity.

We started in Greensboro, Alabama. Tested a pilot in the next town over in Marion, Alabama to see if it really could be scaled, but that was very culturally similar. And Peter’s generously offered to support a pilot in Pomona, California to see if it could be done in California, a different cultural setting.

And that Pomona had a variety of reasons, Peter had been connected and knew the president of Pomona College, that’s where I went to college, and so it seemed like a natural sort of movement in that direction. And so we’re excited to have 12 fellows working with the schools.

One story I was telling, when we didn’t know how the partnerships we’re going to go with the healthcare organizations in the schools, so we approached the School District in Pomona, we said what would you think of having this group of students, twelve students, straight out of college, work with an elementary school, work with your teachers in grades K-5. And their response was how many of our 27 elementary schools could you work with?

We were like, we can start with one. So that’s – so I liked I liked Peters, sort of in his story, talking about take small steps, but incremental small steps. If you have a good idea, and you implement it properly and pay attention to the details, you really can over time. Because there’s no way when you take something as big as healthcare, it could just seem so overwhelming. That’s what I think everybody is trying to do – is take the Big Shot.

And that’s just not going to work. It’s just too big and too complex. But if you take small-scale steps, you can actually make a difference both at that individual level but then by preparing the community health leaders of tomorrow.

And I think that we really can grow exponentially in terms of the number of sort of health leaders who over the next 30-40 years, because it’s really going to be their system, and they should take responsibility for helping to shape the solution for the system.

PK: Thank you. Shelley?

Emcee: Oh, Jack has a question.

Q5: Peter, what caught your imagination and why did you do the research you did on this person? And I want to know more about who you are. What is it that’s motivating you? I mean you have had huge success in your career. You run a multibillion-dollar business. Why are you so interested in going bottom-up in communities making them work? I want to understand who you are.

PK: So I grew up in Santa Ana in a middle-class family. Went to public schools. But for a young kid, I had lavish tastes. I wanted a stingray bicycle. I desperately wanted a stingray bicycle. My dad was so cheap. He wouldn’t buy me my stingray bicycle.

So I started at age 13, sorting deposit bottles at the pantry market. They paid me in cash. you know, I’m super sure it was totally illegal what I was doing. But I really liked it I liked. I liked working with my hands and I liked making money and I was saving for my stingray bike.

Shortly thereafter, I went down and got a work permit, and I actually got a job as a busboy. and then I got a job at Hogue Memorial Hospital in Newport Beach working in the kitchen. One summer I spent the whole summer scrubbing pots next to Gabriel Guzman – an immigrant from Mexico – he didn’t speak a word of English. That’s why I speak Spanish. I spent the whole summer scrubbing pots talking Spanish, learning Spanish with Gabriel Guzman. Okay? Now I love Gabriel Guzman – he’s one of my most dear people I’ve ever met my whole life.

So I saw the world from the bottom, didn’t I? I saw it from the bottom of a range of institutions. And what did I see? Almost universally, how bad the managements were of all these institutions. My direct supervisors almost without exception were assholes. And they specialized in abusing down and kissing ass up. Now do you think we had any respect for these supervisors of ours? Of course we didn’t have any respect. But what about the people above them? We didn’t respect them either did we? Well, how capable can they be if this idiot is fooling them? He’s not fooling us and we’re high school kids. Okay?

So I saw all this, Jack. I saw it from the bottom. A series of fluke-ish circumstances brought me into contact with some masters, some mentors, who taught me what the top looks like. So suddenly, by a fluke, by accident, I’ve got the bottom, and I’ve got the top. And I just applied it. And did it ever work. Oh my god did it work.

And I’ve used it in everything in my whole life. I’ve done six major capital campaigns. Every time there’s a project that fails in Pasadena, a school project, they come find me. Let’s go get that Peter, you know, he knows how to do this.

Yeah, because I do it like Frederick Taylor Gates did. I go and talk to everybody. I get all the input from everybody. and what does that do? It designs the plan, doesn’t it? And then when you go to raise the money, everybody’s willing to contribute. Why? It’s their plan. they own it.

So, you know, that’s who I am. Part of who I am is, I love history. I just love learning from the past. And I studied Rockefeller and that’s what got me into Gates. Who in the world is this Frederick Taylor Gates? Rockefeller says he’s the best businessman that he ever encountered? Better than Henry Ford and Andrew Carnegie?

Well I’ve studied Henry Ford and Andrew Carnegie. They were unbelievably capable businesspeople. Who in the heck is this Frederick Taylor Gates? And I found this book. And I went out on the Internet – I have more disposable income today than I did when I was trying to buy that stingray bike, okay? And I bought every single copy that was available of Frederick Taylor Gates’ memoirs. I got like 24 of them, and the last few, is you know, getting scarcity. Where there’s scarcity, the price goes up. I paid $300 a piece for them. But what did I have? I had the inventory. And I sent them to Bill Gates and I sent them to Warren Buffett, and I got really nice letters back from them saying, you know, this is the most thought-provoking book I’ve ever seen on philanthropy.

But I’m going to take that book and I’m going to redo it and I’m going to put annotations on the side. I’m going to navigate the reader through the book and I’m going to try and make it – I’m going to target it – for these big, philanthropic family foundations. I’m going to send them all a copy of this book. They throw in the trash, they throw it in the trash. But maybe, maybe one of them, two of them will read this book and say, you know, this is correct. This is what our family fortune should be devoted to. And if we do it right, guess what will happen dear? We’ll go from being on the letterhead to being on a postage stamp.

And isn’t that what you really want in life? Be remembered on a postage stamp. His program has the has the potential to be a postage stamp program. It’s the best thing I’ve ever seen, okay? And I’ve been around. It’s the best thing I’ve ever seen. Do you mind if I tell the story of how it happened? That I called you?

This is, it’s kind of creepy, it’s kind of weird, okay? I don’t go to church. I’m the chair of the Cathedral in LA. I’ve been the chair since it opened, because Cardinal Mahony asked me to do it. He says, the only guy I know who could make everybody get along, okay? So I said okay, I’ll do it.

I’ve learned a lot doing it, but I don’t go to church. But I’m going through my mail one day—I get all this mail. I stand over the trashcan. I just throw it [and throw it into the trash]. And I come to the Pomona Alumni Magazine. I didn’t go to Pomona. I’m not interested in Pomona Magazine. And yet I couldn’t throw it out. My hand would not throw it out. Something in my head said you need to read something in it – I’m not making this up. I know it sounds weird – you need to read something in here.

I opened it up. I open it up to this page – and here he is standing there. It says, Something’s Happening in Greensboro. And it’s the story of what he’s doing. And I start reading this, like I had to get my yellow pen, I go get my yellow pen, highlighting almost the whole thing.

This is exactly – this is the model. This is the solution to the healthcare problem in America. And a guy, an unknown guy in Greensboro, Alabama is doing it. A top-down, bottom-up guy. John Dorsey.

Okay.

End Notes

This is Part 2: The Q&A. Part 1: The Speech, can be found here.

Peter doesn’t have a public web presence, but if you enjoy this speech, the next best person to follow is Blas Moros, who works with Peter at Glenair. You can find his website here and follow him on twitter @blasmoros.

  • The book in question, Frederick Taylor Gates’ autobiography, can be found on Amazon. Unfortunately, it’s going for $996.99. Fortunately, Blas has written up (and read) a summary and shared his takeaways here.

And if you want more from me, you can follow me on Twitter @kgao1412, or subscribe to my substack A Letter a Day, where I share some notes on one of the letters from my compilations each day.

Additional Reading

Written by FTG

Writings about FTG

(Transcript) Peter Kaufman Speech at the Redlands Forum

If you’ve visited my compilations page, you’ll know that Peter Kaufman is one of the people responsible for my compilations. He encouraged me to take copious notes, organize them, and write them up. He doesn’t write/speak publicly often, but when he does, you’d be wise to listen.

For those who don’t know him, Peter is the longtime chairman and CEO of Glen-air, a multi-billion-dollar aerospace company that creates and distributes mission-critical interconnect solutions. He is also the editor of Poor Charlie’s Almanack (which I have based many of my compilations on), one of the greatest books of all time, and recommended by people such as Warren Buffett, Lu Li, Bill Gurley, Bill Gates, Naval Ravikant, and Josh Wolfe.

This is a transcription of the speech given by Peter at the Redlands Forum on 1/16/2020.

A transcript of the Q&A can be found here.

*Transcribed 7/10/2020
**Lightly edited; any errors should be attributed to me

And if you want more from me, you can follow me on Twitter @kgao1412, or subscribe to my substack A Letter a Day, where I share some notes on one of the letters from my compilations each day.

An Unsung Hero

This is our unsung hero by the way [holding up a booklet with a picture of man on its cover], and the mystery is: who is this man? Because I’m going to argue that this man has had more of an impact on all of our lives here tonight than almost anybody else we can think of. and yet, unless some of you are very astute historians, my guess is you’ve never heard of this man.

Now, to properly frame this talk, I have an apple. There’s this beautiful Zen line that I really love. it says that anyone can count the number of seeds in an apple, but very few can count the number of apples in a seed. Isn’t that beautiful? Okay? So the first half, counting the seeds in an apple, that’s a finite life. The second half, counting the number of apples in a seed, is an infinite life, additive sum. And this man I’m going to talk about tonight, boy did he ever nail the infinite life, did he ever leave the world a better place than he found it.

By the way, as you leave tonight, you [can] all take home a copy of the story, okay?

From 1880 to 1888, these are ages 27 to [34] of our unsung hero. He was the uncommonly honest, pious, and hard-working pastor of the lowly Central Baptist Church in Minneapolis, Minnesota. He was not without a sense of humor, saying his church was mainly populated by those made to feel unwelcome at the fancy First Baptist Church of Minneapolis. He was born on July 2, 1853 in Broome County, New York. Graduated from the University of Rochester in 1877, and from the Rochester Theological Seminary in 1880. He was obsessed with living a life completely aligned with strict religious beliefs, and in his first stint as a pastor he was working himself to exhaustion. But this extreme ethic – work ethic and piousness was noticed around town. And one day [as] he’s working in his office, there’s a knock on the door. And he looks over to see who’s coming in, and he is shocked, absolutely shocked, to see it is George Pillsbury. The leading citizen of Minneapolis, the flour baron. Now, George Pillsbury was not one of his congregants. Where do you think George Pillsbury went to church? Exactly right. Jack, Laura, this is a very astute audience you have here tonight.

An account survives of this meeting in our young pastors own hand. The effects that still unfold from this meeting, 132 years ago, [continues] to profoundly affect all of our lives here tonight, and all those in America. In fact, I would argue, that such effects are among the most impactful and transformative in American history. Now you are probably thinking, Peter’s setting the bar way too high here, okay. How in the world is going to live up to this intro? But we’re going to clear that bar. Now if you’ll bear with me for a minute, I’m going to do a little side bar. Before I recount the events of that historic meeting, I want to take a short detour, and I think it’ll be worth it. It’s the why.

Just why was this man able to do all the amazing things that I’m going to tell you about tonight? I say the answer comes from simple chemistry. A chemistry model that perhaps offers the greatest potential for self-improvement for any human being. And I hope after you hear this chemistry model, I hope you share it. With your children, your grandchildren, with everyone you know. Because I think this is the best pathway to self-improvement that’s available to any of us.

Now, in chemistry there’s a scale of hardness called the Mohs’ scale. M-O-H-S.

Diamond is the hardest substance, it’s a 10, and baby powder is the weakest, it’s a 1. Now on the Mohs’ scale of hardness, tin, which I just happen to have, some tin here, is only a 1.5 on the Mohs’ scale of hardness, it’s very weak. I’m going walk all the way over here, as far away as I can get. I’m going to put the tin there, and while I’m walking all the way over here, I’m going to talk about copper. Copper on the Mohs’ scale is only a three. If we have a 1.5 over there and a three over here. why am I separating these two like this? Because in nature, for whatever reason, tin and copper are not generally found in the geographic proximity of one another. And as I will ultimately connect up, that’s the beauty of this model. they’re not generally found in the geographic proximity of one another.

Now, somewhere all along the line in history, somebody had a very bright idea: I wonder what would happen if I went way over here and got some tin, and then went way over here, reached way across, to something not generally found in the geographic proximity of tin, namely copper, and I blended them together. Now arithmetically, what should we get? 1.5 plus 3 is 4.5, divided by 2 to get the average, we should get 2.25. Do we get 2.25? No. I wouldn’t be telling this story, would I, if you have 2.25.

Does anybody know what you get when you blend tin and copper to get – not Dave Sorensen. Dave Sorensen is an expert in metals. Brass is close, but not – bronze – who said bronze? You see me afterwards. I have a prize for you.

You get bronze. Now, does anybody know what bronze is on the Mohs’ scale of hardness? We know it’s not 2.25. I’ll give you a hint – who said 6? You see me afterwards as well.

It’s a 6. Iron is 5.5. Can you imagine taking two independent characteristics, neither of which is all that powerful, and putting them together in just the right way, and getting a 6? Now, in physics, they have a name for this. It’s called a leaping emergent effect. Now, what if in your own life you could put together some characteristics and become bronze yourself? Become a 6? What would you need to do? Well, you need to identify what kind of a person am I? Am I tin? Am I copper? What would I need to reach across and blend into myself? Okay?

Now, in terms our unsung hero, I’m going to argue that the reason he was able to accomplish what he did, and the reason you’ve never heard of him, is because what he blended in together was something you almost never see. He understood the world from the bottom up, and he understood the world from the top down. In the military, we see NCOs. they understand the world from the bottom up. We see generals, they understand the world from the top down, okay. They’re fighting with each other all the time, aren’t they? And every once in a while, you get a George Marshall. What was George Marshall? He was bronze, wasn’t he?

He understood it from the bottom up, he understood it from the top down. And our unsung hero’s one of the best in history at blending bottom up understanding and top down understanding. but that’s also why you’ve never heard of him. Because the people who blend these two characteristics together, are they ever a self-promoter? No they’re not, are they?

This auditorium that we’re in tonight, this building that we’re in tonight, who were they built by? This couple over here. They have that rare combination, don’t they? They understand everything from the bottom up, they understand everything from the top down. Are they self-promoters? No. This is a beautiful combination. I wish the world was full – I wish our country was full of bronze leaders, but it isn’t.

We’ll go back to our story now.

I’ve told this story 50 times, and every time I tell it, it surprises me again. I said this is impossible, one human being could not do this. Okay, here’s what happened when George Pillsbury comes in. These are the words of our unsung hero, from his memoirs, word-for-word.

Mr. Pillsbury said he wished to have a little conversation with me, which he would be glad if I were to regard as confidential. While to outward appearance he was hale and hearty, such he said was not the fact. His physicians had warned him of an insidious and incurable disease that must in no long time terminate his life. In other words, he’s dying. He said he had made in his will a bequest of $200,000 towards a Baptist Academy, an educational project. But, he said, I’m concerned my gift will be neglected, and I’m contemplating a change in my will. I don’t trust these people. I don’t want to leave them $200,000. I don’t trust these people.

Okay? Why is he talking to our young guy? Because I trust our young guy. I’ve watched our young guy. There’s nothing not to trust about our young guy, who’s 34 years old.

He said he had come to me for any counsel I might give him, or were his doubts justified? if so, could I suggest a way of correcting the situation as to render it more assuring. I asked him to give me a little time for reflection on his problem.

Okay, now this is me talking. I have a deep, deep background in development work. I’ve chaired several capital campaigns and advised many others. But I am aware of no story that approaches the one you’re about to hear when it comes to sheer top-down bottom-up genius in development work. Like a first domino, the way our pastor responds to Pillsbury’s problem sets into motion a series of effects that forever change the young man’s life, and in turn the whole world.

Remember, he’s only 34 years old, but already the George Pillsburys of the world are noticing the unusual combination of factors present in this young man and seeking him out for counsel. So what does our pastor do? He goes to work on his assignment. he embarks on a due diligence tour to understand every last nook and cranny of what the educational structure should optimally look like in the Minnesota area. His tour brings him into contact with every Baptist of note in the state.

From this huge bottom-up dataset he amasses, he develops a sound top-down big-picture plan and submits it back to George Pillsbury. Here in his own words is the four-part plan he submits. Not just for any Baptist Academy, no. For the optimal Baptist Academy.

  1. Such an academy must be well endowed and equipped. A much better school than the ordinary high school. It should be modeled on such great Eastern schools as the Phillips Exeter Academy. Similarly, with hundreds of thousands in endowment. To convince Minnesota Baptists of the value to them and their children of a well-endowed Academy, a series of popular addresses can be given from influential pulpits.
  2. Success for such an Academy will only be assured if local Baptists themselves contribute a considerable sum. where your treasure is, there will your heart be also.
  3. Instead of your $200,000 pledge, Mr. Pillsbury, you should offer conditionally to give say, $50,000 to the Academy, provided the Baptists of the state first contribute an equal sum. funds that I will go out and raise myself.
  4. Of the hundred thousand thus raised, half should go into a needed new building and the other half into endowment. With proper safeguards in place that all this proves successful, with confidence, you can then safely leave the remaining $150,000 in your will.

This is awesome. Just awesome. Superb top-down and superb bottom-up. In the history of large-scale development, has anyone ever turned down a major gift in exchange for the privilege of going out and raising a big chunk of money themselves, only then to be matched and then propose contingencies for the remaining estate gift?

Needless to say, George Pillsbury is bowled over. Our young pastor gets the green light. He forms the committee. He heads it up. He speaks everywhere to talk up the plan. From bottom to top, he raises the money, inspiring and energizing the community. These instincts as we will see, for informed engaged top-down bottom-up interaction, will go on to benefit him enormously.

The project succeeds. Magnificently.

His work comes to the attention of a group of Chicago-area Baptists, including Dr. William Rainey Harper, who have been trying for years to interest New Yorker John. D. Rockefeller, the richest Baptist in the world, in founding a Midwestern Baptist University – one to rival the Ivy League schools of the East.

But they have been singularly unsuccessful in such asks to the oil titan. In fact, they have been so clumsy, Rockefeller has banned them from ever calling on him again. But in watching the awesome development skills of this 34 year old pastor, Harper and his group think they may have a second chance.

Young pastor, they ask, will you go see Mr. Rockefeller on our behalf?

Armed with a formal letter of introduction from Dr. Harper to Mr. Rockefeller, our unsung hero agrees to travel to New York to take a shot. But Rockefeller won’t meet with him. Refuses. I’ve been through this before. Not going through it again. However, he says, I’ve been watching you at a distance. I’m very impressed with you. if you want to write me a letter, you can write me a letter.

Our pastor writes him a letter. It’s the perfect letter. He just nails it. In previous asks, Rockefeller has been repulsed by the haste advocated by Harper and others. too big, too fast. Not respecting the details. in stark contrast, our pastor’s letter suggests a methodical, bottom-up, incremental step-by-step approach. an exact match for Rockefellers lifelong temperament.

He says, Mr. Rockefellers ideas happen to coincide with my own. Happen to coincide? It was no coincidence. our hero is a natural. How many 35 – he’s 35 by now. How many 35 year olds have a blend of top-down, bottom-up thinking in perfect harmony with that of the richest man in the world? A financial titan who made his fortune combining these very traits himself? You can see why Rockefeller was so impressed with this letter. There’s a letter from a 35 year old – he goes: I could have written this letter myself.

Time does not allow the reading of the full masterpiece of a letter, but it survives to this day. here is the money paragraph that so resonated with Rockefeller:

“All things come to him that waits. Our best and greatest schools have developed broadly and hardly step-by-step in this way. holding the possible scope of the institution and abeyance for a few years will cost nothing, while time will of itself solved the question easily and with certainty.”

The letter is such a home run with Rockefeller it results in an invitation to go visit him in person in New York. Our young pastor makes the ask face-to-face, and the rest is history. Rockefeller becomes the funding founder of what becomes – anyone? The University of Chicago!

Our kid is all of 35 years old! He’s responsible for the existence of the University of Chicago. Would not exist without his ask. Wouldn’t have existed without the George Pillsbury exercise that came before. If our story ended here it would be worth a big fuss. Imagine a 35 year old pastor being responsible for the very existence of the University of Chicago and it’s over 100 Nobel Prizes.

But the story doesn’t end here. It only gets more and more incredible. For Rockefeller is so taken with the bronze-level talents of this young man, he requested my early removal to New York, especially to help him with his benevolences. Meaning all the people that are pestering him, asking him for money all the time. when it came to philanthropic solicitations, the tycoon was constantly hunted, stalked, and hounded, almost like a wild animal.

He relocates to New York City and is put in charge of all of Rockefellers philanthropy. Using what he calls wholesale scientific giving, he begins to steer donations towards large-scale, focused philanthropy for the betterment of humanity. More on this later – much more.

No surprise, his performance is so good – everything he gives this this kid. Rockefeller decides to put even more on his plate. Will you on your travels, Rockefeller says to him, take a quick look at some of my non-Standard Oil investment properties throughout the country?

Yes, he says. He responds by visiting three of Rockefeller’s principal non-Standard Oil investments: an iron furnace in Alabama, a mortgage on a steel mill in Wisconsin, and various mining properties in Colorado. Like a great detective, he seeks validation of the legitimacy of each property. He verifies recorded documents and county record offices. he interviews objective third party of experts. He even chats up miners on a Colorado train.

He finds most of Rockefellers investments are worthless scams pawned off on Rockefeller by seemingly upstanding Eastern individuals and investment banks. Our kid’s the only one who figured out these are scams. Now, in this thing you’re going to take home later, is the whole chapter from this man’s memoirs where he tells you how he did this. It’s incredible. It’s like reading a detective story.

Extricating Rockefeller from these messes, he turns instead to an investment area his investigations deem is legitimate: the Mesabi Range of the Great Lakes region – which Jack you and I were just talking about this this morning. Taking amazing advantage of the aftermath of the panic of 1893, one of the worst financial plunges the US has ever suffered, he commits $33.5MM of Rockefellers fortune, amassing oil  resources, mines, railroads, docks and building an [oar?]-carrying fleet of sixty vessels.

In 1901, he sells the properties to JP Morgan and US Steel for $88.5MM. That’s a $55MM profit in eight years. You know what that is in 2020 dollars? It’s roughly $1.5B that this Baptist preacher with no educational background in business, no business experience to speak of, makes his employer $1.5B in eight years. And John D. Rockefeller never set foot on any of those properties.

In an era of no income taxes, he makes Rockefeller 55MM large. Such performance led Rockefeller to later say, he was the greatest businessman I ever encountered in my life. Better even than Henry Ford and Andrew Carnegie. Well this is, this is impossible, isn’t it?

This kid is responsible for the University of Chicago, he makes what’s the equivalent today of a $1.5B in eight years all by himself? Yet this is just kid stuff. In 1897, our unsung hero prepares a memo for Mr. Rockefeller, and our show really gets rolling.

The story unfolds like this: when he first went into the employ of Mr. Rockefeller, he wrote to himself: medicine, as his generally taught and practiced in the United States is practically futile. He wrote that to himself. Does he have a background in medicine? No. But he does he care about humanity? Yes.

We’ll let him tell the rest of the story.

On a whim, four years later in summer 1897, with his family in the Catskills on vacation, he revisits the subject of medicine, having brought along for leisure reading, William Osler is 1,000-page textbook: Principles and Practice of Medicine. I’m sure that we all, when we go on summer vacations with our family, take along William Osler’s 1000-page textbook.

Now we’ll let him tell the rest of the story.

I saw clearly from the work of this able and honest man, perhaps the ablest physician of his time, that medicine had in fact, with only four or five exceptions, no cures or disease. Medicine could hardly hope to become a science until medicine was endowed, and qualified men were enabled to give themselves to uninterrupted study on ample salary entirely independent of practice. To this end it seemed to me an institute of medical research ought to be established in the United States on the general lines of the work of Koch in Berlin and the Pasteur Institute in Paris. And here was an opportunity for Mr. Rockefeller to do an immense service to his country and perhaps the world.

This idea took possession of me, he says. Mr. Rockefeller entertained my suggestion hospitably, as indeed I encouraged further and further detailed inquiry. It was in this way that my name became associated with the origin of the great Institute of Medical Research subsequently founded and so munificently endowed and equipped by Mr. Rockefeller. Anybody know the name of this institution? Rockefeller Institute. It’s now Rockefeller University. New York City. 27 Nobel prizes in medical research. It was the first Medical Research Institute founded in the United States exclusively devoted to figure out what? – how to cure diseases.

We’re almost done.

In 1905, seeing firsthand the impact that Rockefeller’s immense fortune was having towards humanitarian work on a great scale, our unsung hero pursues an entirely new vision: the establishment of the first permanent private foundation.

There were no foundations back then. We’re all familiar today with the Gates Foundation and the Walton Foundation – all these big – they didn’t exist. It was his idea – there should be a permanent foundation.

Why?

He says, it was not until 1905 that I ventured with many misgivings to approach Mr. Rockefeller with the question of the use and disposition to be made of his fortune. It might be argued that I was trespassing on a domain in which I had no proper business. But to myself it was very intimately my business, for I had come clearly to see that unless Mr. Rockefeller were to make some such disposition of his fortune, for a great part of it my life was doing more harm than good.

Rockefeller’s fortune was rolling up so fast that his heirs would dissipate their inheritance or become intoxicated with power unless we set up a permanent corporate philanthropy for the good of mankind. So at last I broke my silence. I wrote a letter. It is dated June 3,1905. This of course becomes the Rockefeller Foundation, which due to its highly complex nature was not officially chartered until 1913 – actually making it technically second in establishment to the Russell Sage Foundation. However, it appears Rockefeller’s idea was first.

In any event, over the rest of his professional association with Rockefeller, as he headed up this Foundation, he oversaw the distribution, Personally, of $500MM in philanthropy to benefit mankind, exceeding the $350MM overseen by the very well-known Andrew Carnegie.

Let’s recap, and even add some more factors. There once lived a man of top-down, bottom-up understanding. A non-self-promoting man. A man of honesty, piety, aptitude, and genuine love for humanity. A man likely you’ve never heard of, because he wasn’t a self-promoter.

  1. Was called the greatest businessman of his time above Henry Ford and Andrew Carnegie.
  2. Was perhaps the greatest development asker of all time at age 35, responsible for establishing the University of Chicago.
  3. Conceived the world’s first permanent private foundation, then personally oversaw $500MM in distributions – that’s over $10B in today’s dollars.
  4. Conceived the Rockefeller Institute and it’s unique research model.
  5. Eradicated hookworm in the American South and the rest of the world.
  6. Established black high schools in the south that allowed graduates to attend the best southern universities.
  7. Finally, his most important move of all – one each of us and all Americans benefit from today – he sparked the 1910 Flexner report, establishing Johns Hopkins as the model for medical school education reform, which moved American medicine from the bottom of the barrel internationally to number one where it remains today. There’s not a person in here who hasn’t benefited from that.

Talk about an infinite life. Is the world better off because this man lived? His name was Frederick Taylor Gates. Now be honest, show of hands. How many of you have ever heard of Frederick Taylor Gates? Anybody? That’s the solution to our mystery.

I thank you.

End Notes

This was Part 1: The Speech. Part 2: The Q&A can be found here.

Peter doesn’t have a public web presence, but if you enjoy this speech, the next best person to follow is Blas Moros, who works with Peter at Glenair. You can find his website here and follow him on twitter @blasmoros.

  • The book in question, Frederick Taylor Gates’ autobiography, can be found on Amazon. Unfortunately, it’s going for $996.99. Fortunately, Blas has written up (and read) a summary and shared his takeaways here.

And if you want more from me, you can follow me on Twitter @kgao1412, or subscribe to my substack A Letter a Day, where I share some notes on one of the letters from my compilations each day.

Additional Reading

Written by FTG

Writings about FTG

(Transcript) Start: The Love Principle in Investing // Shervin Pishevar

Over the weekend, I came across Shervin Pishevar’s new podcast, Start. Although episode 1 is short (only 4 minutes) it is packed with wisdom, and a great introduction to Shervin’s investing and life philosophy.

You can listen to the full podcast episode here.

*Transcribed 7/6/2020. Any mistakes should be attributed to me.

Many times, I talk about the love principle as a key principle in entrepreneurship and investing.

When my daughter was 11 years old, we were at her favorite sushi place, and she asked me, “Dad, how do you invest?” I told her that I use the love principle. That if you’re going to invest in something, you have to love the product, the founders, the team, the company, the market. And if you don’t love any one of those things, most likely, it’s not going to be a great investment. One that’s going to change the world.

And she looked at me and she said, “Well dad, I love Great America.” And she was right. She would go to Great America with her best friends, almost every weekend. And she said, “Is that an example?” And I said, “Absolutely. That’s a great example. You love Great America, so now you should go do what’s called diligence. Go and study Great America as a business. Go interview the employees.”

And she did that. She treated it like a homework project. And she came back, after going to Great America, and interviewing employees, and she said, “Dad, the company is called Cedar Fair (that owns Great America). Everyone loves the CEO. There’s a bunch of rides that are coming that they’re investing in that are going to be very exciting. And, the 49ers are building a billion-dollar stadium right next to Great America. Basically on the same property.” And I said, “Well, there you go. That’s a great job on your diligence.”

And we looked it up, and it was a public company, and she made her first investment. And she returned 100% on that stock. And she’s using the profits from that investment to start her own company now, that she started when she was 18. And she’s launching soon.

And so, it was an important lesson in learning about the love principle. And I was watching an interview recently, with Jerry Seinfeld, and he was being interviewed by someone and he said, basically, you have to love what you do. The same love principle. And when you love something, you are tireless about it. It’s not about having the willpower to go through it. It’s about the love.

And my greatest investments, my greatest experiences with companies and founders and teams and products and helping build global brands, have always been about the love. Has been about the times you’re talking to a founder at any hour… I was talking to one of my favorite founders last night, at midnight, checking in on them. Checking in on his round, checking in on his company. And it was a joyous thing for me to do, and there is love there.

And when founders and teams feel like they are supported and loved, guess what happens? They thrive. And they work through their mistakes. They learn, they grow. Because they feel like they can take the risk to be vulnerable, and to ask for help. To ask for mentorship. And that’s only possible when there’s love.

If you enjoyed this podcast, and want to follow Shervin, you can do so at his Twitter @shervin.

And if you want more from me, you can follow me on Twitter @kgao1412, or subscribe to my substack A Letter a Day, where I share some notes on one of the letters from my compilations each day.

(Transcript+Slides) Overcoming Human Limitations Through Emerging Technologies // Arielle Zuckerberg

This is a speech that Arielle Zuckerberg gave at Slush 2016. I watched it right around the time I was really starting to explore Transhumanism, and actually led me to meeting and befriending the developer of the cochlear implant.

You can find the whole presentation here.

*Transcribed a long long time ago. Any mistakes should be attributed to me.

All right, awesome. I’m Arielle Zuckerberg. I’m a partner at Kleiner. And today, I’m going to talk about overcoming human limitations through emerging technologies.

Here’s a little bit about me. They gave you the intro so I’ll skip this one.

We’re in a post-evolution era. Natural selection has run its course. If you don’t believe me, ask your vegan friends. I believe that we are moving towards a transhumanist future and we always have been. A future in which science and technology will continue to develop and use science and technology to increase human capacity in the mental, physical, and reproductive realms.

So today I’m going to talk about three emerging technologies that I believe will increase human capacity and overcome limitations. And I’m got also going to talk about the ethical conflicts I believe will arise from that.

But first let’s talk about where we are now.

Nootropics, or – people have various ways of pronouncing this but today I’m going to go with nootropics (noah-tro-pics) – or smart drugs, including Modafinil, which is a wakefulness promoting agent which increases alertness, facilitates reasoning.

Modafinil is the only drug that’s approved by the US Air Force for helicopter pilots and extended missions. It’s also clinically prescribed for Narcolepsy. But increasingly, everyday, people are using modafinil and saying that they’re reaping extreme benefits from using this smart drug.

Here’s a quote from the founder and CEO of Bulletproof: “I use smart drugs and have for years. I used modafinil I got my Wharton MBA while working full-time at a startup that sold for $600MM.”

Users claim that Modafinil helps with writer’s block, cramming for exams, cleaning your apartment from floor to ceiling, alphabetizing your bookcase.

So another thing that improves, increases cognitive efficiency is of course mobile phones and the Internet. There’s no excuse not to know anything anymore. This allows us to look up anything, anywhere, at any time.

In addition to extending and expanding our knowledge, mobile phones also serve as an external memory storage for things like our thoughts, ideas, the people we know, our friends’ birthdays. So let’s talk about physical enhancement.

In 2016 we have surgery, orthodontics, corrective lenses, medical devices in general that can improve both cause cosmetic and corrective procedures. One example is vision correction, which is very near and dear to me. I’m basically legally blind without my contacts or glasses.

But in addition to corrections, some people are taking this a step further. Some people are going above and beyond to get beyond perfect vision. For example, Mark McGwire – who also used performance-enhancing drugs to score 70 home runs, which is a record in 1988 – also had custom designed contact lenses to improve his vision, which could definitely make a difference when a fastball is coming at you at 95 miles an hour.

Tiger Woods and other golfers – I think dozens of golfers now do this, but I think he kind of was the first one to lead the charge – lost 16 straight tournaments before getting laser eye surgery. But after upgrading his vision, he won seven of the next ten tournaments.

So the people are already, you know, doing these procedures not just for corrective purposes, but to enhance beyond perfect. And I think we’ll just see more and more of that. And you know, the question of whether or not this is cheating, I feel will definitely come up in the future. And in what context it’s cheating. How far beyond perfect can one go?

We also have artificial limbs and organs, of course, for people who’ve gone through injuries or diseases. Jared Fields is a US Army sergeant, won a gold medal for the hundred meters in a 12.15 second time. Usain Bolt obviously ran it in 9.58 seconds, but there are questions here, as the technology gets better and better you know, we might break the human limit if you have prosthetic limbs. The natural human limit of course.

So reproductive enhancement. So increasingly, women are having children in their 30s and 40s, and a lot of people are questioning whether it is their obligation to go through the invasive prenatal testing called amniocentesis, where a needle is injected into the uterus. I’ll go into that a little later, but there are both invasive and non-invasive methods, and prenatal diagnosis has made it possible for people to have a better understanding of, you know, the condition of their fetus before it’s born.

Contraception, also, here’s where we are today. Obviously, there’s some work to be done on the male side, but there has been progress.

A study was conducted recently to test male contraception and here’s what happened.

An external peer review committee determined that, for safety reasons, recruitment should be stopped.

The adverse side effects included mood changes, depression, pain at the injection site, and increased libido. Women have been dealing with these side effects for a long time but this study was stopped because of those side effects. Hopefully in the future we’ll overcome that, and I think this also brings to light some ethical issues and gender issues.

So let’s talk about emerging technologies. That was where we are today. Here’s where I believe where we’re going.

AI assistance with an AR overlay – an augmented reality overlay – which is a natural extension, I believe, of mobile phones plus the Internet. So this is an example – has anyone ever seen Black Mirror? If you watch Black Mirror, [raise your hand], yeah? Okay, so this is from the episode where everyone has these contact lenses or ocular implants – it’s not exactly clear what it is – but it allows them to see people’s ratings and other information just by looking at someone. This is kind of a dark example, but you’d also see it in a more practical context, like your cooking or you know, you’re looking at a rambutan, which is what that crazy fruit was before, and you can ask your AI assistant: What is this? Or who is that? How do I know this person? And you know, maybe it’s a cochlear implant or just some kind of Q to show you exactly what you want to know when you want to know. And you won’t have to look it up anymore. I think you’ll just ask, and the answer will come. Hopefully like a Jarvis-style sidekick.

We talked about prosthetics before, but prostheses are becoming more and more complex and now you can control them with your mind. And I don’t know if I necessarily have a have a clear opinion on this, but I think I can imagine a future where people choose to get these robotic limbs to replace their natural ones, even if they haven’t had their limb amputated. Or you know maybe people will just want better functionality. And I think that’s definitely possible. You know, maybe people will replace their feet with something that you know, if you’re an ice climber and you want to replace your feet with something it’s better for the things you want to do when you want to do them. Maybe they’ll even be detachable, you know you can have a set of attachments.

Genetic engineering. This is the next step in reproductive enhancements. And this is a clip from Gattaca, in which people, this is a pretty old movie, but it kind of illustrates issues that I think we’ll be dealing with in the future where people will be expected, if they have the means and the ability, to select the best possible you know option from possible embryos. You know, you could pick physical features, metabolic features, you know, understand whether or not your child or potential child is going carry diseases. And the question arises, I mean do people have an obligation to engineer the perfect child, or does, what are the child’s rights or the parents’ rights? And I think as this technology becomes increasingly available, you know, will people have the duties to genetically enhance and modify their offspring?

So, I mentioned a couple of the ethical conflicts as I was going along, but I think the main one is that, and this is so true today, which is you know, a lot of high-medicine is only available to people of a certain wealth. And the wealth concentration is increasing over time, and I feel like this will only further bifurcate humans into two groups: enhanced humans are people who have access to a lot of these improvements, and you know, natural humans or people who don’t have access to the improvements, who don’t have the ability to, you know get an ocular implant so they can have an AR overlay, or people who don’t have the ability to, you know get corrective, or even corrective procedures.

I think, yeah, people who can afford these enhancements will hugely benefit and people who can’t afford them will be left behind. So this is I think a huge issue that you know, we’ll definitely have to think about and address going forward. Also it doesn’t help that a lot of scientific research, most scientific research is privately funded versus safe funded, and a lot of those private funding sources have commercial interests potentially. So I don’t think this is something that can be stopped and, nor would I advocate for this to be something that should be stopped. But I do think reproductive, like what is our duty to you know design the perfect child or select the perfect child from several options, what is the definition of cheating, you know, will we allow athletes to have better than perfect vi-, we’re currently allowing athletes have better than perfect vision, but you know where do we draw the line and in what context is it okay to [yell] these corrective procedures or enhancing procedures and also furthering the wealth divide. The concentration of not just wealth, but also access, intelligence and all these enhancements.

Cool. Thank you.

If you liked this talk, you can find Arielle on Twitter at @ariellezuck.

And as always, you can find me on Twitter at @kgao1412.

(Transcript) Steve Jurvetson 2020 Commencement Speech // Saint Mark’s School

Over the years, I’ve found that commencement speeches are, word for word, some of the most wisdom-dense content one can consume. There is no shortage of legendary speeches – David Foster Wallace at Kenyon, Peter Thiel at Hamilton, Steve Jobs at Stanford, Elon Musk at Cal-Tech, Paul Tudor Jones at Buckley School – just to name a few.

I believe this speech, given by Steve Jurvetson to the Saint Marks Class of 2020, is one of the greats. I’ve transcribed the video for your convenience. The opening (which was cut from the video) is taken from Steve’s blog, and you can find the video here.

*Transcribed 6/24/2020
**Any mistakes should be attributed to me.

Steve Jurvetson ’85 // Distinguish Alumnus // Future Ventures, SpaceX, and Tesla

“The Saint Mark’s Class of 2020 has contributed greatly to our school community – in the classroom, in the arts, on the playing fields – and they’ve also led with courage, integrity, resilience, and with heart. Notwithstanding the adversity and significant disruption to their senior year, these Marksmen have set a great example and made us very proud.”

That is how your headmaster described you to me. He is proud of you. Your parents are proud of you. The long lineage of alumni that came before you are proud of you. This physical separation of our presence does not in any way gainsay your accomplishments. But it might feel a little strange.

So what to make of all this extra time at home? One of my children is also a senior this year. And it’s a blessing for me as a parent to have some interrupted blocks of time to think about the transition to come and to interact as adults. This may seem like the last thing you’d want more of, on the precipice of graduation, independence, and collegiate life.

But once you’re on the other side of this transition, you may realize how precious and rare these opportunities are. Tim Urban recently tabulated the days of our lives to the shocking realization that by the time you graduate high school, 93% of all of your in-person time with your parents will be behind you. The entire rest of your life is but 7%. Treat this sequestered time for what it is. Something precious. Be mindful, and kind, and grateful, if you can. This transition of yours is their proudest and most poignant passage. It will be something that causes them to cry as you go, whether they show it or not.

The repetition of life at home also affords an opportunity to reflect on what you choose to do each day. Will you start each day with exercise? Will you stay sober? Will you read a good book each night, or watch a screen? These simple choices, compounded over a decade, can make all the difference in the world for your professional advancement, happiness, and health. We know this to be true.

But it’s hard to see day-to-day. Think of the power of compounded interest. Let me say it more forcefully. Spend less time focused on the goals for your life. Spend more time on the habits and simple iterative algorithms that will improve your life. This obsession on goals is misplaced. Consider any competitive sporting event. The losers have the same goals as the winners. Right?

Learning from our heroes’ goals reflects a sample selection bias, since no one does a post-game interview of the losers to ask them about their goals. And they’re the same. And it’s the same in business. Elon Musk believes this dearly. The process of innovation is more important than the product of innovation. This is why he made all the Tesla patents opensource. To help recruit and motivate the best engineers to build the next product. He prioritizes a process of continuous innovation over protecting the products of the past.

You will also find happiness elusive if you focus on goals. It’s the journey of life that’s the reward, not a goalpost destination. Focus on your daily acts, your systems [that] become habits, and your identity will follow. Are you a runner? A lifelong learner? A caring soul? Your tombstone virtues will include none of your resume virtues – the goals and prizes you may seek today.

James Clear summarized it well: “You do not rise to the level of your goals. You fall to the level of your systems.” Once you enter the magical playground of college, it might be hard to establish those systems with so much change afoot. It might be hard to resonate with your identity when myriad horizons open anew.

So, as you’re entering this wild and wonderful world out there, I want to leave you some more thoughts:

10 years ago, I gave the St. Mark’s commencement speech to the graduating seniors, much like yourselves. I told them to, quote, “Rest assured we are entering an intellectual renaissance, interwoven across the sciences. There is no better time to be a student [of] technology, no better time to start a company, no better time to learn something new. Individuals with good ideas are empowered as never before” – I told them.

That is even more true today. The accelerating pace of technology-driven progress has compounded 1000-fold over the past decade – doubling each year for 10 years. Major improvements are just beginning in energy and sustainability, decoding the information systems of biology, and re-engineering the cellular production of meat without slaughter, polymers, and chemicals without oil. The iterative algorithms of evolution and machine learning are revolutionizing AI and the broad category of complex systems design. The resulting algorithmic advances in AI themselves are breathtaking, and remarkably easy to learn – once you shift the locus of learning from product to process, from the artifacts of creation to the methods of creation.

Later this month, SpaceX will return astronauts to space, and before you graduate college, we will have a permanent lunar settlement, and have sent our first landing party to Mars. As we expand outward on the final frontier, we find it representative of the palpable excitement on all the frontiers of the unknown – from neuroscience to AI to synthetic biology.

Now you may have noticed I haven’t said nothing about the tumult in the economy around us. It turns out that market disruption in needed for new entrants and new ideas. It’s an essential precursor for progress.

Tesla launched in the peak of the Great Recession of 2008. What better time to compete with the incumbent gas-burning car companies than when they’re going bankrupt and selling off all their assets? It turns out that starting a new business works best in a recession. Companies can focus on iterating with customers rather than racing off to the financial markets. If you look at the companies in the Dow Jones Industrial Average, two-thirds of them were founded in a recession. That was true in 2010, and it’s true today.

New entrants forge the future. They always have. They are the source of all meaningful change. And that is true for new companies, as well as new intellects – such as yourself – entering the world stage.

So I want to share my excitement for your future – oh, to be in your shoes again. I think, I will wish you the best in this. That you may skip forward on your future path, with playful curiosity, and consider your potential on this planet as something grand. You can change the world for the better, and find the sublime satisfaction of symbolic immortality.

Thank you, and all the best, from Steve Jurvetson, Class of ’85.

Thanks.

(Transcript) Electricity as Medicine – Renee Ryan // Cala Health

Ever since I befriended the scientist who developed the cochlear implant and was an early developer of remote neuromuscular stimulators, I’ve been fascinated by neuromodulation. While I was looking at minimally invasive procedures, non-invasive methods didn’t even cross my mind. While non-invasive methods are focused on assuage, they do not cure. Even so, I was very pleasantly surprised to learn of Cala Health, and I really enjoyed Renee Ryan’s (Cala CEO) talk with Josh Wolfe (Lux Capital).  

Lux has a Medium Page where they share transcripts of all the Futura episodes, but they haven’t published this one yet, so sharing mine here. You can watch the full video here.

If you want a recap of Season 1, check out this tweetstorm.

*Any transcription mistakes should be attributed to me.
*Transcribed 6/16/2020

Josh: Hey everyone, I’m Josh Wolfe, Managing Partner and Co-founder of Lux Capital, a firm that invests in emerging science and technology ventures at the outer most edges of what’s possible. We’re back with season two of our new web series Futura, where you’ll be meeting the rebels of science and invention. We’re turning Sci-fi, into Sci-fact. This season we’re taking you inside with the futuristic founders and inventors who are bringing their cutting-edge ideas to life.

I’m here today with Renee Ryan, the CEO of Cala Health, which is merging breakthroughs in neuroscience and technology to deliver individualized peripheral nerve stimulation. Wearable electronic medicine isn’t science fiction anymore.

So one of the very cool things about you is that you started out as an investor. We were both on the same side in one of the great successes, Auris, which was originally invested in by J&J, and then sold to J&J. But tell me about your transition from the buy side to identifying a mutual portfolio company, and then going to lead it.

Renee: Well, it was interesting. I realized that large companies, like J&J, don’t really have a cash problem. They have an innovation problem. So the idea of starting your own companies, or becoming farmers versus fishermen, was really sort of a mind shift that I had. And the summer that I started Verb Surgical, which was really this sort of breakthrough innovation, not just in surgical robotics but really digital surgery and transforming the O.R. for the 21st century. But that summer was the same summer that Lux and J&J got together to found Cala as well. So exciting times, but the mindset was about doing things differently, right? And the ability to create opportunities like wearable neuromodulation or surgical robotics.

Josh: To explain neuromodulation very simply, in lay terms—

Renee: Simply put, it’s using electricity as medicine.

Josh: Electricity as medicine.

Renee: Mm-hmm.

Josh: I mean, that sounds sort of crazy. But this is something that we’ve talked about.

Renee: Yeah, no. Not new at all. I mean, if you think about the history there, it goes back to pacemakers. And then we moved into cardiac defibrillators and lower back pain stimulators. Now we treat obesity and sleep apnea and all sorts of conditions using implantable neuromodulation. Cala was the first time I had seen anything to do it in a body-worn electronics.

Josh: So instead of requiring surgery or some sort of invasive technique, this is something that is going on like a wristwatch equivalent, more sophisticated of course.

Renee: Hopefully, yes.

Josh: Tell me about the technology in Cala’s case. What are the components of it, how does it come together, what’s the hardware, what’s the software, and then what’s the implication for a patient.

Renee: So the insight that Kate had was really the ability to stimulate over two nerves – at the wrist – but generate the signal in the Central Tremor Network in the brain. So it wasn’t just a simple electrical pulse, it was the idea of having a patterned pulsing across two nerves, that was the real innovation that she discovered.

Josh: And the implication for patients – of course, essential tremors are shaking, manifest from Parkinson’s and other neurodegenerative diseases – what is the implication when you put on a device like what Cala has made?

Renee: Yeah, you know, we’re not curative in any way, but we are reducing the tremor burden. So we ran the largest study ever done for an essential tremor therapy, and 263 patients across three months. And what we saw was that about 92% of our patients actually derived some level of benefit. What you’re able to do is restore people to their activities of daily living. So anecdotally, we have patients who want to play the guitar, they want to paint, they want to feed themselves. Restoration of those types of activities are what our goal is.

Josh: Are there any stories that you can share about patients that are actually using the device – that have maybe positively impacted their lives.

Renee: About two weeks after we launched here in California, we were offering a telemedicine option to patients. This patient showed up, she got an appointment on the doctor’s calendar. She was scheduled to have deep brain surgery in about three weeks.

Josh: So, being put under massive invasivesurgery.

Renee: Correct. And she wanted to try theCala trio device as a potential optionfor her. And we found out that she didpostpone her surgery for about fourmonths. And, so far, it’s looking verypromising that the Cala trio is workingfor her.

Josh: That’s amazing. Congratulations.

Renee: Yeah, and her – she was so simple in her needs. All she wanted to do was restore her dignity to feed herself.

Josh: When you think about the talent that has been assembled under your leadership, what are the disciplines that you’re drawing from? Where are people coming from?

Renee: Yeah, I think like many startups in medical devices, we have traditional mechanical engineers and electrical engineers, but what makes Cala, I think, more unique, is that we also attract a wealth of phenomenal data scientists and neuroscientists. Oftentimes we have combination degrees of both a data scientist’s, but also neuroscientist’s, background.

Josh: It’s fascinating – the signal processing in both ways – between being able to read the neurons and essentially write to them – and the intersection between brain science and computer science. Truly remarkable.

Renee: Yeah.

Josh: Now, we love rebel scientists at Lux. We love rebel founders. We love people that are breaking rules in some ways. Are there any rules, whether it’s in the manufacturing or the distribution of your devices, that you’re thinking about this in a different way than people might expect?

Renee: Since the earliest days, when J&J and Lux and Kate all got together, this was about doing it differently. This was about putting the patient at the center of care, and delivering our therapy directly to that patient. Now, it was complicated because we have a prescription involved. So we do need a physician’s endorsement of the technology. But once we, Cala, get the prescription, we are both the manufacturer and the distributor of the device. And we directly ship to patients.

So that engagement, when we bring a patient in, when we train that patient, it’s all done by us directly with our patients.

Josh: So you’ve got the Trio, which is the first device. But what are some of the other devices that we might expect coming down the pipeline?

Renee: About a year ago, we in-licensed work out of Massachusetts General Hospital, out of Harvard, for an auricular based stimulation, which is at the ear. And, we believe that there’s additional neurology and cardiology types of applications using that platform.

Josh: Truly appreciative of the work that you’re doing. I can’t tell you how many times I have people reach out and say can you put me in touch with Cala because they have a brother or sister, a mother or father, a loved one who is afflicted with essential tremors.

And so we always say that we like to invest in technology that matters. Matter that matters. And very grateful to be partnered with you and the future that you’re building.

Renee: And thanks for the support.

Josh: That’s it from us today. I want to thank the rebel inventors at Cala Health for giving us a sneak peek of the future. If you want to get in touch with us, reach out to us at Futura@lux.vc. We’d love to hear your crazy ideas and inspirations.

If you enjoyed this, and want to learn more about Josh, check out my compilation of him. And if you want to keep up with what I’m reading, you can find me on Twitter at @kgao1412.

Keeping Up with China for the English-speaking World

As a Westerner who has lived/worked/studied in China, I often stress how important it is to pay attention to what’s going on in Asia, especially in China. Unfortunately, it’s a bit daunting for the non-Chinese person. To help you with that, I’ve put together a list of the English-friendly resources I use to stay on top of things.

Remember, as with ANY journalism, take everything you read with a grain of salt, do your own analysis, and draw your own conclusions. Rarely is anything as it seems.

*Note: The English-language websites often have different content than the Chinese websites. I highly recommend visiting the Chinese websites and using a translation plugin in addition to visiting the English sites.

**Note2: This list is categorized, but in no particular order.

Business/Economics

Caixin Global

  • The most popular and arguably most respected english-language media company in China. Caixin was founded by Shuli Hu, a former Knight Fellow in journalism at Stanford (previously founded Caijing). Style will be very familiar for westerners.
  • English Link: https://www.caixinglobal.com/
  • Chinese Link: http://www.caixin.com/?HOLDZH

Caijing

  • Known as the “Bloomberg” of China. Known for its independent reporting and criticism of topics others don’t cover (has been the very important exception to the rule about strictures/llimits on Chinese domestic press). Founded by Shuli Hu before she left to start Caixin.
  • English Link: http://english.caijing.com.cn/
  • Chinese Link: http://www.caijing.com.cn/

Week in China

  • Independent Hong Kong-based publication providing context/commentary on key business trends emerging from China and a combination of Chinese and English language sources in press and internet. Exclusively sponsored by HSBC.
  • English Link: https://www.weekinchina.com/

South China Morning Post

Financial Times Chinese

  • Chinese language coverage by the Financial Times. Different content from Western Financial Times.
  • Chinese Link: http://www.ftchinese.com/

PE Daily

Politics

People’s Daily

Global Times

  • Newspaper under the People’s Daily. The Economist calls it a “remarkable innovation,” which addresses “realms once thought taboo.” The Wall Street Journal praises its “insightful stories.”
  • English Link: https://www.globaltimes.cn/
  • Chinese Link: https://www.huanqiu.com/

Xinhua

  • China’s official state-run press agency (China’s AP). Called the biggest and most influential media organization in China, as well as the largest news agency in the world in terms of correspondents. It is a ministry-level institution subordinate to the State Council and highest ranking state media organ alongside People’s Daily. It’s president is a member of the central committee of the CCP. Publisher and News Agency.
  • English Link: http://www.news.cn/english/
  • Chinese Link: http://news.cn/

China Radio International (CRI)

China Central Television (CCTV)

Lijian Zhao

Xijin Hu

Lawfare Blog

  • US-based blog dedicated to national security issues, published in cooperation with Brooking Institution. Covers China from a Western, defense perspective.
  • English Link: https://www.lawfareblog.com/

ChinaTalk

Macro Polo

  • The in-house think tank of the Paulson Institute, focused on decoding China’s economic arrival across different mediums (commentary, digital projects, analysis, multimedia).
  • English Link: https://macropolo.org/

Sinocism

  • Written by Bill Bishop, an entrepreneur and former media executive with over a decade’s experience living and decoding China. Arguably the most consistent and comprehensive China commentary source from a Westerner.
  • English Link: https://sinocism.com/
  • Twitter Link: https://twitter.com/niubi

China Law Translate

Startups/VC

36kr

  • Hands-down the top tech/startup media platform in China. Must read.
  • Chinese Link: https://36kr.com/

Kr-Asia

  • 36Kr’s english-language effort. Covers the tech/startup ecosystems in China, Southeast Asia, and India.
  • English Link: https://kr-asia.com/

Abacus

China Tech Blog

  • Started by Schwarzman Scholars. Provides on-the-ground coverage over China’s tech/entrepreneurship ecosystem from a global viewpoint.
  • English Link: https://www.chinatechblog.org/

China Money Network

Connie Chan

Avery Segal

Tech

Qbitai

Jiqizhixin

Institute for Interdisciplinary Information Sciences

  • The first education and research institution dedicated to interdisciplinary information sciences in mainland China. Led by Turing Laureate Andrew Yao, it is known for the world famous “Yao Class,” which counts the founders of Face++ and Pony.ai among its alumni. Great for keeping up with research in China.
  • English Link: https://iiis.tsinghua.edu.cn/en/
  • Chinese Link: https://iiis.tsinghua.edu.cn/

8BTC

  • All things crypto in China. The oldest and most influential independent paltform for bitcoin, blockchain, and cryptocurrency news in China.
  • Chinese Link: https://www.8btc.com/

Jeffrey Towson

  • Private equity investor, Peking University professor, and best-selling author. One of the rare Western analysts living in China. Solid content.
  • English Link: https://jefftowson.com/

Matt Sheehan

  • Fellow at Macro Polo and author of “The Transpacific Experiment: How CHina and California Collaborate and Compete for Our Future.” Focuses on China-US AI relations.
  • Twitter Link: https://twitter.com/mattsheehan88

Research/Educational Institutions

Tsinghua University

Beijing University (Beida)

Culture

Jing Daily

Radii

  • Independent media platform dedicated to understanding and sharing vibrant stories around culture, innovation, and life.
  • English Link: https://radiichina.com/

Elephant Room

  • Independent media project focused on contemporary China’s social, cultural, and business innovations.
  • English Link: http://elephant-room.com/

General Media Platforms

Wechat

  • Tecent’s iconic “super-app.” Essential for living in China and following the news through group chats, moments, and Top Stories feed. Best way to get “on-the-ground” info.
  • App-only. English version available and chats have a built-in translator, but you’d need to have existing friends in China and the news/content is almost exclusively in Chinese.

Weibo

Toutiao

  • Bytedance’s main product. Reading recommendation platform powered by machine learning.
  • Chinese Links: https://www.toutiao.com/

Douyin

  • Bytedance’s video product. Short videos. Although seemingly the same product as TikTok (international version), the two entities are completely separate. May be (probably) powered by the same technology, but content completely different.
  • Need Chinese phone number

(Transcript) The Fleet of the Future Mapping the Planet — Sebastian de Halleux // Saildrone

Ever since my time at DJI, I’ve been obsessed with drones, mapping, information collection, and data analysis. I came Saildrone a while back, so it was an absolute pleasure watching Sebastian de Halleux (Saildrone COO) be interviewed by Josh Wolfe (Lux Capital).

Lux has a Medium Page where they share transcripts of all the Futura episodes, but they haven’t published this one yet, so sharing mine here. You can watch the full video here.

If you want a recap of Season 1, check out this tweetstorm.

*Any transcription mistakes should be attributed to me.
*Transcribed 5/20/2020

Josh: Hey everyone, I’m Josh Wolfe, Managing Partner and Co-founder of Lux Capital, a firm that invests in emerging science and technology ventures at the outer most edges of what’s possible. We’re back with season two of our new web series Futura, where you’ll be meeting the rebels of science and invention. We’re turning Sci-fi, into Sci-fact. This season we’re taking you inside with the futuristic founders and inventors who are bringing their cutting-edge ideas to life.

I’m here with Sebastian de Halleux, the COO of Saildrone. No longer science fiction, they have a robotic fleet of daring drones on ocean missions at the extreme edges of the globe.

So we’ve got drones in space, we’ve got drones in the sky, we have drones on the ground, but we’ve never really had drones at the ocean. And you are changing all of that. Tell us about the origins of Saildrone.

Sebastian: It was born in [in desert] out of research in high-performance aerodynamics to break the land speed record in the land yacht. The real invention that came from that effort was a propulsion method that uses wind, but reuses only three watts of electricity to control a very powerful wind propulsion system. That was then adapted to a marine vehicle, and the Saildrone was born.

Josh: So you’ve got the physical frame, which is an innovation itself, but what about all the technology inside?

Sebastian: Inside you really have the innovation that has been made possible by miniaturization. So you know, high performance IMU, GPS, satellite modems, and the satellite constellation itself that enables the data extraction from all those vehicles in real time back to the cloud. So many things had to come together to make the Saildrone possible, which is an effort that would have been inconceivable even ten years ago.

Josh: Now when we first invested there was, I think, one vessel. How many are now out at sea?

Sebastian: The goal of the company, as you know, is to try to quantify the entire planet. And so the ocean is 360 million square kilometres. So we divide this in small domains: six by six degrees. And if you do this, you get a thousand such domains. And so, our goal has always been trying to build a thousand, you know, vehicles. And so right now, we have a hundred active Saildrones.

Josh: You also set a record. I mean, you guys were the first to produce autonomous navigation around the Arctic Circle.

Sebastian: That’s right. So in the Arctic — we’ve been going there for five years — we have been further north than any unmanned vehicle. 76 degrees North, which is really really high up. And these oceans have never been sailed since the dawn of humanity because it had never been ice-free.

But something I’m even more proud of is the circumnavigation of Antarctica. So it’s hard to believe, but it’s only 120 years ago that humans first overwintered in Antarctica — in a sailing boat, actually. Half the crew died. It was, you know, just the early days of exploration. And we were the first robotics company to sail around Antarctica unassisted. 196 days from New Zealand to New Zealand. Now think about this. This is the Southern Ocean, you know, where 60-foot waves happen every other day, where the vehicles get rolled. We had a collision with an iceberg.

Josh: And have there been any crazy encounters?

Sebastian: We have had episode of seals taking rides on Saildrones up in the High Arctic avoiding orcas that are chasing them. Collisions with eight mile long icebergs in big storms in the ocean.

Josh: Seals have used Saildrones as refuge?

Sebastian: That’s right. We joke it’s like the Uber for the Arctic.

Josh: Now, at Lux we love rebel scientists and rebel founders who are trying to break some rules. In some way they look at the system they find a way to hack it. What are some of the rules at Saildrone that you had to throw out?

Sebastian: Well if you’d walk into any of our meeting rooms, you know, you’d smile because we talk a lot about the high seas, which is where we operate, you know, which is beyond any national jurisdiction. This is the land of parrots, you know, and this is pretty much where the Saildrone fleet operates.

So we’d [normally] break many rules, but very few rules exist where we operate, which is a frontier that’s just, you know, on our doorstep here.

Josh: Truly, Jules Verne would be inspired.

Sebastian: Absolutely. I think he would be proud.

Josh: So you go from the desert to the ocean. And the vessels go from small to large. Tell me, from the current state of the fleet of the Saildrones today, what can we expect in the future?

Sebastian: The original idea was this network of a thousand, you know, Saildrones — 23 feet in length. But for some jobs, you just, these are not gonna cut it. You have some sensors which are just too power hungry or too big to be carried by those vehicles. So for that, we are about to release something called the Saildrone Surveyor. Imagine a 72-foot robot with a 60-foot tall sail that can cruise at 10 knots with peak speed of 20 knots and carry one and a half ton of a equipment.

Josh: If there’s one spot that you personally could spend all of your time in the world on the ocean, where in the world would that be?

Sebastian: So you know, this is how I first came into Saildrone. I love the ocean. It’s on our doorstep. I’ve worked in technology, so the ocean is my refuge. And I’ve been to Hawaii a few times, but I’ve never taken a plane. I always sail from San Francisco to Hawaii. It’s just fascinating, because you can look at it, but understanding it is a whole other, sort of, realm. And the questions about the oceans have never changed. But the technology that we use to address those questions is evolving so rapidly that we’re finding new answers.

Josh: If there were three big questions, three big answers, that you would be proud in a decade hence, Saildrone has solved or answered, what would they be? As they relate to the ocean.

Sebastian: Better understanding of the ocean resources like fish and fish [stock]. Being able to sustainably manage fisheries that feed 20% of the world population. That would be one.

The second one is improving weather forecasts and extending it over time to give people a better grip around what’s going to happen in the future of the planet.

And the third one, and that’s the big one, is understanding the carbon cycle and the heat cycle which is currently rapidly changing. It’s going to be key to our survival.

So understanding what’s happening, and how we can hopefully use the ocean as a solution to our own future would really be an amazing legacy.

Josh: It’s very inspiring against a backdrop of so much dystopian tales of the climate and the earth, to see the engineering and forward-thinking future that you are building to help solve the crisis.

Sebastian: There’s pretty much, you know, no part of the economy that’s not touched by the weather, which is the short-term manifestation of the state of the planet, or by climate, which is its long-term analogue. Right? We talk about an Arctic ice-free ocean within our lifetime. We talk about extreme weather disrupting companies in creating billion-dollar, you know, damage events, you know, ten times more frequently than ten years ago. So, how do we understand a fast-changing world? We need more data, and stimulation of data into models that can predict what’s going to happen in the future.

Josh: The people that you are hiring at Saildrone. Are they oceanographers, are they computer scientists, are they engineers? What are the talents and the disciplines that you’re starting to see and that you’re recruiting from?

Sebastian: So you know, we are truly a full-stack company. Literally, it starts with the mechanical engineers and composite technicians and system designers, electronics engineer, all the way up to machine learning in AI experts, as well as oceanographers. People come from the best companies in the world and in the Valley.

Josh: Well I think the scale of the mission has attracted extraordinary people, and we’re very proud to be part of it.

Sebastian: Great, Josh.

Josh: That’s it from us today. I want to thank the rebel inventors at Saildrone for giving us a sneak peek of the future. If you want to get in touch with us, reach out to us at Futura@lux.vc. We’d love to hear your crazy ideas and inspirations.

If you enjoyed this, and want to learn more about Josh, check out my compilation of him. And if you want to keep up with what I’m reading, you can find me on Twitter at @kgao1412.

(Transcript) Renegades of Defense — Palmer Luckey // Anduril

As anyone visiting this website knows, I’m a huge fan of Josh Wolfe (Lux Capital) and Peter Thiel (Founders Fund), and their focus on deep tech and defense. Previously, I’ve written a tweetstorm sharing my favorite takeaways from season 1 of Lux Capital’s web series Futura. I initially wanted to wait till season 2 wrapped up so I could binge watch the whole thing.

However, after re-reading some of Teledyne’s old annual reports, I kept thinking of Anduril, the subject of this episode and in my opinion the spiritual successor to Teledyne. It didn’t help that Anduril is backed by BOTH Lux and Founders Fund, or that the interview was conducted personally by Josh. Lux has a Medium Page where they share transcripts of all the Futura episodes, but they haven’t published this one yet, so sharing it here first. You can watch the full video here.

*Any transcription mistakes should be attributed to me.
*Transcribed 5/11/2020

Josh: Hey everyone, I’m Josh Wolfe, Managing Partner and Co-founder of Lux Capital, a firm that invests in emerging science and technology ventures at the outer most edges of what’s possible. We’re back with season two of our new web series Futura, where you’ll be meeting the rebels of science and invention. We’re turning Sci-fi, into Sci-fact. This season we’re taking you inside with the futuristic founders and inventors who are bringing their cutting-edge ideas to life.

Today I’m here with Palmer Luckey, founder of Anduril, who is developing some of the most cutting-edge technology in both hardware and software specifically for the defense sector.

So, one of the things that we absolutely love is this decreasing gap between science fiction and science fact. And I feel like a lot of the things that you’ve invented and created as an entrepreneur have been premised on sci-fi. What is — is that true?

Palmer: Everything I’ve ever built has been something that has been in dozens if not hundreds of sci-fi novels, movies, comics, you name it. The things that I’m building are mostly a matter of knowing when to take an idea that used to not be feasible, and then say, “hey, it’s finally feasible. We can finally work on it.” I mean, Oculus wasn’t about new science, new materials, new physics. It was about things that already existed being put together in a smart way.

Josh: I love the idea that new things come from the combinations of old things. How do you decide the priority of the portfolio that you’re building? Because I know the pipeline is really rich, with some really cool things. But the first few things that you decided to emphasize and prioritize?

Palmer: Well, the core thing that we’ve build is called Lattice. It’s an AI-powered sensor fusion network that can take data from thousands of different sources, merge into a real-time 3D-models of very large areas, and then tag everything in that model with metadata. So you can sort it, filter it, run predictive analytics on it.

Most of the products that we build are either feeding data into Lattice, or they’re taking data from Lattice and acting on it. For example, our sentry towers. They have a 2-mile range where they look around themselves and they detect all the people, all the vehicles, all the animals that are moving through that space. And they identify them, track them, and can tell you what they’re doing and where they’re going.

An example of a product that acts on data from Lattice would be Anvil, which is our counter drone system. When one of our towers detects an enemy drone that is in an area it shouldn’t be, it can send a notification to a human operator. The person can push one button, and Anvil will take that information, fly out, reacquire the target with its own terminal guidance sensor, accelerate, run into it, and destroy it.

Both of those products are far more valuable because of the other. So what we’re really trying to build is the tool that allows people to do what people do best and machines to do best. And for humans and machines to work side by side very effectively.

Josh: Was there some technological breakthrough that occurred in the past 5-7 years, whether it’s at the cloud layer, infrastructure layer, hardware, or software, that *this* made it possible today that it would have been impossible a decade ago?

Palmer: Machine learning. Machine learning has become incredibly powerful over just the last few years. The ability to train it quickly and efficiently has made all of our products possible.

Josh: One of the things that we love at Lux is backing rebel scientists, entrepreneurs, and founders, which you embody. What are some of the rules that you had to throw out, either technologically or systematically, with Anduril?

Palmer: I mean, when we started the company, we basically threw out the rulebook on how defense procurement is normally done. You know, it’s normally very much focused on cost-plus contracting, where a company gets paid for time and materials — like a fixed cost. And then a fixed profit margin on top of that. The problem is, that incentivizes companies to spend as long as they can doing something. And I didn’t want to start a company that had those natural incentives.

The problem is that they say “How can we develop this product in such a way that congressmen can’t vote to kill it?” And the answer of us is, “Don’t rely on money from congressmen to get the thing built.” Use your own money.

Josh: This is rational and rare and risk-seeking, because — if I may — it’s sort of like the big old contractors are basically saying, “We will bid in the hopes of building.”

Palmer: Yup.

Josh: Whereas you guys are saying, “We will build, in the hope that the government, our customer, DoD, is going to buy.

Palmer: I want to set up a company so that when we fail to make a product that works, we don’t get paid. That seems obvious, but it is not the way that it works in the defense space.

Josh: What are some of the technological things on your wish list? Things that don’t yet exist for a variety of reason, either technologically they haven’t been invented or too expensive, that you wish existed?

Palmer: First, I’d say high-energy-density battery systems. Another thing on my wish list is just cheaper access to space. I think there’s a lot of applications for things that will be in low-earth orbit, geosynchronous orbit, and then out beyond into the solar system, that today are totally cost-prohibitive, and are going to change the way that we use technologies.

Josh: I love the idea that you were talking about before, which I call the adjacent possible, where something is being innovated or developed in a different area, and then smart guys like you are able to go and reach in, be like “Oh, I can use that for my—”

Palmer: And that’s why I keep my eyes on everything. Because a lot of times, the things that make our products possible come out of new advancements in those other fields.

Josh: There’s this directional arrow of progress in technology, where you get higher and higher resolution, and higher and higher precision. And I’m of the view that the greater your technological precision, the greater your moral precision — particularly in defense. What’s your view on this?

Palmer: I mean, in defense, it’s obviously true. The more options you have, the more likely you are to be able to take the right option. And so, I’m a big fan of not trying to limit the military through crippling them, and saying “I don’t want you to have that technology because it *could* be used for bad.” It’s like “no, no, no.” Build the technology, and just make sure hat we have the strict controls in place to make sure that it’s used for good.

Josh: The diversity of the technologies you work on is very impressive. The diversity of the people that are here is very impressive. Tell me about their backgrounds and where they come from and why they’re here joining you in this mission.

Palmer: We hire people from all over the place. We hire people from large tech companies that want to work on defense problems. We have people coming from the defense space, that want to work faster than they’ve been able to work. We get a lot of new grads. I will say, the common trend between almost all the people in our company, is that they are people who are interested in working on things even outside of school. Even outside of their job. And when I hire people, that’s the first thing I look for.

Josh: Well, you embody this in that you were technologically extraordinarily successful, financially extraordinarily successful. You didn’t have to go and start another company. But you were driven by this passion to do this. But you’re also driven by a philosophical mission around this. What — what is the purpose of Anduril?

Palmer: The purpose of Anduril is to build a next-generation defense company that fills the holes left by all the other people that should be filling it. For the first time in history, the most innovative, most talent-dense companies in the United States are refusing to do work with DoD. The rest of the world is smart. They know what technologies are coming next.

Josh: And they’re racing ahead.

Palmer: And they’re racing ahead. With or without us. I want to make sure we have a seat at the table so that we’re the ones that are defining the rules of how this game is played.

Josh: Palmer, absolutely thrilled to be partnered with you on this mission. I’m really proud of the work you’re doing.

Palmer: We love working with you too, Josh.

Josh: That’s it from us today. I want to thank the rebel inventors at Anduril for giving us a sneak peak of the future. And if you want to get in touch with us, reach out to futura@lux.vc. We’d love to hear your crazy ideas and inspirations.

If you enjoyed this, and want to learn more about Josh, check out my compilation of him. And if you want to keep up with what I’m reading, you can find me on Twitter at @kgao1412.

Rare Interview: Neil Shen (Sequoia China) and Stephen Schwarzman (Blackstone) Part IV

Last week, I came across a live discussion between Neil Shen (Founder of Venture Capital firm Sequoia Capital China and #1 on the Forbes Midas List in 2018, 2019, and 2020) and Stephen Schwarzman (Founder and CEO of private equity firm The Blackstone Group). In this wide-ranging conversation, these two giants of their respective fields discuss everything from China’s economy and the impact of COVID-19 to the core traits an entrepreneur should have and what to look for when hiring.

No recording, but I’m sharing my transcription for easy consumption.

In this section, the pair discuss principles for investing and life, and give advice to those starting their careers or businesses in uncertain times.

This is Part 4 of 4. 

For more fun stuff, you can follow me on twitter @kgao1412. And definitely check out my compilations page.

Part III: Why Culture is more important than Management

4/23/2020

Part 4: Principles for Life and for Investing

Neil Shen: Well, that’s a very good suggestion how businesses [“seasons”] interested should talking to potential candidates. Obviously, the very reason you can make those decisions and make those calls when you interview them, is because you obviously come from a history of successful investments. So let’s get into that part of the conversation now.

So in the book, you mention one of your guiding principles is “Never lose money.” Can you elaborate on that? Are there any other investment principles you’d like to share with the audience, with the younger generation?

Stephen Schwarzman: Yeah, sure. “Don’t lose is money” is like this famous saying for a doctor, “Do no harm.” In other words, you don’t have somebody come into your office, do some things to him, and kill the patient, right? So, I’ve learned, from the third investment that we made, in the steel distribution business that went wrong, investors hate it when you lose money. If you don’t make so much on some things, it’s okay. That’s just a mistake. If you lose their money, they get astonishingly angry at you, and they’ll almost never give you more money. So you have to be very careful when you make a decision. That doesn’t mean you don’t take risk. But when you make any decision, you have to believe that you’re not taking risk.

And the reason you would believe that is either because you’re stupid in the first place, and you just sort of feel like believing that, or you’ve done the work to show where things can go wrong. And you’ve discussed it, and planned, to take those things that obviously can hurt any new business, any new organization, any new investment, and you’ve engineered those out.

I think it’s important that investments are not balanced — that the chance of losing money is equal to the chance of making money — that’s a ridiculous approach in my view, even if it’s a lot of money. I’m not in the venture business, like you are, where people do that all the time. And sometimes they do astonishingly well. What I’ve learned, is when you’re handling large amounts of money — like we have, over $500B of money that’s a huge amount of money for private investments, the biggest in the world, actually, at Blackstone with no other company close to our size — that our responsibility is always doing a great job for people. And using the process I talked about earlier, where we openly debate the basic assumptions of everything, enables us to, for the most part, to avoid loss

Before the financial crisis that we now have — we’ll see how we all come out of that — our last 700 investments, we only had had one bankruptcy. One catastrophic loss. And that’s a pretty amazing record, when you buy a lot of things, and you borrow a lot of money for each one. To only have one that collapsed out of 700 shows that you can do that.

Neil Shen: Absolutely. I think, I guess every single one of the 700 has some embedded downside risk, but somehow you analyze it and you manage it. That’s an amazing number and record. Other than “Never lose money,” any other investment principles? You pick one to share with the audience.

Stephen Schwarzman: Yeah. Go into industries that have growth. If you’re investing in something where that whole field is doing well, and is going to do better in the future than it is the day you invest in — in that kind of field — you will find your way to success. If you’re investing in something that you think is quite cheap, but has very little growth, then when something goes wrong, you don’t have a way to fight your way to success. So that would be the other thing I would say.

So for example, Neil, in the real estate business, we sold our large shopping centers and malls when we saw the internet coming in. In the Western world, that was a very smart thing, to not own those. And we took the money, new money, and bought warehouses. Now why did we buy warehouses? Because all the Internet sellers, whether they’re the Alibabas or JDs, doesn’t matter, they all need warehouse space for their goods to ship them to customers. And so warehouses, throughout the world, ended up being best asset class in real estate. Now, we were the largest purchaser of warehouses in the world over the last 10 years. So what we did is, we looked at the way the growth was going to be, where society was changing, got out of things that we thought weren’t going to work, and made huge commitments to the things we did.

Neil Shen: Yes. It’s a lot better to be in a growth industry. They enjoy the tailwinds. Instead of meeting the headwinds. So many young people in China are reading your book, not only for investment, but also for advice on their career life. So if you can only offer one suggestion to them, what would that be?

Stephen Schwarzman: I think one of the suggestions, particularly for younger people, is go into something that you love. What you find in life, is if you find something where you are a natural fit, your interests and your capabilities fit a certain type of activity, you can be really great at doing that. So one funny example, in our country, is we had a basketball player named Michael Jordan, who was probably the best basketball player who ever played. Remarkable athlete. His father died and he became very depressed. He quit basketball and tried to play another sport, called baseball. And Michael Jordan was a terrible baseball player. Here was the best person in a sport, who went into another sport and was mediocre.

How is that possible? They’re both athletic. But after a year and a half, he decided to go back and play basketball. And I was at his second game, he hadn’t played in almost two years, and he scored 40 points. In his second game. Which is an exceptionally high score. Because he was gifted. And each of us have something we like, that we’re better at than other things. And if you stick to where you have a gift, you’ll find that you’ll have a more successful life, you’ll be happier, and you’ll probably be much more successful.

So I think I’d like to ask you, what your number one career advice is for people, given the disruption in the economy today, in China.

I would say, whether there is disruption or not, I think the same rule actually applies. And you have said that so well. I think you need to be enthusiastic your job, and your career, and something you truly love. And in addition, I think you can choose an industry where there is a lot of exciting development, I would say, not only in the short term, but also in the medium-to-longer term. I think I would advise young college graduates to look at those criteria. Those are much more important than just compensation.

Neil Shen: For young entrepreneurs, which I know many of them are just starting a company, it is not an easy time. I would suggest them to focus on survival during this very [“significant?”] time. And I think the most important thing is, attend to your cash flows. Because that’s the only way you can make sure the company will survive. And also, like any startup, focus on product. I think the crisis will be over, and if you have a truly differentiated product, you’re going to come out as someone who is much stronger in the sector. And I just feel like you need to be resilient, in terms of, in markets like that, because many great companies actually have been built during special periods of time, like… (interrupted).

Stephen Schwarzman: But I told our younger people, that they’re actually quite lucky to be involved in our industry, which is the investment industry, at this stage, of really huge, economic dislocation. Because they’re going to learn to never trust anything that somebody tells them about what the future’s going to be.

As you said, make sure you have enough cash and cash flow so you don’t get in trouble. When young people start, they look at the world, they look at models, they build expectations, and they don’t always plan for everything going wrong. When I started — I first started in 1969, then I went to business school and came back and started again in 1972 at Lehman Brothers — there was no equity increase for 10 years in the United States. So I learned, equities don’t go up, automatically. And if they do, it’s a gift. And it may be temporary. So my whole career — because I learned at that time —

Neil Shen: Yup. Yup.

Stephen Schwarzman:  — is not believe what everybody tells you. Always assume it can go wrong. Always protect the business.

Neil Shen: And prepare for the really [“long”] (interrupted)

Stephen Schwarzman: Right. And so what happens is, the young people now, who are starting out, and other people, who have businesses, will learn discipline and what academics call “risk control” in a way that will benefit them for the next 10, 20, or 30 years of their careers. And even though it’s tougher times now, they have to look at it as educational time, where they will learn rules that will help make them success.

Neil Shen: Great. Really enjoyed talking with you. We are running overtime — but I hope that you could actually come back to China soon, so that you can physically see the audience who will become big fans of your book.

Stephen Schwarzman: Well, I’d love to come back soon. I have the Schwarzman Scholars program at Tsinghua University. Right now, everybody is scattered around the world. From the foreign students’ perspective, everybody would like to come back. We all need to be safe. That’s the job of our governments, to help provide that safe environment. But it’ll be great to come back as soon as I can.

Neil Shen: Great. Thank you so much for your time. And stay safe!

This is Part 4 of 4.

For more fun stuff, you can follow me on twitter @kgao1412. And definitely check out my compilations page.