2: Michael Dempsey - The Craft of Investing in the Future
Nov 25, 2024
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Michael Dempsey, Managing Partner of Compound and a seasoned investor in science and tech, shares his insights on navigating the evolving landscape of investment. He discusses the impact of cultural shifts on technology adoption and the importance of being original in investment strategies. Dempsey delves into future challenges, such as managing rapid societal change and ethical considerations in biotechnology. He highlights the potential of AI in mental health therapy and the growing complexity of digital identities in a tech-driven world.
The podcast emphasizes the distinction between technology's practical applications and science's quest for understanding, showcasing their interconnectivity with cultural impacts.
Investment strategies have evolved significantly, highlighting the need for adaptability to navigate a landscape dominated by high-conviction stocks and changing market dynamics.
Cultural shifts are powerful drivers of technological investment, indicating the importance of understanding societal beliefs alongside technological advancements for effective investments.
The commitment to craftsmanship is presented as vital for success, fostering innovation and deeper connections in both personal and professional domains.
Deep dives
The Definition of Technology
Technology is described as the endeavor to push the limits of what is possible, while science aims to create what was once deemed impossible. This perspective underscores the distinction between the two fields; with technology primarily seen as practical applications that extend beyond traditional boundaries, contrasting the scientific quest for fundamental understanding. As technology evolves, its implications ripple through other sectors, including markets and cultural changes, indicating a broader interconnectivity between science and its societal impact. This interconnectedness highlights the importance of understanding how technological advancements shape and are shaped by cultural shifts.
Evolving Investment Perspectives
Investment strategies have significantly evolved in the past two decades, revealing shifts in risk appetite, time horizons, and overall market outlooks. The landscape is increasingly dominated by a select group of high-conviction stocks, while traditional value propositions risk being overshadowed by short-term market trends. Different approaches to investing have emerged, particularly within venture capital, illustrating a diversification of strategies aimed at capturing long-term growth potential. This evolution emphasizes the necessity for adaptability in investment philosophies to navigate a rapidly changing financial environment.
Cultural Change and Investment
Cultural change is positioned as a powerful driver of technological investment, sometimes overshadowing the technology itself. For instance, the rise of cryptocurrencies highlights how societal beliefs can fuel market phenomena, challenging conventional investment wisdom. The distinction between technology and cultural shifts raises questions about how traditional investors perceive and engage with these dynamics. This perspective fosters a better understanding of the intertwining roles of societal beliefs and technological progress in shaping future investments.
Case-by-Case Technology Evaluation
Evaluating technology should be approached on a case-by-case basis, particularly amid rapid advancements and market proliferation. This nuanced perspective recognizes that different technologies, like AI or biotech, require unique contextual considerations regarding their societal impacts and business models. The complexity in determining commercial viability underscores the necessity for investor diligence in assessing each technology's unique trajectory. As the landscape evolves, understanding the interplay between various factors will be essential in crafting effective investment strategies.
The Importance of Originality
Originality in investment is viewed as a critical component for success, particularly in a landscape characterized by growing competition and saturation. The ability to identify and support unique ideas can provide significant advantages and lead to outsized returns. This focus on originality contrasts with mainstream approaches that prioritize established, high-conviction investments, which may lack the potential for groundbreaking innovation. Embracing original thinking fosters an environment conducive to discovering the next wave of transformative ideas and technologies.
Navigating AI's Growth
The current state of AI investment is marked by both excitement and caution as the market experiences rapid growth and potential saturation. Observers note that while AI presents numerous opportunities, many investors are hesitant to make large bets amid fears of overvaluation. This hesitance reflects broader anxieties around the sustainability of AI-driven growth and its long-term viability. Investors must balance the potential for significant advances with the inherent risks and uncertainties that accompany new technological trends.
The Craft of Building
Craftsmanship is upheld as a fundamental value, emphasizing the importance of dedication to mastering skills and producing high-quality work. In both personal and professional realms, a commitment to craft encourages continuous learning and improvement, ultimately leading to deeper connections with others. This appreciation for craftsmanship serves as a guiding principle for building relationships, businesses, and investments, fostering an environment where innovation and excellence thrive. Recognizing the intrinsic value of craft encourages individuals and organizations to transfer their skills into meaningful contributions to society.
Michael Dempsey (Website, X) is an investor, writer, technologist, and Managing Partner of Compound, an early-stage, thesis-driven, research-centric investment firm.
Michael and Compound invest in seed and pre-seed science and technology companies in categories like healthcare and biotech, machine learning and AI, robotics, and crypto. He writes prolifically across a range of topics and I've always admired his ability and tenacity to think about the future and paint an optimistic, yet grounded view of where things are going. He's deeply reflective and wise, and I've known both his dedication to craft and the size of his heart for nearly a decade as a friend.
Timestamps:
(0:00): Technology, Science, and Cultural Change
(08:37): Inflection Points and seeing the present vs. predicting the future
(13:00): Being original and/or contrarian; what is "alpha"
(16:58): "Post-science projects"
(21:54): Technological timing and false inflection points
(34:44): Heroes, Talent, Elon, and Zuck
(45:30): Founders of the future will spike on creativity
(49:46): Fighting decay
(55:53): Future shock: "time is collapsing"
(1:06:56): The future of humanity and our biology
(1:12:16): Bryan Johnson and biological experimentation
(1:14:48): AI Therapy
(1:19:38): Vtubers, digital influencers, and pseudonymity online
(1:26:19): Authenticity online: "Being known is being loved
