Top 5 Notes from Matt Ocko’s deeptech podcast w Exponential View
With my commute from “office” to home shrinking from a 25 minute train ride to about a 3.5 second hallway walk, my podcast listening is way down. But when one of the originals / greats from my sector of investing gives an interview, I find the time.
This is the case with Matt Ocko‘s recent interview with Azeem Azhar. Azeem runs a substack called Exponential View that bridges “the gap between two cultures—that of technology on one end, and humanities on the other—to provide a holistic understanding of our near future.” One of my favorite studies that he elevated. A few of his posts are about the energy transition, including a recent one about electric vehicle adoption.
Matt is the cofounder and Managing Partner of DataCollective, or DCVC for short. I consider DataCollective and Lux Capital two of the pioneers of the deeptech space… and Matt actually coined the term deeptech back in 1999. We are co-investors with DCVC in DroneDeploy and Jupiter Intelligence.
Given his history in the space and the success in the “deeptech” investing world, I encourage you all to go listen to the podcast.
Here are my top 5 takeaways:
1- The underlying theme is respect for the industry scope and entrepreneurs. These are hard problems that require a LOT to go right with leadership, team, timing, computational readiness, customer willingness. These problems take time and conviction. Matt and the DCVC team are steadfast in their support for these
2- The top deeptech companies have the following characteristics
- Machine learning approach enabling you to search the possibility space more effectively
- Massive automation in taking data outputs to final product / recommendation
- Virtuous upward cycle where the data and automation advantages reinforce each other. This results in upward cycle of efficacy and exponential downward cycle in terms of cost. Computational advantage that helps both sides of the computational (output, cost) equation
3- Best deeptech teams combine variety of scientific fields and disciplines. Doctors, scientists, engineers, real industry practitioners. And the leaders that bring them together need to be high integrity
4- Unit economics matter more than ever… just because it is deeptech doesn’t mean the traditional business metrics go out the window!
I love these few sentences:
“Computational advantage and the virtuous spiral of reduction in capex and opex must occur both for the company AND the customers. The startup has to reduce their own costs and the costs of the end product…. The companies that deliver great financial return and global utility have to have an output that is acceptable to regular, hardworking and often frightened, cranky, complex, idiosyncratic, short-attention span customers… so what these deeptech companies produce has to upend the existing trillion dollar industries without the customers having to perform unnatural acts to receive the benefits of innovation.”
5- Abundance vs. Scarcity as a mindset for the future. Abundance is believing we can use our technology to create surplus – deeptech technologies and their ability to create compounding positive effects to the upside…. while decreasing costs is a framework that can get us to that “abundance” mentality.