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It does seem like almost every major technology–the internet, right? I mean, had a false start in 2000 that caused the bubble, that stock market crashed as a result of. Blockchain crypto, I think, had a false start, and now it’s again coming back. So these are examples. It’s not like data that I think proves the point. But I think, anecdotally, it does seem like many big technologies do seem to have this false start element to them.
Jay Clouse 0:22
The startup investment landscape is changing, and world class companies are being built outside of Silicon Valley. We find them, talk with them, and discuss the upside of investing in them. Welcome to upside. Hello, hello, hello, and welcome to the upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Jay Clouse, and I’m joined by my trusty sidekick, Eric Buffalo-Hornung.
Eric Hornung 1:01
Jay Clouse 1:02
Yeah, I thought you’d be upset about…
Eric Hornung 1:03
Jay Clouse 1:04
Upset about that.
Eric Hornung 1:05
I can’t even get to the nickname because you called me your sidekick. Batman, Robin, is that what this is?
Jay Clouse 1:12
Eric Hornung 1:13
I’m definitely more of a Batman. You’re more of a Robin.
Jay Clouse 1:14
You’re right, you’re right. And in this context, you’re definitely right. We’re sitting here at CES 2020.
Eric Hornung 1:20
Jay Clouse 1:21
Buffalo. Eric Buffalo Hornung, and we’ll get that nickname here in a second. We’re in a dedicated broadcast booth, thanks to the CES team and being media trailblazers at this year’s event.
Eric Hornung 1:33
Yeah, I mean, we just got really lucky. That’s what I’m getting out of this.
Jay Clouse 1:35
Eric Hornung 1:36
It’s it’s fun being a media Trailblazer because we’re surrounded with all these people from all these publications that have such reputations. I mean, you got Entrepreneur and Axios and USA Today and Forbes, and the list goes on and on and on. And we’re just little old upside over here.
Jay Clouse 1:51
It’s great. It’s one of those things where you look around you say, How did I get here? And you’re just happy to be there. We had a keynote presentation today from the CEO of Delta Airlines, and we were literally seated in the front row in the two most central seats for this keynote. What a time to be alive.
Eric Hornung 2:09
What a time to be alive, Jay. I mean, again, that’s a lucky situation. Everything in this CES experience, we’re in the city of luck. And we got lucky last night as well. Weird phrasing.
Jay Clouse 2:24
Eric texted me last night and says, Jay, I have a good feeling about your luck tonight. Let’s, let’s gamble. And you know, I honestly have a good feeling about my luck all the time. So I was down. We go down there. He tells me to, he tells me to pick out a slot machine, and circling around a bunch of the slots, I pick a couple, we sit down, I put in 20 bucks, he throws in a hundo. Most boring slot machine in my life. I mean, you’re just pressing button. There’s not even a pull arm.
Jay Clouse 2:51
Right. But you were also betting small, you’re betting a buck 80.
Jay Clouse 2:55
I was betting a buck 80 and you’re betting $6, but I mean, I put in 20 bucks. You’re right, if you’re going to play small, you’re going to win small. And I didn’t win at all. Meanwhile, as I turned $20 into 25 cents, Eric just pounded in the six button, and all sudden to my left, I hear the machine just go “Buffaloooo.” Eric starts dancing as if like he expect this to happen. He wasn’t even like exclaiming or surprised, just like Buffalooo. And the meters just running, running, running. It’s got a number on the screen that says like, okay, all these things hit, it’s a bunch of animated buffalo running in place, and there’s like a couple of x2 on the screen. And the meter says 70…720,000.
Eric Hornung 3:42
Jay Clouse 3:43
And it’s just running, running, running.
Eric Hornung 3:44
720,000. 72,000. 72,000.
Jay Clouse 3:48
It was 72,000?
Eric Hornung 3:49
Jay Clouse 3:50
Well, Eric didn’t win $72,000.
Eric Hornung 3:52
Right. As you can tell by me still doing this
Jay Clouse 3:53
podcast but he didn’t turn hundred dollars into $720. And teah, I was very jealous. That’s the end of the story.
Eric Hornung 4:03
Yeah, that’s the end of the story. It was a good story though. It was a fun story.
Jay Clouse 4:06
Well, speaking of buffaloes, and the frontier, today we are speaking with Loup Ventures, a research driven venture capital firm based in Minneapolis and New York, investing in frontier tech companies. Speaking with Doug Clinton, the managing partner of this firm that was founded in 2017. Eric, you found Loup Ventures and our invitations to folks to meet us here at CES. What stuck out to you about Loup?
Eric Hornung 4:30
Well, Doug is speaking at a panel on the future of storytelling. And when I dug a little bit, when I dug a little bit into his background, I found that they were really into this frontier tech space. You and I haven’t really dug too much into frontier tech. I thought it would be interesting. I thought’d be interesting to have him come on and talk about what he sees as the next coming technologies. So here we are talking with Doug.
Jay Clouse 4:59
The three of us talk together, a real Doug trio. If you have any thoughts–that was a Pokemon joke.
Eric Hornung 5:04
I got it.
Jay Clouse 5:04
If you have any thoughts as we go along in this interview, you can tweet at us @upsideFM or email us firstname.lastname@example.org. We had about 30 minutes here with Doug, a shorter episode here today, but an exciting episode and, you know, we we like looking at the fringes, we like looking at the frontiers. And I’m sure this interview will be more of the same. So get that interview with Doug right after this. Eric, what do SaaS companies, autonomous vehicle companies, cyber security companies, blockchain companies, and consumer marketplaces all have in common?
Eric Hornung 5:35
They’re all companies.
Jay Clouse 5:37
They’re all companies, and they’re all companies who have hired our friends at Integrity Power Search to help them fill their talent needs. Integrity Power Search is the number one, full stack, high growth startup recruiting firm between the coasts. They partner with venture capitalists, private equity groups and CEOs to build amazing teams for the world’s most disrupting companies that may be SAS, autonomous vehicles, blockchain, consumer marketplaces, insurtech, robotic process automation. Eric, they can do it all.
Eric Hornung 6:03
They can do it all. And we’ve seen them do it all. They are impressive.
Jay Clouse 6:06
Over 600 searches since 2012. More than 200 happening just this year in 2019. Their clients have collectively raised over $2.5 billion in venture funding. If you want to hear how Integrity Power Search can help your team for your talent needs, go to upside.fm/integrity and get started.
Eric Hornung 6:24
Integrity Power Search. Who you gonna call? That’s their slogan, right?
Jay Clouse 6:28
I don’t think it is. But maybe it is now.
Eric Hornung 6:30
All right. You’re welcome for that one, Caleb.
Jay Clouse 6:38
Doug, welcome the show.
Doug Clinton 6:39
Thank you for having me. Good to be here.
Eric Hornung 6:41
On upside, we like to start with the background, the guests. So can you tell us about the history of Doug?
Doug Clinton 6:46
History of Doug.
Eric Hornung 6:47
Doug Clinton 6:47
I’ll start with the history of the loop, which is very much intertwined with the history of Doug. Loup we started about three years ago. There’s three partners, myself and two people I worked with for about a decade, Piper Jaffray. So we’re a midwest-based fund. I happened to be based in New York. But we covered the mega cap tech stocks for about a decade, you know, Apple, Google, Facebook were the ones, we were known really well for Amazon. And we started to see how much time and effort they were spending on things like artificial intelligence, robotics, ARVR. So what we thought was the future of technology, the next wave post smartphone. And so we left the Wall Street thing and started a fund to invest in those themes. And so my history is, is mostly that over the last 13 years, sort of been intertwined in the tech world. Immediately before that, I was an early employee at a, at a startup. So I did do the startup life thing as well, which was a lot of fun, a company called NPocket, got bought by Nokia. So it’s really fun to see the whole sort of success wave of how a startup goes through that. And hopefully a lot of our companies that we invest in has the same experience.
Eric Hornung 7:52
How do we all collectively decide what the next technologies are going to be?
Doug Clinton 7:57
Interesting way to ask that question. I like that. I think that there’s, like, technology fundamentally is to augment the human, you know, experience, I think. Any technology, that’s sort of the purpose of it. If you think about the smartphone, it’s this computer that gives you superpowers. If you imagine the world like 100 years ago, and you told them what the smartphone was, they’d think you were crazy. So I think that from a, the sort of fundamental point, the next technology, like as we decide this is going to be the next big thing, it has to have some sort of augmentative power. It has to make our lives significantly better. And I think when technologies have false starts, and I always like to use, this is a not a great example, but 3D TV, where it’s like people thought that was gonna be huge. If you we’re at CES 10 years ago, it’s, like, all everybody would talk about. And it never really happened because it’s like, the experience just wasn’t that great, the technology wasn’t that compelling. And so I think the level of impact that a technology can have on you is one of the really important parts of getting people excited. When people get excited, they adopt it, and it becomes this sort of cycle where ultimately it becomes like a self fulfilling prophecy.
Jay Clouse 9:04
You sound a little bit like a futurist. How often, how often do you think from like a thesis driven standpoint of, here’s where I think technology is really going to augment the human experience versus companies are coming to you, finding you, they’re cutting edge and you’re saying, Oh, that’s really interesting, hadn’t even thought about that.
Doug Clinton 9:20
I think it’s symbiotic. It goes, it goes back and forth. The companies inform and teach us so much when we have companies pitch us. And at the same time, we’re always developing theses about problems that we might have. Simple problems, complex problems. Something we’ve been thinking a lot about recently is recycling, which is, I think, a really huge problem, huge opportunity. It’s a very topical, just sort of the green movement in general. And if you look at solar, solar again, 10 years ago, really promising technology. And it sort of had this false start. Technologies often have false starts. But recycling was something that one of our team members just said, Hey, like, it seems like recycling is not very efficient and like, we’ve been doing a lot of work on the EV space. What are we going to do with all these batteries afterwards? So sometimes it’s just things that our team comes up with. But a lot of times, I mean, the companies that we speak to, even when we don’t invest, in a lot of cases, we learn a lot from what they tell us and kind of how they see the future. So…
Eric Hornung 10:13
Do you think that technologies having false starts is a long term positive indicator or completely uncorrelated to long term success?
Doug Clinton 10:20
I’d say, anecdotally, I would probably say it’s a positive indicator, but just, just based on examples, right. Like AI had a kind of a false start in the 80s. VR has had a false start. And it’s,
Jay Clouse 10:32
Doug Clinton 10:33
Right, exact, Google Glasses. And now AR is, I think, having a little bit of a comeback, right. But it does seem like almost every major technology. The internet, right? I mean, had a false start in 2000 that caused the bubble, that stock market crashed as a result of. Blockchain. crypto, I think had a false start, and now it’s again coming back. So these are examples. It’s not like data that I think proves the point. But I think, anecdotally, it does seem like many big technologies do seem to have this false start element to them.
Jay Clouse 11:00
What year did you say you guys started Loup?
Doug Clinton 11:01
It was 2017. So we’re about three years old.
Jay Clouse 11:04
And you guys are based in Minneapolis.
Doug Clinton 11:06
Jay Clouse 11:07
But you, you’re still primarily in New York.
Doug Clinton 11:09
Jay Clouse 11:09
How big is the team and who’s in Minneapolis?
Doug Clinton 11:12
So I’m a partner at Loup. My other two partners are both in Minneapolis. And then we have five other team members based in a combination of Minneapolis, New York, and San Francisco.
Jay Clouse 11:24
Why did you choose Minneapolis as a location with the spread that you already have in New York or sounds like San Francisco as well?
Doug Clinton 11:30
Easy reason. My partners are both from Minneapolis, and the bank that we used to work for, Piper Jaffray’s headquartered there. I lived there briefly as well. It’s a great place to live. There was really great talent there. And so it was sort of a geographic advantage. And also because that’s where they wanted to be.
Eric Hornung 11:45
What’s the…We’re sitting here at CES and 2020. And there’s all these technologies that everyone’s talking about, right? Gaming’s really big this year. It seems like automotive is really big this year. It seems like smart cities is really big this year. It seems like people are starting talking about 5G. What’s the thing that everyone’s excited about that you’re the least excited about?
Doug Clinton 12:03
We, we just talked about VR a little bit. And unfortunately, I think VR still is in a false start phase. I think that the Oculus Go was a really good step forward for VR. But you know, as a technology, there’s a lot of really good experiences you can have on VR. But I still think we’re probably at least five years if not a decade away from sort of mainstream adoption there. And I was actually surprised how much sort of VR related stuff I’ve seen around. There’s a lot of sort of paraphernalia, I think, related to VR on the floor, and I haven’t walked around that much, but it always catches my eyes. I’m like, I can’t believe that, like, people are, like, really still trying to push this because it still feels difficult. So that’s probably the big one for me.
Jay Clouse 12:44
Would you lump AR and with that as well?
Doug Clinton 12:47
I think AR is a little bit of a different beast only because you can sort of separate AR into what you can do with a smartphone today, which is in everybody’s pocket, and what you can do with the glasses. So I think the AR feels like it’s, it’s much more real. And like I even saw walking over this morning, AARP has a booth, and they actually have an AR app to help people like,
Jay Clouse 13:10
Doug Clinton 13:12
That’s a great marketing they can do there, you know? But the app is, to you know, you, you show it in like your kitchen, and it will tell you where there are dangerous spots, if you happen to be older and, and you know, you need to do a little work to make your home safe for you. So I mean, I think that’s a real world application in a standard company.
Jay Clouse 13:30
I’ve always kind of agreed with that. VR seems like it’s still so everyday inaccessible for what I would want a human experience to be like. It seems like such a siloed thing, and I understand the argument of, you know, what Facebook’s trying to do, where they can make these hyper realistic avatars of you in VR where you can communicate with someone else’s hyper realistic avatar across the world. And that seems compelling but in like very small situations throughout the day, you know? Even we we’re walking around the show floor earlier, and there was a guy wearing Oculus standing there. And I looked at him, I’m like, I just want to rob this guy.
Doug Clinton 14:06
Right, yeah, it’s a strange…It’s almost like when you see a robot in public for the first time. Like, you walk around San Francisco, and they’re all over the place. But like, if you’ve never seen a robot, you’re kind of like, well people kick them, right? People will do whatever to the robots. And I think when you see people using technology or just see technology in general in the wild, there is that reaction of like, wow, this is really different. And I think with AR in particular, because you were really siloing yourself away from the outside world, that’s the purpose of the technology. It may be that, that element is even stronger.
Eric Hornung 14:38
What are the technologies that Loup is most excited about that other people aren’t?
Doug Clinton 14:42
I know we talked about recycling, I think recycling is under appreciated still.L
Eric Hornung 14:46
Like the robotics or like chemical recycling.? Like what, what about recycling is interesting?
Doug Clinton 14:50
Chemical recycling, I think batteries in particular with EVs. I think EVs is another field that we’re probably more excited than most people are about. I mean, I think that it’s a no-brainer, if you throw out timescale, that eventually EVs are going to be the majority of cars in the market I don’t know if that’s going to be 15 years away or 50 years away. But as a component of that, to really live up to the potential of being green, you have to do something with the batteries when they are done in the cars. It’s an issue if you don’t, then it sort of defeats the purpose in some ways, I think, if you don’t do that. So I think those two things are one thing we’re really excited about. And the other that we’ve done a lot of work on is the neuro-technology space. So things like brain computer interfaces. We’ve had this thesis where if you kind of think about technology broadly–I’ll give you this futurist angle again. So the philosopher angle, 50 years ago, you would go and you’d use a computer in a giant cooled room, and maybe you’d have to do a punch card before you even do it to give it something to calculate. And then we obviously had the, the GUI, and you could use your hand to manipulate a mouse. It’s closer kind of like a sensory experience. Then we had touchscreens. So literally, you can touch what you want on your phone. And now we have voice interfaces. So we’re getting closer and closer to the sort of natural computing experience. If you think about that progression, you’re sort of just getting closer and closer to your brain’s output, right? And so brain computer interface essentially allows you to bypass that sensory layer where your brain has to compute something, and then put it out to your motor neurons if it’s a touchscreen, or to your voice to say whatever your command is. And so that’s a technology that, again, it’s hard to say timescale-wise when something like that becomes really mass adopted. But I’m really excited for the potential of it because I do you think that it’s the future of computers.
Eric Hornung 16:37
Does that make us more or less human?
Doug Clinton 16:39
I think you could argue both. I think–and this is, goes back to the idea of technology augments humans–there’s always this debate of like, is technology good or evil? And I think that technology is neither. Like technologies benign, it’s human nature that is good or evil. And I like to use the example of social networks, where a social network is not good or evil, even though there’s a really fun debate about which is true right now. It’s the way that humans use the tool that makes it one or the other. So if you use a social network to stay in touch with their friends, or maybe try to enlighten the world about something that they don’t know about, that’s a really good positive use of social networking. And then a lot of that stuff happens, you just don’t hear about it as much. But when the bad stuff happens, bullying, you know, misinformation, you do hear about that. And so, you know, I think all technology could be used for good or evil. And I think, I don’t know if you can say any technology makes us more or less human. It just sort of enhances the experience overall. So I’m not sure which side I’d take on that.
Jay Clouse 17:40
I wanna dig into this neuro technology stuff because I thought about a little bit, but I guarantee you thought about it more. So we talked about false starts. To me, some of this neural technology getting closer and closer to our brain itself scares me because of, what if there’s a false start? If I put some sort of mesh on my brain, and that’s not properly protected or something, like, what are the downside risks of this? And where do you think that technology has to be before we actually start using it safely?
Doug Clinton 18:08
Yeah, I think the biggest thing is we have to be really cognizant of data safety with these brain interfaces initially, because of what you said, like, there’s, from a physical danger standpoint, especially with the stuff that’s available today, the non-invasive stuff, there’s really not that much danger there–Yes, there are electrodes, but the current is very minimal, like you wouldn’t ever really get hurt. I think it’s more about, you know, as a consumer, are you comfortable with some company collecting this brain data, which seems way more important than, like, your social media data, and then interpreting it to help you augment your life? So I think that’s where it really starts. And in terms of kind of, where does the technology need to go? I think we’re starting to see some early applications where it’s fun, just like VR, there’s some good gaming stuff. One of our companies, Neurable, has a BCI based game where you can just control the screen with your thoughts. It’s super cool. It’s a great introduction to how the technology works. But very quickly, you can imagine a world where if someone is paralyzed, for example, and they need to manipulate a keyboard, they can’t do it, they could actually use sort of BCI based keyboard and instead of the way, the BCI-based keyboards are, are generally done today is they’re actually a circuit where you have surgery and it’s connected directly to your brain. I actually think the non-invasive technology, the speed that it’s improving, we could probably actually do that in a non-invasive way and make it much easier for people to communicate.
Eric Hornung 19:34
This gaming startup that sounds like the ideal scenario where you could just play Call of Duty with your mind rather than having to like…how does, how does that work? Could you, like, dive more into what that looks like? What are the limitations right now?
Doug Clinton 19:48
So basically, the way it works is you’ll see sort of prompts on the screen. And so certain points on the screen will flash, and it might even be sort of naked to your eye, but you’re still perceiving it. And when your eyes catches the attention of something where you have an intention, so you have a certain spike in your brainwaves that the device is reading, it interprets that as a like, I would touch this button if it were a touchscreen. So, so that’s basically how it works.
Eric Hornung 20:14
And are there limitations, like, on how good that technology is right now?
Doug Clinton 20:18
Yeah, there’s definitely speed limitations, right. So like, going through that processing sequence, it takes time. And then the technology has to be smart enough, and it learns over time, too, obviously, but it has to figure out when you’re having an intention and actually then perform the action. So like speed for speed, if I type something on a keyboard with my, you know, iPhone and did something with a keyboard on a BCI, it’d be no match right now. But I think for early use case, like proving out the technology, which is still where we are with it, it’s still, it’s pretty compelling.
Jay Clouse 20:50
What are some of…Let’s talk about some of your portfolio companies.
Doug Clinton 20:53
Jay Clouse 20:53
What are some of the most cutting edge technologies that you guys have invested in?
Doug Clinton 20:58
The brain computer interface stuff is up there. Trying to think of which companies we have announced and that I can talk about. I’ll talk about another BCI related one. So Neurable, as we talked about, is a non-invasive company. We’ve invested in a company that provides an invasive neural interface as well. So it’s targeting more like clinical applications, where, you know, you go in, you have surgery, and you have a super high bandwidth interface plugged in your brain. So it’s more competitive with like, what Elon Musk is building with Neuralink. So I mean, we’ll do anything as cutting edge as that to another company that I’m really excited about that’s actually sort of like a, I think an analog to AI, is a company called Invisible and they’re providing a service where, AI is great, but it’s not great for everything. They’re providing a service where you can essentially make any complex task AI performable, but they essentially just use a network of humans to do the tasks for you. And then they can obviously build processes around them and ultimately create automated tasks to them.
Eric Hornung 22:00
So when you launch a social media platform, or a b2b SaaS company, the business models are pretty straightforward. Is there a standard business model that kind of applies to these emerging tech spaces?
Doug Clinton 22:13
It depends. Usually, they’re either some sort of software related model, whatever that looks like, or in the case of Paradoromix, they’re selling hardware, so sort of more like a traditional medical device model. So usually they, even though the technology is, I think, emerging, the business models tend to be fairly similar to the things that we see more commonplace.
Eric Hornung 22:34
And how do you source deals?
Doug Clinton 22:37
A lot of networking, I’d say, is the big thing. We try to engage universities i a lot of cases, especially for the neurotech related stuff. A lot of that does come out of academia. But it’s a mix. You know, it’s we talk to VCs all the time, we talk to our portfolio companies all the time and just try to get a sense for what they’re excited about, if they have connections that are building something that’s too early for them or too late for them, depending on when they’re investing. So, the answer is, the easy answer is, we’ll source deals anywhere we can get them. A good deal’ s a good deal. But it’s a lot of work on the networking side for sure.
Jay Clouse 23:11
They sound like capital intensive and long time horizon businesses potentially. How do you think about that in the context of your portfolio?
Doug Clinton 23:18
Yeah, I’d say if I had to break down our portfolio, there’s some percentage, maybe it’s 30 40%, that are probably more capital intensive type businesses, some related to hardware, some maybe have the sort of longer development cycle. And the other portion of portfolio is more traditional and more standard business model, maybe a simpler development and solving a more immediate problem. So we do try to be cognizant of that when we build our portfolio to have some things that are maybe these sort of new markets where you, by definition, have a longer ramp and then hopefully a hockey stick, and some that are maybe existing markets where it’s more linear and you start to see results right away.
Jay Clouse 23:56
Your website says you’re a frontier tech company. We’ve talked about recycling, we’ve talked about these neural networks. How much attention do you feel like is being paid to existential, human and planet problems versus like if you look around CES, how much of our collective human energy is being put into frivolous ****?
Doug Clinton 24:20
Fun question. Probably too much is the easy answer. But I think if you also look at the incentive structure of investing, your your job as an investor is to make money for your LPs. And a lot of companies that have made a lot of money in the last 10 years have not necessarily been companies that are saving the world. So again, there’s a balance that’s, that’s probably fair to put between the two. You know, a company like Tesla, even though it seems to be almost like a religion, people either love it or hate it, especially their investors. I think they’re doing really great things for the world. And it happened to be a venture success, but it was one of those companies that was a really long development cycle, right? Took them…
Eric Hornung 24:58
Doug Clinton 24:58
Exactly, it’s still not profitable, and we’re 15 years in. But it’s a great company. So I think the answer is, we probably aren’t, I mean, if we just look at it objectively, we’re probably not spending enough time as humanity sort of trying to solve these problems. But I also think it takes kind of a special type of person to be compelled to do that and also have the sort of business ability and leadership ability to get people excited about something like recycling, where it’s like, this is gonna be a really long road. And you might not make a lot of money right away, maybe you don’t make a lot of money ever, versus if you’re building a social network, you can say, well look at Facebook, you know, we could become millionaires if we hit this in a few years, right? So I think you just have to think about the incentive structures, what people are motivated by. It’d always be great if there were more people motivated by trying to save the world, but I think just the reality is, it’s not always the case.
Jay Clouse 25:50
Do you personally have any fears towards existential risk things like climate change, like do you feel like we’re facing any real crisis?
Doug Clinton 26:00
We talk in the context of our fund a lot about the AI question like, if AI does fulfill its promise, like what happens to jobs, you know, how does that sort of change the way the world works? It’s not an easy answer. I think anything, especially when you’re involved in humanity or climate, these are all complex, adaptive systems. And so even if you understand, like, all the components that go into the system, you still don’t understand the system. And so even if you solve like pieces of these problems, you may not necessarily actually solve the problem. And even if you understand pieces of how AI works, and how humans might interact with AI, you probably don’t understand what the holistic effect of AI will be on humanity in total. And social network is a perfect example that. We understand all the pieces of social networking. We did 10 years ago. But nobody could have predicted or said, yeah, like social networks can be used to influence elections, and they’re gonna be used for this mass scale bullying and misinformation campaigns, all the crazy stuff that’s going on. So I think technology is sort of inherently unpredictable in that sense. And for us like we always just try to put the the sort of ethical side of our investments onto the founders that we put money in. And, you know, we really want to trust them as people as part of our investment assessment is like, are these are the right people to be running companies that could potentially have mass scale impact on the world? And I feel like that’s the best margin of safety we really have.
Jay Clouse 27:21
It’s interesting to think about complex, adaptive systems that might be like existential risks. Is it actually more of an existential risk now, or we just more aware of it? You know, like, was the complex adaptive system of 60 years ago, you know, where we’re making nuclear arms the first time, is that just as dangerous as what we feel today and when we’re talking about AI?
Doug Clinton 27:41
Yeah. I don’t know, either. It’s one point that I would think about there, this is not a fully thought out hypothesis is like, it feels like technology, what it really does, in a lot of cases, is changed the timescale, where the nuclear arms race ended up in this cold war that lasted 30-40 years. You know, if there’s an AI arms race where we get to a point–this is obviously future–but get to a point where AI is capable of doing, fulfilling some of the promise that we think it can, you know, I don’t know, if you have like this 50 year Cold War type thing. It feels like the outcomes sort of become more apparent more quickly, versus what we’ve seen historically, where like maybe the complex, adaptive system in was like the 1700s was like the steam engine, right? But like, that didn’t have this, all of a sudden, like, Oh, my God, like everybody’s life was changed type thing. It had this gradual wave of impact that sort of led to, I think, the Industrial Revolution and became this massive wave, but over 100 plus years, right? I think technology now things seem to happen so much faster, where like the smartphone, for example, you know, adopted in less than 10 years, where almost half the world has one.
Eric Hornung 28:50
It’s good for a 10 year investment timeframes and IRR.
Doug Clinton 28:53
Right yeah. If you find the right trend, that’s the goal.
Jay Clouse 28:57
I assume you probably do a lot of just like looking at new research that’s coming out. And with a number of research universities and you know, even 4400 companies here showcasing at CES, how do you parse through the noise defined signal and, like, really impactful new technology?
Doug Clinton 29:15
It’s hard. I think we try to focus on neuro-technology as a vertical that we really try to own as a fund. We haven’t seen a lot of other funds playing in that space. And so just by definition, like if we just focus on that category, it helps us narrow that funnel a lot, because you’re right, there’s so much stuff that comes out. There’s no way that you could keep on top of all the innovation that’s happening. So I think that’s one thing where we try to focus is that. But yeah, we, we read a lot of academic research, and some of it is stuff that comes from our companies. And again, some of it’s stuff where maybe we have an interest as a team in some particular thing. And we go and do a deep dive on the academic research related to that. So it’s really difficult to your point, but I think we try to have these sort of layers of focus and then some intense periods of learning where we really dive deep.
Eric Hornung 30:02
For neuro, is there a screen that’s like a low hanging fruit, this is bull****?
Doug Clinton 30:09
Like a heuristic, we will look at it and say this is impossible? I can’t think of one. Usually like stuff that’s, that’s that bad never gets really in our orbit, I think, where, you know, where we’d say, you know what, we have to validate this. But when we do make investments, we always do our best to, to validate the tech beforehand.
Jay Clouse 30:28
Have you spent any time looking at aging or anti-aging?
Doug Clinton 30:30
We…a little bit. I’m not an expert on. It’s personally a very interesting topic to me. We’ve invested in a couple companies, one we just announced, that I would put in this sort of broad aging bucket, which is called Levels Health. And they actually help people who are non-diabetics get a continuous glucose monitor prescribed to them. And then you can monitor your glucose levels all day long and see how your diet impacts your glucose levels and then optimize your diet based on that. Because what’s interesting is, like, if you eat a banana and I eat a banana, we might I have very different insulin responses to that food. And if I spike and you don’t spike, then I’m more sensitive to that particular type of sugar. And it might be something that I’d want to remove from my diet for performance reasons. But for you, it’d be fine to keep eating it. So knowing specifically how your body responds to certain foods I think is part of this broader performance and anti-aging bucket. Another area that I think is really interesting is we’ve seen things from like hymns and roman, where they’re talking more, doing more work about men’s health, making it more accessible. I think testosterone replacement therapy is a really interesting area that has not been sort of technified yet and made simple. But I think as a, as an anti aging and quality of life industry, these clinics can be sketchy, but the industry and like the actual application, I think, i’s super interesting.
Eric Hornung 31:50
Well, this has been awesome. We’re running up on time. If people want to find out more about you or Loup, where should they go?
Doug Clinton 31:57
They can go to our website, which is LoupVentures.com. Loup is L-O-U-P. You can find all of our research there and on Twitter.
Jay Clouse 32:06
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Eric Hornung 32:46
All right, Jay, we just spoke with Doug. Really threw me for a loop on that interview.
Jay Clouse 32:52
I see what you did there too. Yeah, we, we really got into it. He said, tell us about the history of Doug, and he was like, well, the history of Doug is very intertwined, intertwined with the history of Loup, which leads me to believe that Doug, maybe four years old? No, Doug, gave us a ton of really great, deep thoughts exercises, there. Doesn’t take me long to get out of my depth as you know, Eric, so I was fighting about my weight class this whole time. I do love the idea of neuro tech which we haven’t talked about on the show.
Eric Hornung 33:20
Not even a little bit.
Jay Clouse 33:21
Not even a little bit. And as Doug noted, a lot of that research is coming out of the coastal areas. So we just haven’t really been able to touch it. But we got to spend some time there, and I like that.
Eric Hornung 33:30
I think we’re going to have to find a company in neuro tech now. BCI, brain computer interface. Man, that is, that’s something that feels like 50 years off, but I’m probably wrong.
Jay Clouse 33:42
Probably wrong. Do you think there’s any BCI companies that could help me quickly become the math guy on the show?
Eric Hornung 33:50
I think that that’s the entire point of being able to do computations faster in your head with a BCI.
Jay Clouse 33:56
I love that. You, you love reading the blog, Wait But Why.
Eric Hornung 34:00
I do. It’s my favorite blog in the world.
Jay Clouse 34:02
You read the Neuralink piece, I’m sure.
Eric Hornung 34:04
You said the word existential no less than 17 times then interview.
Jay Clouse 34:04
When I first read that, and he described, well as Elon described it, this lossless communication, I love that idea, which we didn’t speak to specifically here in this interview. But this idea of lossless communication is, if there is a brain computer interface implanted in you, you no longer have to interpret your electrical impulses as thoughts and put them into the technology of language for someone else to understand what you’re experiencing in your brain and thinking. You can literally transmit that knowledge directly and have no loss due to the technology of language. Mind blowing, also terrifying stuff, which I wanted to talk about a little bit with Doug and we did.
Eric Hornung 34:04
Jay Clouse 34:52
I’m a little bit of a doomsday guy, to be honest.
Eric Hornung 34:54
You are. You, you like to find the dark side of technology and, and bring it out in interviews.
Jay Clouse 34:58
And I’m an optimist. person. I just believe that…
Eric Hornung 35:02
You’re the most optimistic pessimist I know.
Jay Clouse 35:04
I’ll take that title. That seems fair. Yeah, there’s, there’s just a lot that we’re screwing around with. And I also think we’re putting a lot of frivolous energy into things that we don’t need to.
Eric Hornung 35:14
Like VR apparently.
Jay Clouse 35:16
I don’t think VR is necessarily frivolous. I just think that it’s very, it has its use cases. And I don’t think they’re going to be this ubiquitous thing where we’re all just walking around in VR headsets all the time. I think AR is way more promising, because it’s just more of a human experience, like it’s augmenting your world and not closing you off to the literal people around you. But maybe that’s a closed-minded view. Maybe in VR, you’re surrounded by people just the same. I could see that. But is that a more human experience? I have a hard time thinking that that’s going to be better.
Eric Hornung 35:48
I mean, you are the chief philosophical officer of the podcast, that’s for sure.
Jay Clouse 35:53
You think so?
Eric Hornung 35:54
I don’t know. I’ll give you that title. Do you want it? Wanna be the CPO?
Jay Clouse 35:57
CPO, most optimistic pessimists, co-producer,
Eric Hornung 36:03
Jay Clouse 36:04
CEO of the up company.
Eric Hornung 36:05
Jay Clouse 36:06
Stacking the titles.
Eric Hornung 36:08
I just keep getting no titles, and you get three, including CPO.
Jay Clouse 36:12
My LinkedIn headline is running out of space.
Eric Hornung 36:15
Yeah, maybe this outro is running out of space because we are running up on time.
Jay Clouse 36:20
Real quick, though, what was your highlight of this conversation?
Eric Hornung 36:22
I love frontier tech, the futuristic aspect of it. I love hearing what people think is real and fake. I love talking about market history and this idea of false starts. I mean, I really just liked this interview in general, because it’s so different than what we get a lot of times in the Midwest, where it’s, hey, we’re creating a marketplace or Hey, we’re creating a b2b SaaS company or, hey, we’re using some hard sciences and we’re going to try to license them out. This was much more mind-expanding than most of the type of venture firms that we talk to around the middle of the country.
Jay Clouse 37:00
I’d love to dig more into this. Someday we’ll get our unofficial friend Josh Wolf on the show.
Eric Hornung 37:05
Our unofficial friend? Yeah.
Jay Clouse 37:06
Unofficial friend, our unreciprocated friend,
Eric Hornung 37:08
Josh Wolf, if you hear this, come on the show.
Jay Clouse 37:14
Well, we’ll be back talking a little bit more here from CES 2020 soon, but until that time, tweet at us @upsideFM or email us email@example.com. And we’ll talk to you next week.
Debrief starts: 32:46
Doug Clinton is the managing partner of Loup Ventures. A Midwest-based venture firm, Loup Ventures was founded in 2017, and to date, they have made exciting investments focusing on frontier tech. Their latest concentrations include neuro-tech and BCI, as well as anti-aging companies. In today’s interview, Doug maps out the scene of frontier tech and gives us his thoughts on the consequences such technologies may have in the future.
- AD: Finding experienced employees for your new business with Integrity Power Search (5:27)
- About Loup (6:47, 11:00)
- “Deciding” the next big technology (7:52)
- Technology false starts (10:13)
- Least exciting new technologies (11:45)
- Most exciting new technologies (14:38)
- Neuro-tech and its human implications (15:27)
- Past investments (20:53)
- Investing in technologies that answer existential problems (23:56)
- Researching new technologies (28:57)
- Health and anti-aging tech (30:28)
This episode is sponsored by Integrity Power Search, the #1 full stack high growth startup recruiting firm between the coasts. They partner with venture capitalists, private equity groups and CEOs to build amazing teams for the world’s most disrupting companies.
Learn more about or get in touch with Integrity Power Search: https://upside.fm/integrity