How To Invest in the Future: the next revolution will be psychological

If asked to predict the future, do you immediately think about flying cars and space travel?  

Whether because it is an evolutionary desire to create tools, or the incredible branding and marketing of sci-fi movies, you’re not alone.

But you’d be wrong. At least partially.

We have some degree of foresight for the long term.  Robotaxi’s are here, space travel is coming. AI is here, in spirit. Humanoids are here but maybe too scary?

But we consistently fail to predict the steps in between.  We consistently fail to get the timing right.  We are blindsided not so much by the eventual creation as much as we are by when it occurs. I’m also certain that we could have gotten to the destination faster.

On one view, some might say this is because we are designed to think linearly.  We’re blindsided because — due to network effects like population growth, connectivity, speed of communication, etc — change is exponential and accelerating. 

But I also think this is because we’re thinking about the wrong things.  Very often we fail to include the human elements in our consideration.  

@rorysutherland has some great examples and a bunch of talks that are very much worth your time.

1. Waiting is psychologically uncomfortable.  Yes, adding GPS to your phone laid a foundation, but Uber and Lyft succeeded over taxis in no small part because they noticed that giving a predictable / estimated wait time increased adoption rather than face the uncertainty of when a cab might arrive.  

2. Colors determine efficacy. Orange painkillers are perceived as more effective than small red ones.  Blue pills tend to be better for sedation. 

3. Shape alters presentation.  Cadbury changed the shape of their chocolate bars, consumers complained about the altered taste, even though the formulation remained the same.  Wine tastes better if it comes from a heavier bottle.  

What does this mean for startups?  

• Humans are irrational. We need to experiment in seemingly irrational ways, even in ways that you can’t readily see how to measure.

• Avoid the tendency to reduce systems into bite sized chunks. E.g. if you replace your $30K per year doorman from your hotel, you may find that your $1000 nightly rate has been cut in half.    

What does this mean for investing in the future? (whether as a VC, an employee, or a regulator): 

In the short term, look for founders and companies that:

• Take a holistic view of their product as well as the ecosystem.  I think this is why Andreesen’s concept of the idea maze is so powerful.  It’s not so much that founders who have done this can predict where to take their product over the next 3-5 years, but that they have a better sense of how the system functions.

• Value experimentation across multiple domains and metrics. Do they have an 80/20 philosophy in place in terms of exploiting and exploring?

• Understand that products don’t sell themselves, particularly today. Not even ChatGPT sold itself. The interface sold it.  Legions of influencers and 1,000’s of AI newsletters sold it. 

In the long term, look at the trends, what’s missing to unlock adoption?  Do you believe these are things that can be overcome in the short term? Is it something you can help influence?

• For example, pre-ChatGPT, AI and LLMs had been around for a while.  Performance was pretty good in 2020, but then ChatGPT provided the interface.  This would have been qualitatively less risky than investing in 2000, pre-transformers, pre-cloud, pre-NVIDIA, pre-lots of things. 

• E.g. autonomous vehicles are almost here today.  What’s missing?  In my view, at least one aspect is the messaging around accident avoidance and safety rather than the benefits of optimizing my commute, which I now only rarely do anyway.  Or something other unexplored variable.  

• E.g. nuclear power, or specifically small modular nuclear power plants. Because AI’s power appetite is massive, we’re seeing an uptick in investment.  What was previously something we had to sell on efficiency and emissions benefits to utilities (a difficult sell in the US), now we have a relatively smaller set of decision makers to convince.

More to come on this, but I’m curious to hear your thoughts.  If you find this interesting, I’d love the feedback.