1/ Releasing a redacted Lux quarterly letter to LPs.
Some strong views of
-a catalog of an excess of excesses
-what catalysts cause the current market frenzy to end
(preview: LP indigestion)
-what we are advising our Lux family companies
-much more…
2/-The importance of HEIGHTENED HUMILITY in times like these (where source of ‘success’ can be easily mistaken)
-Telepresence helps us connect with far-flung founders but true presence (in person) helps our team connect like never before
-Where a CONSENSUS of CONCERNS is CENTERED
3/ Time travel with us a year hence—
reflecting back on the year that was.
Which of the 2 paragraphs below do you expect to read in Q3 2022?
4/-Is now time for CAUTION or throwing CAUTION to the wind?
-Valuations have risen
diligence fallen &
EXCESS is in EXCESS
-Preparing for the turn—when it comes
is wiser than predicting—when it may
5/ An excess of excesses—or what things wicked may this way come…
As Fed + central banks dole out dramatic distortion of discount rates, duration and the “true” cost of capital into markets…
A scene from ‘Deadwood’ comes to mind…
6/ -In just the last 12 weeks, startups raised more than the entire 99-00 .com boom/bust
-Character is built thru hardship + steep slopes
Yet today’s hero’s journey has given way to flattened slopes
-Thus far all news has been good news—which to realists—portends bad news.
7/ Failures comes from a failure to imagine failure
Good times let guards down
making co’s vulnerable to the silent artillery of time
LP’s whiteboard of GPs coming to market
looks like A Beautiful Mind
indigenstion of LPs + pace of new commitments
cant match pace of new raises
8/…before continuing…
ht @TheRealCarlChi1 for the image of investor swim lanes then + now
9/ The “Hemingway Hinge”…
A few funds with AUM $50-100B taking page from Carlyle,Apollo, KKR + now TPG will…
turn once cultivated intimate partnerships
into calculated intentions to go public becoming institutional corporations, fully diversified supermarkets
10/
-We have benefited from unusual demand—just as we caution against its unlikely persistence in its current form.
-we said 90% of SPACs would be CRAPs
-Some deals will prove…less kosher than a kilebasa sausage smothered in swiss cheese
-The Appointment in Samarra…
11/ Indefinitely Modified Paths—the wisdom of William James & Jurassic Park.
“Life finds a way”… and so do incredible founders
in every cutting-edge industry we find + fund…
12/ Space race is real—over 12 nations have astral aspirations
took humanity til 1961 to launch 1st 👨🚀 in space
last mo there were 14 in space @ same time
Do wise things when others are doing provably foolish things
And do what may appear to be foolish that’ll prove to be wise
• • •
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-Over 50% of small VCs will involuntarily exit as ~5 VCs are planning to voluntarily exit (IPO)
-Lux team has invested over half a billion dollars across 82 companies (new + existing) in the past few months…
2/
-Zuck’s “ Poachapalooza 2025”
-L&A (License + Acquihire) is the new M&A
-the AI capex surge (5% of GDP) ~ fiber-optic + router binge of 2000 tech boom (5.2%) and short step below sheet-rock bonanza of 2005 housing bubble (6.7%).
-Open source vs Closed…
3/great irony in frenzy for ARTIFICIAL intelligence––what’s acquired isnt hardware but HUMAN intelligence
-frontier of agentic Al not defined by model size-but what we can verify
-99% reliable agent degrades to 60.5% after 50 sequential decision tasks––each error cascading like cracks in glass
NVDA = 19% of that––and 42% of NVDA revenue comes from just 5 Big Tech co's buying GPUs:
Meta, Amazon, Microsoft, Google, Tesla
2/At recent lunch with LP who put Lux in business I talked about shift from consensus cloud inference (GPUs + datacenters + power) to on-device inference (memory + batteries)...
3/ This valued LP talked about CAPEX:
Meta, AMZN, MSFT, GOOG TLSA spending $560B by EOY 2025
-@anduriltech founder Palmer Luckey on @60Minutes
“The Future of Warfare”
-@eGenesisBio on @CNN with Sanjay Gupta
“Animal Pharm”
-new Lux Q1 2025 Quarterly Letter
2/ This is one of my favorite letters we’ve ever written
The theme is PARTNERSHIPS
-between man and machine
-between present and future selves, decision, companies
-between us and our founders of Lux companies
-between Lux partners ourselves
3/ word processor > spellcheck >grammar‑check > LLM “style‑check” if paragraph was birthed by human mind or statistical echo. We detect plagiarism but also something subtler—call it prompterism, prose coaxed from silicon’s
latent space rather than summoned from lived experience.
2/ The 🇨🇳CCP “2035 Science & Technology Vision” states unapologetically “original innovation is the sharpest blade.” coupling that declaration w/ vast subsidies, talent visas + procurement guarantees which have helped them take lead in 37 of 44 critical and emerging technologies!
3/ Upending American science seemed an impossible order.
Regularly copied and always envied, but never rivaled.
Constructed by visionaries like Vannevar Bush in the ashes of WWII + propelled by brilliant legislation like Bayh-Dole Act––we did the impossible: an open scientific enterprise that could simultaneously probe into the furthest frontiers while translating the most original insights uncovered into the most prosperous companies in the world.