Michael Dempsey is the Managing Partner at Compound, a thesis-driven, research-centric investment firm.
We spent two hours talking through the past, present, and future of a bunch of topics in technology and investing.
Michael started investing in AI in 2016. He was the first investor in now-unicorns Runway and Wayve. But he hasn’t done much AI investing over the past few years. We talk about why, how AI will intersect with robotics, the future of things like crypto and synthetic biology, and why so many deep tech companies mess up economic value capture.
We also talk about what it means to be a thesis-driven venture firm, Compound’s research process and how to replicate it, what private and public market investors can learn from each other, advice for anyone starting in venture today, how to build a brand in VC, and why venture firms don’t compound and actually decay over time.
Thank you to Kevin Kwok, Andy Weissman, Cristóbal Valenzuela, Blake Robbins, and Smac at Compound for their help brainstorming topics for this.
Special thanks to Ramp for supporting this episode. It's the corporate card and expense management platform used by over 40,000 companies, like Shopify, CBRE and Stripe. Time is money. Save both with Ramp. Get $250 for signing-up here.
Timestamps:
(4:09) Leading Runway’s Seed in 2018
(10:15) Short-term ARR vs long-term sustainability
(16:20) Compound, a research-centric investment firm
(18:41) Investing in bio, crypto, real-world AI, and healthcare
(23:58) VC firms do not compound, they decay over time
(29:27) How to build a research-focused investment firm
(41:30) Current state of venture slop
(45:43) Building a brand as a VC firm
(52:31) Investing in Wayve in 2016
(58:53) Why deep tech companies screw up economic value capture
(1:04:57) How to approach massive funding rounds
(1:08:36) Should VCs “play the game on the field”?
(1:15:33) Compound is a forecasting firm
(1:21:37) Advice for young people getting into VC
(1:26:48) Public market investors underappreciate narratives
(1:31:20) Michael’s crypto thesis + real use cases
(1:40:07) Why crypto hasn’t seen mass adoption yet
(1:49:00) Humanoid robots won’t work
(1:54:42) Should you make a hyped launch video?
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