I’m really excited to share this interview—Mike has been a mentor, sparring partner, and friend for a decade. He’s one of my favorite people to talk to about the future, especially the stuff on the fringes. I’ve included a few favorite excerpts for newsletter readers below, but the full episode is available here, Spotify, YouTube, and podcast platforms.
“Alpha” (14:53)
JD: What is alpha?
MD: The ability to have excess returns relative to what the overall market would give you. And in, in, you know, in a framing, you could just say to have something that a level of intelligence that is, or, or a view or something that feels, um, excess and asymmetrically skewed to the upside.
JD: Do you think thinking about alpha, whether explicitly or implicitly is important for people who aren't investors?
MD: Yeah. Um, mostly because, and I think everyone does that anyways though, because they think about what makes them special, or they think about what makes them unique, and, or what makes them not. and I think people struggle more and more culturally with not being unique in some way. and I think we see that across a bunch of things. and so I think, I think about kind of consistency as maybe the contrarian thing that you could do. Which is like, can you... There's a famous quote we use a lot. It's not famous, actually, but it's a quote we use a lot, called the, "if you want to understand how something works, study it when it's coming apart." And the idea is, in these areas, they cycle up and down in hype and consensus, whatever. And to truly have a contrarian or whatever, some structural advantage, the thing is to understand the counter cyclicality and be there the entire time. And so you can exploit being there early, being original. You can exploit counter trading the market and thinking something is interesting ahead of other people.
And then, when it's really interesting, you can exploit not being a part of it, and just let the world go and still learn, but you don't have to lose money doing it. You don't have to spend too much time doing it. And then when it cycles back down inevitably, you'll have compounded all these learnings by just continuing to be there.
False inflection points and continuing to have conviction anyway (21:54)
JD: In the, in the broader inflections points kind of idea, you talk about false inflection points, put simply this notion where sort of, it seems like the wave is coming for a given technology and then you're too early. So a classic example of this would have been like VR when you've written about this, when Facebook bought Oculus, it seems pretty intuitive to me that there's like a pretty clear science project and not science project curve for certain areas, let's say. At times self driving cars, maybe bio, but there are also other areas where it's like much more hazy. I'm curious if there are any, maybe, maybe to take the VR point right now as we're at an interesting point post post vision pro. And then more broadly, are there any other areas that you think are more likely to be false inflection points today?
MD: I think I have a more…. I think this is like my maybe my most smooth brain approach to anything in life as you know I really hate that general framing or like maybe like left curve right curve approach.
I Think that the beauty of what I do is if I believe in a future I should just continually bet on that future and keep losing money until I don't. And so I'll start with that framing which is if you fundamentally believe something will happen As long as you're not wrong by like 40 years, you should just keep doing the thing. assuming you make other good decisions around that thing.
AI Therapy (39:11)
JD: You've talked about like minimum viable intelligence in the AI context. I'm curious if there are any areas, and this has to do a little bit too, with, uh, the skeuomorphism stuff and so on, like, or, or even the notion, like we just stopped at ChatGPT 4, or GPT 4, or Claude, whatever it is. Are there any areas specifically that you're particularly amped on from a product standpoint?
MD: It's therapy. I'm obsessed.
JD: Huh. Say, say more. And this is theoretical, or you're actually doing this?
MD: I've tried everything. I've tried all of them. I've tried all the apps. I am obsessed with finding someone to, who is more creative than me to push the limits on what this would look like in a non skeuomorphic way…
Today therapy is this super synchronous thing that you show up to for an hour, 45 minutes, whatever. You have to be in the right state of mind to do it at that time. you, have pretty minimal context with your therapist. I have been seeing a therapist weekly for a long time. Still though, like last week she was like, I never knew that about you. And I was like, great. Tens of thousands of dollars later.
And I think that those, there, and there's more and more things that will signal, what matters, what's going on in our head. And then lastly just this idea that, our brains are more chaotic than ever before as whatever quote you had read of mine from before and that probably means that rumination happens at far different times than humans are available And so you could theoretically start to spin up like a late night therapy service that's maybe just an interesting business where you just have people in a different time zone service people in New York City or whatever when people are at home at 11 p. m. freaking out about something.
So I think there's all of that, and there’s just this idea that there's all these, I think that people think about their mental health and their conversations as this almost always on progressive thing. And you kind of tap in and out of, you tap in and out people into that. And I think about this with my friends, a bunch of my group chats, like you're in some of them with me, like are, you pop in for 15 minutes, you talk about something really quickly, everyone dissolves.
I think a lot about the product mechanism of how you can share your location for an hour on your phone. and I kind of wish you could share your group chat for an hour and maybe you pull in like your therapist, your AI therapist and your other friends and they all interact with it. And I think there's a lot of, there's some version of these things and it's not, probably doesn't end up being called AI therapy. It's probably called something else. It probably has some different mechanism, but I just think it's an undefeated trend that people want people to be inside their head.
Spending Money on Healthcare (1:09:13)
MD: I think that In general, when we think about how us as millennials or our parents, anyone, how much we spend in America as a percentage of our income on our making sure we don't die, it is meaningfully lower than it should be. And I was talking to a friend the other day whose dad has had a heart attack. One of our other friends, dad randomly passed away last week, and the main thing I was telling him as he was asking all these questions about how to help his parents, is I was like you should think about what percentage of your net worth you'd be willing to spend or of your annual income or something
JD: To preventative care.
MD: On preventative care. To not to not die or for your parents to hopefully, you know live better.
JD: The there's always been way more pop science, Huberman type stuff. Is there a specific or general frame, specific person, publication, etc, or general frame that you would recommend people like at least go to If you're like a level 7, people are other people are level 9 or 10. Somebody who's a level 1, like what is the sort of basic way to get a little smarter on this type of stuff or maybe even be more up to date?
MD: Yeah, it's really hard. I think the beauty about all this stuff and this is why we're so obsessed with biohacking, is that you can effectively go to something like consensus.app, which is this research paper search engine. And you can ask a natural language question and it'll synthesize all the research for you and tell you what's good, what bad, and you can put in papers into ChatGPT, Claude and ask, explain this to me like I'm 12. you can have an understanding of science in whatever degrees of difficulty you want for the first time ever.
Episode Description
Michael Dempsey (Website, X) is an investor, writer, technologist, and Managing Partner of Compound, an early-stage, thesis-driven, research-centric investment firm. Michael and Compound invest in seed and pre-seed science and technology companies in categories like healthcare and biotech, machine learning and AI, robotics, and crypto. He writes prolifically across a range of topics and I've always admired his ability and tenacity to think about the future and paint an optimistic, yet grounded view of where things are going. He's deeply reflective and wise, and I've known both his dedication to craft and the size of his heart for nearly a decade as a friend.
Timestamps
(0:00): Technology, Science, and Cultural Change
(08:37): Inflection Points and seeing the present vs. predicting the future
(13:00): Being original and/or contrarian; what is "alpha"
(16:58): "Post-science projects"
(21:54): Technological timing and false inflection points
(34:44): Heroes, Talent, Elon, and Zuck
(45:30): Founders of the future will spike on creativity
(49:46): Fighting decay
(55:53): Future shock: "time is collapsing"
(1:06:56): The future of humanity and our biology
(1:12:16): Bryan Johnson and biological experimentation
(1:14:48): AI Therapy
(1:19:38): Vtubers, digital influencers, and pseudonymity online
(1:26:19): Authenticity online: "Being known is being loved"
(1:31:57): Discipline, Curiosity, and Writing
(1:36:29): Inertia and Friendship
(1:44:44): A life of Craft
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