#101 - Pablos Holman: Hacking, Deep Tech & AI

0:05Pablos Holman:Welcome to the Insightful Investor Podcast, a weekly series that seeks to share industry, investment, and market insights. We define insights as concepts that are counterintuitive, widely misunderstood, or underappreciated. In other words, unique ideas that you probably won't hear elsewhere. I'm Alex Shahidi, the host of the podcast and co-CIO of Evoke Advisors, a leading investment advisory firm. Learn more about our show at insightfulinvestor.org.

0:38Pablos Holman:Today's guest is Pablos Holman. He's a legendary hacker, an inventor, and a deep tech investor. We're going to talk about all those things today. Just a quick background, he helped launch Blue Origin with Jeff Bezos and co-founded Intellectual Ventures Lab with Nathan Mirvold. So a lot of history there. Pablos' TED Talks have reached tens of millions of viewers. And today he backs bold ideas through his venture fund, which we'll talk about as well. He's on a mission to make the future awesome by understanding the world's toughest problems and finding technologies that can solve them, which he shares on his podcast, The Deep Future.

1:14Pablos Holman:He also has a book, Deep Future, Creating Technology That Matters, that we can talk about as well. And these are exciting topics for me. So, Pablos, welcome to the show. Cool. Thanks, man. Let me go back a little bit. You grew up in Alaska. You're probably the first guest on our show that grew up in Alaska. And so what sparked the interest in technology and later hacking? Well, I was born in Alaska and then I got one of the first computers Apple ever made when I was like 10 years old or around there. So the thing about that is nobody had ever seen a computer where I came from. And so there was nobody to learn from.

1:58I had to learn by just taking it apart and putting it back together and, you know, crashing it and rebooting it. And so I learned a lot about computers kind of the hard way. And then I got so excited about that because there was nothing else to do in the wilderness. Um, so I, you know, really felt this excitement about this new technology and I could see how it could be helpful to people. And they were very, very leery of that notion, but eventually, uh, computers became useful in a lot of different ways and went a lot of places. And so my early career was in, in, uh, advancing computers. And then I sort of defected into deep tech later on.

2:41Pablos Holman:One of the things that you list as one of your titles, in fact, is as a hacker. What does it mean to be a responsible hacker and why is that role worth respecting? Well, you probably start out as an irresponsible hacker and then find out the hard way how to become more responsible. I think of hacking as more of like a mindset or maybe a learning style. You know, like I described, I had to learn by reverse engineering the computer. And so the way hackers learn is they just kind of try everything and throw out the stuff that doesn't work. And that's not very common. But, you know, most people are good at just like reading the directions and doing what they're supposed to do.

3:25Hackers are violating the warranty before they got the shrink wrap off. So they're just sort of approaching everything with a different mindset. And it turns out, you know, computers are this bottomless pit of puzzles. And so they're very attractive to that kind of mind. But the same brain that's good for hacking is good at invention. And so to me, hackers are very important because they're the ones who are good at figuring out what's possible. And you don't get any new inventions by reading the directions. You know, you have to get them by being very creative. And so that's what hackers are good for.

4:06And so even now, I might not be trying to hack computers anymore, but I'm trying to hack everything else in the world. And that's how I think about it.

4:13Pablos Holman:I guess there's an inherent curiosity that in some ways is born in you that makes it makes this an attractive endeavor. Yeah, I don't know if it was if I was born with it, but I think you, you know, the curiosity comes from trying to figure out what's possible. You know, if you only know things that other people are teaching you are possible or that you see other people doing or see around you, you know, that might be interesting, but it doesn't exercise your curiosity in the same way as if you're trying to go figure out what is possible. And maybe part of that is just that, you know you have to get sort of uh literate in something for that kind of curiosity to really go somewhere you know if you don't know anything about like i'm not i don't know there's lots of things i don't know anything about you know like uh you know i don't know anything about foreign languages or something you know i don't know anything about um yeah you need the foundation right yeah you need a foundation and that way then your curiosity has you know a context that it lives in so but you know for me that was computers i'd learned a lot about the computer it was you know it was possible to always just go to the next level even now i'm i'm still i'm whatever i'm 40 years into that or something and i'm still i'm just trying to go to the next level What's the next thing I can figure out?

5:48What's the next thing I could do? And so I'm always soaking up. Of course, I soak up everything else other people figure out, but that's informing me so that hopefully, you know, I want to try and figure out the next thing.

5:58Pablos Holman:Yeah, and I think part of it is having an innovators or futurist type of mindset where you're trying to be creative and come up with the new technologies of the future. So you want to learn what we've already learned from history, but look forward to what does that look like in the future? Yeah, you want to learn what's already known as quickly as possible so that you can build on that and go to what's unknown. Yep. So if we talk about hacking a little bit, what are some of the uncomfortable truths, the attacks you can't fully avoid if you're a targeted individual or company? Well, look, I think you got first the first sorting filter is, you know, are you being targeted?

6:41And most people are not being targeted. They're just getting caught up in the dragnet of, you know, ambient hacking. You know, once we find an attack, we're going to run it against every IP address on the Internet, see what falls in our lap. That's what most people are dealing with. That's your phishing attacks and stuff like that. whereas if you are a target and that means you know something about you is valuable enough that somebody wants to come after you then you have a different class of of problem to deal with and it can be very difficult um to defend yourself and so then you really need to break down well what you know who what what is the capacity of whoever's targeting me right so if your attackers or nation states, man, you're probably doomed, depending on which nation state, I suppose.

7:39Because they have the abilities a lot of times to get a hold of the latest and greatest attacks. And these are very valuable attacks because they can be used against people who don't know that the attack exists. If you don't know it exists, it's hard to defend against it. And so the kind of scale of and sophistication of cybersecurity between nation states is a game that most of us can't play. That said, you know, if you're not a nation state, you know, you're a corporation or you're a celebrity or something, a high net worth person, the attackers coming after you don't usually have access to the most sophisticated attacks.

8:25So their toolkit is limited to the the stuff we do know how to defend against. And so for people in that position, I think, you know, the, you know, this is a moving target. You're very unlikely to be able to figure it out yourself. You need to get help from people who play this game every day.

8:44Pablos Holman:So if you're an average listener and you're not a nation state, where are you most vulnerable to being hacked? In other words, what are some basic steps that cover maybe 80 % of the real world, real world risks and maybe even the extra steps. Yeah. I mean, the things that you hear all the time, use a password manager. That's number one. So you're not using the same password on multiple websites. That's really the most important place to start. Don't open suspicious emails and click on shit and that kind of stuff. No, probably don't install any more software than necessary on your computer or your phone.

9:23Probably using an iPhone is probably about as safe as you can get. I mean, it is the highest value target in the world, but also probably the most secure thing you could get away with using in day-to-day life. Those are the places to start. If you have a bigger problem, then I could try to give you advice, but it would change over time. So what you want is somebody who plays this game regularly. And by that, I mean, you know, people who are in the defense in cybersecurity business, you know, the first thing they're going to do is run system update, try to keep you updated. They're going to look for opportunities to maybe install some software that can monitor what's happening and look for any anomalies or any weird activity.

10:11And so it just depends on your situation, what level of diligence is required, you know, or is reasonable. The way to think about it, you know, we have this maxim in computer security, which is, you know, if you're being chased by a bear, you don't have to be able to run faster than a bear. You just have to be able to run faster than your friends. And that is really the job here. It's a war of escalation. You can never win the game, but you can easily lose, especially if you don't play. And so you really just need to get in the game a little bit, figure out where your risks are and try and do something about it, not be the low hanging fruit.

10:56And that is as good as you can get in general on this stuff.

11:00Pablos Holman:And effectively be running. If you're standing still, you're going to get caught. Yeah, that's right. So if we pull back the curtain a little bit, would you just walk us through how the hacker community works. In other words, walk us through this concept I've heard you talk about called zero day markets and that tension between disclosure versus weaponization. Yeah. So this game is pretty highly evolved at this point. And what's happening is, you know, any piece of software in the world, which could be Windows or Gmail or anything that you use, that's software that's getting written. The software is designed to do something for the user, But, you know, the people who are building it are just trying to make it work and, you know, fix some bugs, but add some features.

11:44And they don't really, you know, necessarily have time to think of all the deranged things that a hacker might do to their software. And hackers are really good at figuring out all the all the ways the software can be made to do things it's not supposed to do. And at the end of that might be give me your password or credit card number or Bitcoin wallet or whatever. And so the game is involves a lot of, you know, you could say the the attackers are trying to is you got hackers who are trying to just figure out what's possible in the US. Most of them are professionals. And, you know, the the job opportunities for them are so good that they're not trying to steal your credit card number.

12:30You know, fraud isn't a good business for them. But if you're in Eastern Europe or somewhere in Asia with nothing else to do and the law enforcement isn't too sophisticated about cybercrime, then maybe the best economic opportunity for you is to try and hack into people's computers and get their PayPal account or something. So that's what's going on. And once the hackers, what we call white hat hackers, these are the folks who are researchers who are discovering vulnerabilities. What they'll do is they'll publish them. You know, first, if I find a, you know, let's say I find a way to hack into Android phones.

13:12Well, the first thing I'm going to do is reach out to Google, which makes Android. And I'm going to say, look, I found this bug, giving you a heads up so you can fix it, send out a patch, run system update, keep people from being vulnerable. But in 30 days, I'm going to publish about it publicly. Now, the day I do that, everybody knows about it. And so that hack will get systematized by criminal hackers, you know, the attackers, and they'll go try and exploit every opportunity they can get out of it. That 30-day window in the middle is called zero day. It's a zero day attack because you could say even before the 30-day window, it's a zero day because I know about it, but Google doesn't.

14:00Android doesn't know about it. And so in that window, it can be very valuable. So some hackers, what they'll do with that is once I've got this zero day attack, I can go sell it. Now, there's kind of a black market for that, but the truth is most hackers would sell it to a broker who then sells it to governments around the world because they're really the only ones you can sell to without having to worry about some legal ramifications. intelligence right i can sell an attack to the cia but i can't go sell it to you know um general motors you know um and so that's kind of the the game that's being played most people never see this or would have anything to do with it but along the way that attack is very valuable while it's a zero day attack so that's worth a lot of money if i had a zero day on iphone that's worth millions and millions of dollars because someone could take that attack and then use it against the highest value people on earth who have iPhones in their hands.

15:11So that's the game. And then, of course, Apple doesn't want those attacks out there. It devalues their brand. It's risk for them and their customers. So Apple's trying to stop this as much as possible. And they're pretty good at it. But there are times when things are vulnerable and other times when they're less vulnerable. So there's kind of a weather report about that stuff.

15:32Pablos Holman:So basically, this community helps keep more people safe effectively. Oh, yeah, for sure. I mean, it's very advanced at this point. And there's a whole systematized process for sharing this information. You know, all the big companies work together on it. It's not something they don't try to compete on being more or less secure. If two companies hate each other, they're still going to share any information they find out about being hacked. Yeah, because it's the good guys versus the bad guys. And in that sense, they're on the same team. Yeah. You are a futurist and an inventor. How is inventing different from craft, even though both require skill?

16:16well i think uh a lot of people when you think about the people that uh are often celebrated you know we celebrate humans who are really good at something and that could be your sports ball heroes it could be you know actors or singers or you know djs or painters or whatever and these people are often considered creative but you know mostly what they're doing is what I would call craft. You know, they're perfecting a skill. They're getting really good at it. They're getting to the world-class level at their skill. But what have they really created? You know, at the end of the day, a small fraction of them are truly creating something new or something that is actual art, meaning art in the sense of like an advancement in their craft.

17:15So that's true. You could get into the Olympics and not be creative at all. You could be in the top 40 with hip hop tracks and not actually be creative. You're just doing a real good job of something that was already done before, maybe millions of times. And so I think we're a little miscalibrated on what creative means. And what's interesting is if you think about what does it mean to invent, there is no craft of invention. Really, it's got to be creative. It has to be new. And it actually has the additional frustrating requirement of having to be useful, or it doesn't really go anywhere anyway.

18:05So an invention, I think inventors are oddly like our most creative class of people. It's not a legitimate career choice. There's no like, you know, Oscars for inventors. There's no like, you know, most people can't even name a single inventor that's not dead. It's one of these things where I think society is a little miscalibrated. You know, we celebrate these folks who are entertaining and really good at their craft but we have lost the distinction between between art and craft between creativity and craft and and i think along the way we lost our we lost any relationship to our most important creative class which is our inventors and so that's what i'm trying to do is really find these people and celebrate them in part, but also try and support them and bring their inventions to life because that's where we get all of our new superpowers as humans come from new inventions.

19:12Pablos Holman:I guess one way to think about it is each of these crafts in some ways is like a game and some people get really good at playing the game. But every once in a while, somebody comes up with a new game that hasn't existed in the past and then it starts a new craft. For sure. That's exactly right. And I think it's important to find those people and support them and help them out. And I know they sound crazy and sometimes they look crazy, but you got to nurture them along because they need the help. Yeah, because we're not going to advance as humans without more invention. That's for sure. Yeah. Would you define deep tech in simple terms?

19:53So when we talk about deep tech, a lot of that comes from trying to distinguish what we mean from the technology that people already have in their mind. Most people think we live in a world full of technology. And the truth is, we just live in a world full of software. Almost all the technology we've developed in the last couple decades is just software. We're just aiming software at more and more things. And our big tech industry, when you really pick it apart, what are they doing? They're just doing software. Their big wins are things like disrupting yellow cab with software, disrupting or reinventing hospitality or couch surfing with software.

20:43It's not really, there's no new technology there. They're not inventing something. They're not truly advancing the capacity for humans. They're not bringing us the superpowers that we need to go to the next level. So deep tech is the opposite of that. Deep tech is about looking at what technologies we can bring to life that could help us solve some of the biggest problems in the world. And by that, I mean, if you think about food or energy or sanitation or construction or mining or manufacturing, these are all things that every single human on earth relies on. and you're not going to improve them dramatically with software.

21:32And so by bringing other technologies to life, maybe we could make any of those things 10 times better or 100 times better. And so that's what deep tech is. And it involves a lot of robots and lasers and nuclear reactors and all the stuff that scares other investors and other people working in technology. But that's where the real opportunities to make a big difference are. So that's what deep tech is.

21:54Pablos Holman:So it's another way of saying that the other tech makes incremental improvements, but deep tech can do 10x. They used to call it shallow tech. Okay, shallow tech. Shallow tech is, it's not that it's incremental. I mean, you could, you know, if you take software into a business that never had it, you can make a big improvement. And, you know, look, I already told you, computers were my best friend in childhood. You know, like I love software, but we've kind of gotten drunk on software and, you know, stopped working on everything else. And now we've run, I think we've run its course on software and we've had to reinvent everything for the web.

22:36And then we had to reinvent it for mobile. And now we have to reinvent it for AI. But it's still just going after the same class of problems that software is already aimed at. deep tech is a chance to course correct and go after all these other big industries, big problems, things that Silicon Valley has been ignoring.

22:55Pablos Holman:I know you focus on helping get deep tech out of the lab and into a garage to become real products. Would you talk about that? Yeah. I think the exciting thing for me is finding these inventors who maybe are working in a lab or a garage with crazy hair and a DeLorean or something, but they've got a real breakthrough. They've got something that could make a difference. I'll give you some examples. I mean, that's the easiest. One of our companies has been working on making cargo ships that are sailing, so they don't need any fuel. And the shipping industry burns half its OPEX. So if you could make a cargo ship sail in the wind with no fuel, you'd save a lot of money, like billions and billions of dollars a year, hundreds of billions a year, spent on fuel in this industry.

23:50So why wouldn't we do that? I mean, sailing's been working since the Mayflower, at least. We know it works. So why is the industry burning this nasty bunker oil to move crap from China to Los Angeles. So that's an example. It's not even very deep tech, but it's an industry that's hundreds of years old. Nobody's getting around to reinventing how they do things, but we can. And so we will. And it'll make things a lot better. And that industry is massive. So we try to find inventors like that, help figure out if their idea can really be made economical? Can we do it cost effectively? Can we do it on a venture capital time horizon, which is kind of in the five to 10 year window at the most?

24:41And can it really be a big force multiplier? Can it change something meaningfully? And that's what we try to do. And we do lots and lots of them, you know, so we will do hundreds of these things. And so every day I see all kinds of amazing breakthroughs. It's really cool.

25:04Pablos Holman:And I would think there's each of those individually might have low odds of success, but huge impact if it works. So that's why you want to spread your bets. What we do is unique because we really do invest in the technology and all the investors coming after us are going to want to see, you know, contracts and customers and revenue and unit economics and all these things worked out. So we invest very early. But the idea is to get them shaped up so that they can be attractive to other investors down the road. And yeah, we know that there's a lot of risk when you invest in something this early.

25:41All kinds of things can go wrong. The thing you are doing could get outlawed. The team could have a falling out. There's just a lot of possible failures. So we offset that risk by doing lots and lots of them.

25:58Pablos Holman:I mean, to me, it just sounds like fascinating work because you're probably constantly exposed to new ideas that you didn't even think about. And then once you're introduced to it, you realize, wow, this actually makes a lot of sense. That's right. And I think for us, the sweet spot is really to try and go in and understand a new technology well enough that we could believe in it or invest in it. And not everything, you know, succeeds, but or, you know, not everything gets to the point where we could invest, but a lot of things really can. And a lot of time, we're not usually wrong about the technology.

26:38Sometimes we're wrong about how long it's going to take or how much it's going to cost in the end or things like that. But usually we're right about the technology by the time we invest. And then hopefully we can turn these things into real businesses. When we invest, it often looks like crazy high tech stuff. But the truth is, the day that first ship sails, it's just a cargo ship moving cargo. Nobody has to think about the tech anymore. And so, you know, that's the goal is to get these technologies to the point where they're not, you know, to where we take them for granted, like everything else.