Move Over Software - the Deeptech Era is Here.

Venture

Hardware dominated the 1900s.

We developed as much as we could with human grit and manual calculations. The first integrated circuits. The first code-breaking computer. The first jet planes, stealth fighters, and reconnaissance planes. We pushed the limits of our materials and mechanical design skills until we nearly exhausted the hardware.

Then came software, which ate the world with the internet in the 90s, mobile in the 2000s, and now with the AI craze. Among the top seven companies by market capitalization, six are now heavily software: Microsoft, Nvidia (sort-of), Apple, Google, Amazon, and Meta.

And for the past 20 or so years, there was nowhere else to be but in the digital world.

Back then, if you were smart and ambitious, you grew up hearing about Google's Larry Page and Sergey Brin, Amazon's Jeff Bezos, or Facebook's Mark Zuckerberg. You were propelled by the waves of software. And it pushed you to end up working on software. It's where people have been winning your entire life.

But, if anything, the software era is coming to an end.

I'm growing up with SpaceX's Elon Musk. With Anduril's Palmer Luckey. With Neros, Terraform Industries, Hadrian, Varda, Array Labs, AstroForge, Fuse Energy, Commonwealth Fusion, Atomic Semi, Cortical Labs.

The past few decades of pure software have advanced the world of bits to a point where it is possible to leverage bits to impact the physical atomic world, which is much more lucrative. The coming years will increasingly see the rise of bits + atoms ventures.

In retrospect, it's almost disheartening how the brightest minds of a generation have focused on optimizing ad clicks, e-commerce conversions, and developing more B2B SaaS productivity software when we could've been working on what deeptech is accomplishing now.

For starters, we're looking at nuclear fusion technology, re-useable rockets, and engineered drug compounds. Just achieving these three feats of engineering would mean infinite energy (which will enable a whole host of other technologies), commodification of space, and the elimination of virtually all illnesses.

The era of deeptech is here, and it is here to stay.

From here on, we will increasingly see deeply technical, big, and risky projects. A major critique of deeptech is that it takes too long, or is too capital-intensive. Both are false.1

Finally, I leave you with two notes to consider.

  1. First, what deeptech companies pursue is too important for our future to ignore.
  2. Second, it is a matter of when, not if, these technologies are developed.

AstroForge may not be the one to mine asteroids. Fuse Energy may not be the one to create the world's first fusion plant. Cortical Labs may not be the one to build the first biological computer.

It may not be them, but it will come. These technologies will manifest, and they will soon.

To venture capitalists: I hope more capital will be deployed to support America's techno-optimism.

Yes, you will lose many.

But if you win, you will win big. Bigger than ever. The only mistake now is to play it safe and fund things that don’t matter.

Footnotes

  1. Traditional and deeptech companies are similarly capital intensive, while deeptech companies exit 10-25% faster than their traditional counterparts. Deeptech companies also have 2% to 5% odds of a $250 million exit, while SaaS and FinTech sectors have 1% to 1.5% odds. Betting on Deep Tech