"Do not seek life unlimited, only a lifetime dedication"--36 Krypton interview Dan

It was impossible to associate scientists with venture capital until we met Professor Zhang. Just like knowing Paul Graham, you can't connect a hacker to a painter.

Professor Zhang's academic achievements in physics had nearly reached the top after winning the Franklin Medal this year, and in 2007, Zhang discovered that the "Quantum Spin Hall Effect" was "one of the ten major scientific breakthroughs in the world" by the magazine "Science". Based on his groundbreaking research on topological insulators and quantum spin hall effects, Zhang has taken almost all the heavyweight prizes in the physical world. "It's only a matter of time for him to get the Nobel Prize," his mentor Yang Ning said.

But Professor Zhang did not wait for the honor to come, but across the border into a new field. In 2013, Professor Zhang and Dr Yanjia co-founded Denver Capital to focus on the most disruptive innovation technology and business model in the United States, linking the US to innovation and the Chinese market, at the heart of Stanford University. "Dan" both for Stanford (and translated to Stanford), and "naked loyalty" meaning, "Hua" from China.

The first lesson from YC's current head, Sam Altman, at Stanford's "How to Start a startup," is that 30% of startups can be learned, and 70% are at the top. More than once, many senior investors have stressed that investing is more of an art than a replicable success. Therefore, we also see that every 5 years, there will be more or less a shuffle of the investment community, and the new fund always has the chance to win.

Investment is a kind of market-oriented behavior, you bet is not the team, not the product, but their own expectations, early investment risk and randomness of the large lead to a higher probability of failure. The way in which science requires rigorous deductive reasoning, and thus the ability to predict and verify, seems to be completely contrary. Investing with scientific thinking means that there needs to be a general principle as an investment methodology, just as the axioms of Euclid's "geometry" can still guide modern statesmen and thinkers in drafting the declaration of independence after millennia.

Franklin, as a scientist, entrepreneur, thinker, politician, as one of the drafters of the Declaration of Independence, with scientific thinking of the nation, with scientific thinking of the world. If scientific principles can govern, why not invest? Franklin's spirit and deeds not only encouraged Professor Zhang's pursuit of science in the childhood, but also inspired Zhang to invest with scientific thinking. The highest requirement of venture capital is to have the attitude of "living in the Future", which is actually the way of thinking that scientists are best at.

Professor Zhang said in his acceptance speech that I was moved "the medal can make Franklin's spirit in my knowledge on the road always accompanied." Scientific life is full of romance of adventure, and scientists ' social mission is far more than science itself. Do not seek life endless, only a lifetime contribution. As a scientist, why should we start a venture capital fund? What are the investment philosophies of Denver Capital? What is the principle of scientific investment? Let's talk to Prof. Zhang about his views on science, investment, and the future.

Professor Zhang and Dr. Yanjia

First of all, Professor Zhang won the Franklin Medal! As a "physicist", in exploring the complexity of the universe and material identity, how can you think of investment?

Professor Zhang: First of all, Franklin has always been my idol. As a scientist, politician, thinker, entrepreneur, politician, and as one of the drafters of the Declaration of Independence, many of the things he does seem irrelevant, and their nature is linked. The United States was a fugitive colony, in the early days of the war of independence did not get any help, Franklin is using his scientific reputation, in the diplomatic won the support of France. As a politician, he contributed the most important sentence of the Declaration of Independence "We hold these truths to be self-evident" (we think these truths are self-evident), that is to say that the rule of law is also the first principle of science, It is necessary to have a universal and self-evident law to guide the construction of the state and the legal system. The national system developed under the Declaration of Independence is hundreds of years old, carrying forward the idea of separation of powers and becoming a classic template of modern politics. If scientific principles can govern, why not invest?

In addition, my early years also have a lot of angel investment experience, the founder of VMware Diane Greene and Mendel Rosenblum is my family's neighbors. Two of our kids got together to play football. I was also interested in talking about his company, VMware, and felt that the company had room to grow so that I became an early investor. In fact, physics and computer science are closely related, many computer science algorithms are derived from theoretical physics. The algorithm, like Google's page rank, looks very complex on the surface, but can eventually be grouped into a mathematical formula that has been thoroughly studied in physics. If I had known page rank and the mathematical principles behind it, I would have not hesitated to invest and support the two fledgling students. This has strengthened my idea of investing through scientific thinking. I am also convinced that a broader view of the world can make my teaching and research a higher level.

Many domestic partners know that Professor you only know the identity of "scientist". Few people associate "scientists" with "investors", and do not know where the similarities and differences between doing research and investing are. Physicists are often more able to see the nature and identity of things, investment is also a game of uncertainty game, can you tell us professor you as a physicist's investment philosophy?

Professor Zhang: The biggest problem that human beings now encounter is the rapid development of the knowledge system in tree form, the longer the tree, the greater the knowledge of human beings is more and more complex, but the problem is different branches of knowledge in different fields, want to communicate with each other very difficult, personal knowledge of the system more and more in-depth, But there is little understanding across the field. There is an old saying in China "insiders", which is also the challenge of our times and the opportunity of our times. The scientific principle is to go back to the original point, once we can go back to the root, or several important nodes, we can see the above foliage, this is the opportunity of our times, especially Franklin such talent opportunities.

One of the best examples in Silicon Valley is Elon Musk. Elon Musk, who also studied physics, once said: "I solve all problems with physical thinking, and physics teaches people to reason and think with the first principle rather than the simple analogy." "The thinking framework of physics has led him to create the Internet payment company PayPal, the aerospace technology company SpaceX and the electric car company Tesla in just 20 years. The things he does seem completely unrelated, but this is the deductive of science. Why do we admire Einstein because E=MC2 can explain the principle of small to large atoms to the universe.

In our time, I think people who can read the nature of the knowledge system can seize countless opportunities. This is the deductive thinking (deductive reasoning) that science gives us. So our philosophy is to make use of scientific ideas to invest, the idea is to find both to meet the simple, ubiquitous two characteristics of the technology and products. At the same time, we can see the relationship between different areas, can give our portfolio companies they do not see the synergy, can really grasp the source of power from this era.

But Professor, don't you think that investing is in some way contrary to scientific thinking? First, the results of investment are basically impossible to predict and demonstrate. It's like we'll never be able to fully predict stock movements through modeling. But what science requires is a rigorous argument that predicts the future by the results of the argument. The process of investing is controlled by countless random factors, and it is because the investment is speculative in many cases. But science does not allow a little speculative existence at all.

Professor Zhang: Science has two main directions, one is to put various forms of matter, decomposition to the most basic components. Another is to use these most basic components to construct different states of matter. The discovery, for example, of my award, is the discovery of a new state of electrons. But this is a very difficult process, is a very large data deductive reasoning process. For example, I have this glass of water, there are about 10 of the 23 water molecules, if you want me to predict the trajectory of each molecule, this is not possible. But we know that every molecule in it is doing random Brownian motion, but when there's a lot of molecules, they have a new pattern in statistics. So we can predict the state of water in different environments, knowing that ice and water are two different states of the same molecule.

This is also an investment in the portfolio of a concept, if only to invest in a company, it will be difficult to succeed. But if you have a portfolio mix, you can reasonably hedge the expected return and risk size. But the direction of our portfolio is not random, the portfolio is based on our understanding of the tree of knowledge, we have to have enough vision to pick the branch that we identify can grow, and then within this branch, we have to have a reasonable and sufficient portfolio collocation. This is what we often say is different. When our portfolio is healthy enough, the random probability of a single investment offsets each other, making the overall probability of success higher.

In addition, we have a time factor for predicting the future, such as you let me predict the trend of the stock market tomorrow, which I can not predict, but we are all determined to know what will happen in the solar system in 4 billion years, the solar system will certainly perish, this is to determine the predictable. So at different time scales, we need to have different analysis, what is predictable in this time period. We know that many of the things that are written in science fiction may eventually come true, but when we do, it's a question of investing. In addition, I have a lot of confidence in the development of the network, even in the early days. Why the confidence is very simple, because the human brain is a network, the network of this interactive mode, the way information is produced, is the most consistent with the human brain intelligent principle.

So the investment and the science is not contrary, in a sense, scientific thinking is always guiding the theory of investment. "This is the certainty I have into the uncertain world". The inevitable law of historical development is that scientific thinking will guide economy and investment.

Since the revolution in information technology, especially the advent of the Internet, two things have been done: accelerating the generation of information and accelerating the interaction of information. The density of information has reached an unprecedented level. But we also have, unlike previous revolutions in science and technology, the innovations in this technological revolution have been confined to the field of information technology, but the industries that are closely related to human life, such as transportation, living environment, diet and so on, have not changed significantly 20 years ago. The classic word is Peter Thiel once said, "We wanted flying cars, instead we got 140 characters" (Twitter requires no more than 140 words per message). Does that mean that the acceleration of our innovation does not actually increase dramatically, or maybe even a slowdown?

Professor Zhang: We need flying car, but I think 140 character this is what we need in this era. If a person can say everything in 140 words, then this is a very powerful ability. Franklin often used a simple phrase in his newspaper business. Complex current affairs environment, even write concise and clear advertising words, give journalism to hereafter the social function of advertising, so that the revenue of advertising operations to become one of the financial resources of the media. So I used to say that Franklin was the inventor of Twitter. The abstraction and enrichment of knowledge is a very important trend and ability, which is also an important ability in human evolution, and if I cannot distinguish between human faces and Tiger faces with simple features, then I cannot survive. So every time you can abstract complex information, our brain produces a sense of beauty and pleasure.

On the other hand, in fact, twitter,facetime,wechat and other products appear, actually shorten the distance people. People want to flying car is to do, is to go to another place faster to chat with people over there, now that these products have achieved this effect. So the advent of the internet has actually changed people's view of time and space. People used to measure the distance between people by a straight line between two points in Euclid. Now people use "network distance" or degree of connection to measure, so also redefine the concept of density. Ancient human progress has been associated with the density of energy, from the energy density of the sparse hunting behavior, to the relatively intensive cultivation of energy, the population density also increased correspondingly, this is a significant progress. Modern human progress and the density of information related, and the advent of the Internet is to greatly increase the density of information, but also to the density of the population has a new change, this is a new time and space rules, which also led to the emergence of new science.

Good venture capital will not follow the trend, but create the trend, which we have seen in many successful venture capital institutions. But how to do this, in addition to the original vision, more need to live in the future attitude. Professor Zhang you think as an investor, in what way should be able to "live in the Future", what is your vision of the future?

Professor Zhang: To be able to see the future, we must first look at history. I would like to pass a historical story to illustrate how exciting our time is now. An astronomer called the first Valley, who spent his life accurately documenting the orbits of many planets, was the data base of Kepler's subsequent discoveries. Kepler, as his student, began to have a huge amount of data to start with. But the clever Kepler came up with a "move in the quiet" of the coup. By taking the data every 356 days, the Earth returns to its original point, moving in a static measure of the Martian elliptical orbit on Earth. It was Kepler's discovery that was used to prove the correctness of the theory and the foundation for Newton's theories in the future.

Copernicus era, there is no large amount of data, can not prove the current. The era of the valley, only large data, no Kepler, people still do not know how the planets are moving. We should be at the time between the valley and Kepler: New data is produced in a form that produces a lot of data and not enough data. When the data is to a certain extent, we need a genius like Kepler to interpret the data and see the rules, which will usher in a new era, and Newton in New age. This is the future in my eyes. So to live to the future, is to be able to recognize, what is the phenomenon of the individual, what is collective action, what is the essence of the system, so as to not be subject to the random factors of the individual to see the future direction of the system. In addition, VC in the layout, but also to see the time coefficient, each different time scale should have different layout and investment strategy.

Denver's LP has a lot of domestic technology giants. Recently, because of the high value of the project, capital expansion, the VC industry on the "venture into the cold winter" argument, so more and more domestic capital into the Silicon Valley. In Silicon Valley we have also observed that early project valuations have multiplied, and many Silicon Valley VC has begun to warn of bubbles. In fact, we all know that there is no capital, there is no "bubble", the bubble is more of a capital bubble, technology itself is spiraling upward development. But once the capital bubble expands excessively, it will eventually endanger the development of the whole technology industry chain. What do you think of the "bubble theory" of VC at this stage?

Professor Zhang: There are two possibilities for the development of bubbles, some of which are inflated to a certain extent, and sometimes bubbles grow to a certain extent as new sustainable phenomena. If I were to analyze the phenomenon of bubbles, I would first analyze the bubbles in terms of the size and number of bubbles to see if the distribution was exponential or reciprocal. If this distribution is an exponential function, the bubble is a very concentrated large bubble, the exponential function of the integral is limited, this situation bubble is more likely to burst. If the reciprocal function, the description is a long tail distribution, indicating that there are some large bubbles, a lot of small bubbles, the integral is infinite, then this may be a stable further development of the State. We take the water molecule bubble said, when to a critical value of nearly 100 degrees Celsius, we see the bubble distribution should be shown in the following figure of the distribution of long tail, then a little higher, water into steam, become a myriad of small bubbles. This time the bubble becomes a new stable state, the water will be able to maintain the temperature of 100 degrees has been boiling.

The bubbles that we see now, including innovation itself and capital distribution, if all are focused on fast projects in a handful of areas, are all scrambled up, which is likely to be a bubble. If the so-called bubbles of the future can begin to be distributed in a large number of projects in other fields, then this development is a steady development,

We continue to use water molecules as analogies, and bubble represents a new thing. Water molecules in the bubble is relatively sparse, in the liquid water molecules are relatively dense, so the new thing is certainly relatively sparse and is surrounded by traditional things (liquids). Therefore, the phenomenon of bubbles is also very worthy of attention, it may be a harbinger of new states.

Denver Capital in the Silicon Valley Chinese circle is very feeling VC. This sentiment should come from the investor's mentality that the project does not have short-sighted arbitrage, should also come from the fund's want to complete the mission, this from the Denver name can be seen. What is the significance of mission and sentiment in the process of entrepreneurship or investment?

Professor Zhang: My feeling of doing research, is the most original curiosity, not to study the results of research, but really enjoy the research process that slowly find the nature of the law of Pleasure. Investing, too, is not investing in the pursuit of economic fast, in order to capture the next big trend in this era. In this sentiment, will succeed. And the feelings and ideals are best to gather excellent investment and entrepreneurial team. Feelings and mission is also a manifestation of vision, thinking way. When we examine the entrepreneurial team, we will see the team can not see the overall situation of the vision, there is not enough feelings and patterns of view, will be the focus of the team can quickly learn to quickly integrate the "knowledge tree" ability, but also to the team's thinking methods. It's easy to judge a team's ability to execute, and when all teams are performing on average, these are the biggest factors that distinguish the team from the team.