58. Navigating the Proximity Revolution & The Future of Global Industries | Robert C. Wolcott

Karthik Chidambaram: Hello, everyone. Welcome to a brand new episode of the
Driven by DCKAP podcast. I'm your host, Karthik Chidambaram, CEO of DCKAP.
We make systems talk to each other for distributors.

Today, I'm joined by Robert Wolcott, Co-Founder of Twin Global and adjunct
professor of Innovation at the Kellogg School of Management and at the Booth
School of Business.

Rob has recently authored and released a new book, Proximity, available on
Amazon, where he explores radical shifts in production and service delivery
driven by AI, 3D printing, and more. He is also the Co-Founder of an
advisory firm, Clareo, is a board member of three companies, and is a
venture investor in over 30 companies, many of which are leading in the
proximity revolution.

Rob sees his mission as helping people envision the future and find their
places within it. Rob, it's a pleasure to have you today. Thank you for
joining the Driven by DCKAP podcast. I'm excited and looking forward to this
conversation today.

Robert Wolcott: Thanks, Karthik. Great to be here.

Karthik Chidambaram: So to start off, Rob, you know, you grew up in Chicago.
I went to school there as well. I'm just curious. I mean, I love the Windy
City. Tell us about your early days in Chicago, and how did you end up at
Kellogg and Booth? Also, how did you get into innovation and
entrepreneurship?

Robert Wolcott: Wow, well, there's a long story there, but rather than
boring all your listeners, I guess I'll go back to the pivotal moment. I
actually remember the moment in my childhood when I decided I wanted to be
in Innovation. I didn't know what I was going to do. I had no idea. I barely
knew what it meant. But I remember when I fell in love with the field.

So we were living in Naperville at the time. And just to give people an idea
of how old I am, at that time, there were 24,000 people in Naperville. Of
course, now it's like 150k or so. And I went, I was in the school library.
Because I was one of those kids who actually went to the library, you know,
on my own initiative.

And I checked a book out called ‘American Heritage’ illustrated book of men
and their inventions. It was a great big book with lots of texts, but also
pictures and diagrams and things. And it was a history of the industrial
revolution. And I was hooked. And I checked it out as many times as I could.
I then kept the book after they wouldn't let me check it out anymore.

The librarian called my mom. I got in big trouble. So I mean, I was so
transfixed by technology and innovation and what happened during the
industrial revolution. And, and at that moment, I told myself I'm going to
be in this innovation thing somehow. I don't know what it is. Engineer,
entrepreneur, designer investor. Professor? I have no idea.

Fast forward, I'm at Northwestern as an undergrad getting my history degree
in European and Chinese history. History is my favorite subject. And I meet
a new professor who just retired from a storied career in industry, Don Fry.
He retired from a CEO role at Bell and Howell, which was a fortune 500 at
the time.

When he left, it was on top of the world. He, they had just transformed the
company driven through disruption before we even had a word for disruption
and, and gave his investors a 16 to one return. From the time he started as
CEO to the time he retired, I met him as an undergrad and I said, I want to
work with this person.

And so I had the, as you might guess, being a history major as an undergrad,
after I graduated, I had to go to school at night to study math linear
algebra differential equations, physics, all the things you need in order to
apply for an industrial engineering program when you started in history.

And so then I did my Master's PhD at Northwestern in Industrial engineering
and, and through that process, I met some faculty at Kellogg. They were on
my doctoral committee. They soon somewhere along the line, one of them said,
Hey, would you like to teach a class? You know, and replace me for a
session. I said, yeah, all right. And it kind of went okay.

I didn't screw it up too much. They asked me to come back. Then they asked
me to create my own class and it kind of just got out of hand. Cause I guess
the last thing I'll say is. As with many things in life, I didn't plan it. I
didn't start thinking I was going to become a professor. In fact, I was
never looking for a full time academic role and I've never been full time in
an academic role, always part time.

But I- Karthik, I love universities, but I also couldn't imagine being full
time because they also drive me nuts.

Karthik Chidambaram: How old were you, Rob, when you went to the library,
started reading the book on the Industrial Revolution?

Robert Wolcott: Well, that would be 4th grade, so what would that make me,
9, 10? Wow. Something like 9 or 10, I don't know, you can look up the math,
but it was 4th grade.

Karthik Chidambaram: That's very interesting. So, in fourth grade, you kind
of knew that you wanted to get into innovation, but you didn't know what the
path was.

Robert Wolcott: Exactly. That's it. Yep.

Karthik Chidambaram: Cool. Very nice.

Robert Wolcott: I just love, first of all, I love new things, new ideas,
seeing them happen in the world. But even more than that, Karthik. I love
meeting the people and learning about what drives them and how their mind
works, the people who actually make this stuff happen. And it's- you suffer
a lot of slings and arrows as an innovator, an entrepreneur whether you're
an independent entrepreneur or you're at a big company or a government
agency, whatever it is, if you're trying to do new things.

You're gonna face a lot of resistance and the people that see a vision and
they iterate on it and they get up every day and they really try to make it
happen. I'm a huge fan.

Karthik Chidambaram: You had a very interesting and a great career. You went
to big schools, but after your fourth grade, were you always smart? I'm just
curious. Or did you also have some-?

Robert Wolcott: Well, that begs the question, Karthik, if I'm even smart
now, so I don't- I'll leave, let other people decide that. I'll answer that
in a different way. I've always been curious. I have a tendency when I see
something or hear something that’s interesting to me, I really want to
understand what's going on.

And I just love meeting people with different perspectives and trying to
synthesize things. And I also love standing back from things and trying to
get a very big picture, whether that's. The overall systemic factors that
are driving people to make decisions, say within an organization or looking
out to the future, trying to build foresight as to where things might go.

And in order to do that, I think we, most of us, get very focused on the
weeds. And it's not just a forest we're looking at, we're actually looking
at an entire planet and later this century, of course, beyond the planet,
but so I, I really like standing back, trying to find a few essential points
that we can depend upon and extrapolate them out in various ways to, to
discover where things might go in the future.

So that's kind of my natural act, I guess.

Karthik Chidambaram: You authored and released a new book, Proximity. Tell
us about it. What is Proximity?

Robert Wolcott: Great. So, yeah, in fact, Karthik, Proximity is launching
right about now from Columbia University Press. My co-author, Kajan
Krippendorff, and I during COVID, we were talking about this idea.

And I started developing the idea in 2014. And what happened was, I was like
many of your listeners. I had been going to a lot of tech conferences and, I
don't know if any of your listeners are old enough to remember, years and
years ago, but there was about a decade period where every speaker at tech
conferences had one slide.

Everybody had the same slide, which was Moore's law. Now, by the way, a big
fan of Moore's law, super predictive for quite a long time, really
important, but you know what, after the 174th time you're seeing the Moore's
law slide. You probably don't need to see it again.

So I was staring at the same Moore's law slide and thinking there must be,
we must be able to get have Further insight into what's next. And so I asked
the question inside myself. I said, what is fundamentally different
regarding digital? And I mean, all kinds of digital. So it could be 3D
printing, could be rooftop solar, certainly mobile apps, artificial
intelligence, anything digitally enabled.

What is fundamentally different about digital compared to the industrial
age? And if we could discern that fundamental difference, then it might give
us foresight into where the world's going and quickly, what I realized was,
and this won't shock your listeners, but it's the implication of it that no
one has really noticed.

The first part is that digital allows us to compress capabilities of all
sorts into smaller and smaller packages and distribute them all over the
economy, ever closer to each moment in time and space. So it could be a
mobile app on your mobile device, but it could also be a 3D printing
machine.

It could be rooftop solar power generation, smaller and smaller packages.
More recently, large language models. Now you're seeing small language
models, or as Apple calls them, efficient language models, because they
needed their own term for everything. So you take digital and you compress.
Capabilities into small packages, distribute them all over.

And therefore the implication is, and this is proximity, digital pushes the
creation of value, all sorts of value, products, services, experiences,
digital pushes the creation of value ever closer to the moment of actual
demand and time and space. Now, when I first started talking about this, I
think 2015 was the first time at an economist conference, people thought I
meant better supply chain management.

And I love that everybody loves better supply chain management. That's a
great thing, but that's a really small part of what we're saying. We're
literally saying new business models and technology platforms that encourage
us to procrastinate. To wait as long as possible before adding any value
until there's an actual customer ready to buy or use that product or service
or experience.

And that's proximity and it's happening in every industry and we'll do so.
This is the direction of change for the rest of our careers across every
industry. In the book, Karthik, we talk about how we work, how we eat, how
we create and produce. How we prevent and cure, how we power and how we
defend.

And in the final chapter, we talk about virtual reality and space, which are
both 100 percent proximate. We can talk more about that if you like. So
that's proximity, pushing all value creation ever closer to the moment of
actual demand in time and space.

Karthik Chidambaram: Very interesting. I mean, I love how you relate this to
digital, and it's easy to understand in terms of, hey, let's say if I want
to open my app, you know, it's there.

It's there. I need it and it's there. And, but, how does this work, right?
So when it comes to proximity in manufacturing, you need the raw material,
right? So, I mean, not everything is available close to where you live. So
then how would that work?

Robert Wolcott: Yeah, so a lot of answers to that question in some spaces,
we're already 100 percent proximate. So if you think about digital things
like Netflix, for instance, the provision of video content is already
proximate. You can watch it anywhere on any device at any moment. The
production of the content though, happens months, maybe even years, in
advance. But that's starting to shift because of AI, and video apps like
Sora.

It's still early. It's not great for most things, but where will it be in 10
years? So it's shifting that direction, but you've asked correctly about
physical products and physical products. They operate differently than fully
digitized products, but the more that we can instantiate into digital. The
closer and closer to demand we can actually become with physical products.

So I'll give you an example. In their annual report for 2022, Ford Motor
Company reported that they had made 200, 000 parts for automotive via 3D
printing. Now, this was not worth playing with it. This is a fun thing in
our lab. This is stuff they're using and they're using it in order to cover
critical supply chain stock outs to cover.

MRO, you know I don't really need a hundred copies of that thing in
inventory. What I really need is just one exactly where and when I need it.
And some of those MRO replacement parts are much better, much more
economically when you do the overall math. To produce one copy on a 3D
printer where it's needed.

And so to be clear, Karthik, there are lots of things where 3D printing is
not economical. It doesn't yet work. It's not good enough. People have lost
a lot of money, but what's happening. The same thing that happens with every
disruptive technology over time, it gets better and better and starts to
incur into more and more opportunities and eventually into the core space.

So in the book, we talk about a lot of examples of. A transformative model
where you're actually producing the product, physical products, co-terminus
with the actual demand. And you still need the raw materials. That's true.
So we'll still have supply chains, but we'll, the raw, they'll be closer and
closer to the actual, not just the parts or the components, but closer and
closer over time, 10 years, 20 years, 30 years closer and closer to that raw
material space.

I'll give you a tangible example. One of my favorite examples from the book,
actually. Dr. Jeffrey Ling, one of my heroes, was the medical doctor for the
army. He practices medicines at Johns Hopkins now, but he had six tours of
duty in the Middle East. And they kept running out of generic drugs. Now,
it's not a shock that you're going to run out of generic drugs in a war
zone.

It's a war zone after all. But what Dr. Ling shared with me that I didn't
know is, we run out of generic drugs at hospitals and clinics all over the
United States all the time. And this is every day. I'm not talking about
under patent sort of ethical pharmaceuticals under patent. I'm talking about
generic drugs.

All of our generic drugs are made overseas. Mostly China, India. And so we
have very little control over access to those drugs. And it's a big supply
chain challenge. So Dr. Ling said, wait a minute. Most of these generic,
almost all of these generic drugs are organic. They're made of carbon,
hydrogen, and oxygen.

So if I had the right equipment, I could make the drug right here. Give me a
chemistry set. So he came back to the U. S. He got a big grant from DARPA at
the Department of Defense. They worked with a team from MIT, and they solved
it. The company today is called On Demand Pharmaceuticals. You can look it
up.

The military is using the technology in small scale now, and it's getting
better. The FDA has already confirmed that the drugs that come out of on
demand pharmaceuticals equipment are exactly the same as you get at the
pharmacy. No difference. Now, what does this mean? Well, we have a piece of
equipment the size of a large refrigerator, and it sits there doing
absolutely nothing.

It has carbon, hydrogen, and oxygen in it. Now, APIs, intermediates, for all
of you, your fans who love pharmaceuticals. Set that aside, let's make this
simpler. It basically has carbon, hydrogen, and oxygen in it. Now you type
in, I need a thousand doses of atropine. Hours later, out comes one thousand
doses of atropine, exactly the same as you get at the pharmacy.

Or three hundred doses of ciprofloxacin. Hours later, out come three hundred
doses of cipro. Now, let's think about this from a supply chain perspective.
Right now, the United States has millions of doses of cipro in strategic
reserve in case of a public health emergency. And so many governments do. It
has a shelf life.

Shelf life of about three years. So every three years they throw out all the
pills and they make new pills. Now contrast that traditional model with the
on demand pharmaceuticals model in this equipment is carbon, hydrogen, and
oxygen. Karthik, I have a question for you. What is the shelf life of
carbon?

Well, that's right. Forever. Now, when you start to do the math and you
compare, I have a shelf life product, finished product. I don't know if I've
made enough or too much, right. Or not enough. On the other hand, I have
something sitting there with carbon, hydrogen, and oxygen and waiting for
somebody to need something.

And then I produce it. You see how dramatically different proximate models
are. From the past and in some spaces is happening really fast, like in
artificial intelligence, large language models and other spaces. It's going
to take quite a lot of time, maybe even decades in some cases. But this is
the new direction in which every industry is going the rest of our careers.

Karthik Chidambaram: I love this. How far along do you think we are in terms
of on demand pharmacy? Do you think it's going to happen? You talked about
maybe a few decades, right? So, I mean, is it going to be a few decades or,
you know, are we close enough?

Robert Wolcott: Well, you ask an important question and as an investor, and
I'm not an investor in on demand pharmaceuticals.

I love Dr. Ling. I love the concept. It's just not a space that I would
invest in. But it's hard to say with each individual company, because even
if they've got great tech, great leadership, you just never know. But what's
compelling, Karthik, is About on demand, for instance, is that the FDA has
already signed off that these drugs coming out are the same as you get from
a massive factory thousands of miles away.

Second, they have their first commercial implementation right now in Tupelo,
Mississippi. So on demand work with a health system in Tupelo, very
underserved chronically stocking out of critical drugs. They chose six
injectable drugs. So it's healthcare after all, we have to start slowly. We
have to get it right because people's lives are on the line.

So they chose six injectable drugs as their pilot. They installed the
equipment in Tupelo at this health system. And since they switched it on in
January. They've had zero stockouts of these six injectable drugs. That is
the first time in the history of this health system that they've had zero
stockouts of these drugs.

So I can't pretend in this specific case to say how long it's going to take,
but what we do know is that it's working. And there'll be lots of examples
in a lot of other environments where, you know, I mentioned Ford Motor and
other major automakers are all using 3D printing for more and more aspects
of what they're doing.

It's still a vanishingly small part of their overall manufacturing value
chain, but. It starts to incur and become better and better. And they'll
discover there's a big learning curve for all these things. So I, our
expectation, we don't make date predictions, but our expectation is for
physical products and physical supply chains the next couple of years,
you're not going to see that much difference.

You're going to see things happening at the margin, some compelling stuff.
But 10 years, 20 years from now will be dramatically different. And I could
give examples from other industries. If you like.

Karthik Chidambaram: Well, definitely. So, but proximity would also, I mean,
it would reduce a lot of waste and in turn also help with climate change.

Robert Wolcott: Absolutely. I'm glad you brought it up, Karthik. This is one
thing I'm most excited about, but it also illustrates that we can do it
right, or we can do it wrong. And I'll give you a current example, a company
like, I think it's Sheen or Shine, I don't know, I'm not a fashionista
Taimou think about what they're doing.

They're satisfying the demand, the desire of human beings to have whatever
they want, whenever they want it. And so that's the interesting thing about
proximity. A little subtitle that we like to use for proximity is anything,
anywhere, anytime. And so we all know the Taimou model. They, you can order
that one sweater.

It'll be produced at a factory in China. Then they'll put it on a cargo jet
and fly it to you in Omaha, Nebraska. I mean, boy, what could be better? But
now incidentally, there's a peculiarity of the trade tariff world called the
minimus, which is why they're absolved from paying, at least for now from
paying trade tariffs for those small shipments, but set that aside.

So what is TAMU doing? TAMU is satisfying proximity. In the sense that
they're giving consumers huge choice. They'll make that one thing to order
for them thousands of miles away. They put it on a cargo jet to get it to me
fast. But it's destroying the environment. I mean it's just a simple fact
of, the more sweaters we put on 777 cargo jets ain't such a great thing.

And if you look at the data. A huge percentage of cargo air traffic between
Asia and the United States right now is as a result of these fast fashion
companies. So this shows the enormous demand humans have for whatever they
want, wherever, whenever they want it. And we can use 20th century
technology like Temu is to achieve part of that, the cargo jet, or we can
use 21st century technology to do it in a much more sustainable way, like on
demand pharmaceuticals, like Interstellar Lab in plant derived ingredients
space, like CreateMe in the textile space.

What we talk about in the book, these are new platforms, new technologies
that actually radically decrease waste by not adding value until there's an
actual customer ready to buy.

Karthik Chidambaram: So what do you think is the role of government in
proximity? What do you think they should be doing across the world?

Robert Wolcott: Oh, that's a great question. So in a general sense, I'm a
fan of providing the environment within which companies, investors markets
can do their magic because they tend to be a lot better at allocating
resources.

There are exceptions to that very long term R and D initiatives. Honestly,
there’s lots of data from history that the very long term significant R and
D initiatives either have to have a government or a monopoly, like AT& T
was many years ago to invest that kind of money over that kind of time.

But overall, I tend to be more for, you know, the free market in terms of
driving that. But, today with challenges we're facing with geopolitics, with
climate, extreme climate events around the world governments should use the
concept of proximity to build far more resilience, sustainability, and
adaptability.

I'll give you an example. It is essential that we build more semiconductor
capacity, and that we have more of it here at home. It's a strategic
imperative for lots of reasons. Many of your listeners already know. But
interestingly, everybody was all excited about Sam Altman trying to raise 7
trillion to build semiconductor fabricators around the fab plants around the
world..

And first of all, he's not going to raise 7 trillion. I'll just tell you
that now. I mean, take the two largest companies in human history by market
cap. Add them up and it's not seven trillion dollars. Okay, so he's not
going to raise seven trillion. Now, he is going to raise a lot of money for
chip fabs.

And so he's playing a very important role. But what most people miss the
wisdom of what he's doing, they think, Oh, Sam wants more chip supply,
greater chip supply. That is true. But there's another part to his mission,
which he called he wants a network Of chip fabs around the world, not just
more capacity in Taiwan and Arizona.

He wants a network of chip fabs closer to demand so we can be far more
responsive and also protect global supply chains, protect our national
interests if there are geopolitical challenges. And by the way, Karthik,
this was a fundamental insight that led to the internet, right? Back in the,
I think the sixties, the department of defense posed a challenge.

And the challenge was how do we have a computer communications, any sort of
communications network that can survive and continue operating through a
nuclear attack that became the internet? Well, what was it about the
internet? Well, I have multiple nodes all over the place connected. And if
some of the nodes are knocked out, it redirects to other nodes and adds more
adaptability.

It's the same thing. With proximity, proximate technologies, whether that's
power generation and small-scale solar and wind, or whether that's
small-scale manufacturing closer to demand with automated plants, 3D
printing, et cetera, having more of them in a network makes us much more
adaptable and resilient.

As opposed to the old industrial age model where we have massive plants that
are sitting ducks in the case of a geopolitical challenge.

Karthik Chidambaram: So it's more like a network effect. So the bigger the
network, the better it is.

Robert Wolcott: Yeah, more. It can be more resilient and the good news. So
we could do that. We could have done this 20 years ago, but it would have
been way too expensive.

It would have been horribly uncompetitive, but the fact, that exciting fact
is that digital technologies allow us to do things we could never have done
before. That's what we have to start to recognize. We have to ask. What can
these technology allow us to do that we could never have done before?

And the guideline, the guiding light is bringing that production and
provision of value ever closer to the moment of actual demand. And those
moments, of course, are all over the world at any moment where your
customer, your consumer, your client might be located in time and space. And
digital allows us to do that.

And so we can have a far more resilient, adaptable system than the old
hardwired industrial age supply chain.

Karthik Chidambaram: At DCKAP, we work with a lot of manufacturers and
distributors. So what do you think they can be doing, right? So in terms of
what baby steps or practical things they can be doing to implement proximity
in their business?

Robert Wolcott: That is an excellent question, and I'm actually quite
excited about the opportunity for manufacturers, also distributors, because
there's one thing I imagine all of your clients already have some handle on.
If you look across all the components, parts, inputs, et cetera, to what you
create and provide for your customers and clients, where are the highest
risks?

Thank you very much. Where are the ones where you have challenges with
stockouts from time to time and you've got huge inventory because you need
to make sure you've got it ready to go and that there's a cost where are the
ones where it works great you get the supply you need you you're you're
doing just in time but you've You know what, if there's a huge climate event
and the factory in Thailand is destroyed and there are only two factories
you're sourcing from, you're in some trouble.

So you go through all of the aspects of components, inputs in your supply
chain and ask yourself, what are the risk factors for each individual piece?
What are the highest risks, the ones that we face all the time or the ones
that we could face? And sort of a black swan event after you've done that
assessment, now take the highest risk ones, the highest value ones and say,
do an exercise.

What if we could produce that thing or provide that thing? So provision,
when we say provision, we mean like sales service support, that sort of
thing, producing is producing. What if we could produce and, or provide that
thing at the exact moment of demand? How would the world look? And what
technologies out there might allow us to do it?

I'll give you a tangible example. And it's a company that I have invested
in. Thankfully, I mean, it's doing extraordinarily well. And it really is
changing the game. It's called Interstellar Lab. My good friend, Barbara
Bell, BC is a French plant scientist, and she was then a venture capitalist.

And in 2018, she called me and she said, Rob, I would like to figure out how
to grow food on Mars. And I said, what? She said, grow food on Mars. I said,
it sounds like you said grow food on Mars. Yes, that's what I said. And she
said, would you like to invest? And I said, of course not. I'm not a
billionaire.

I don't have a 60 year time horizon. She laughed because she knew that
wasn't my profile, but she had just gotten a big grant from NASA. And a big
grant from the ESA and that work continues. They've made a ton of progress
to figure out how to have systems to allow us to grow food on Mars or in
spaceships.

Now she, Barbara is also smart enough to know she needs a real business.
This isn't just a science project. So she and her team, they're located just
outside Paris. She and her team made a list of all of the ingredients
derived from plants, the high value, low volume ingredients derived from
plants. And if you think about what industries need high value, very low
volume, very high value ingredients derived from plants, what are they?

They're cosmetics. Skincare, fragrances by some biotech as well. All these
are led from Paris, right? So it's the perfect synchronicity. And so she
reached out to ingredients companies, pharmaceutical cosmetics companies.
What she has is you can look it up online, Interstellar Lab. They have this
pod that you can walk into.

It's a little bigger. Twice the size of this room that I'm sitting in, and
they grow plants in an ideal atmosphere, customized for each individual
plant. And her biggest client right now. So this is, they have revenues.
They're growing like mad. Their biggest client is Robotech, the largest
ingredients company in the world.

They just announced in January, a contract with L'Oreal. L'Oreal is
installing a bunch of her pods in their manufacturing plants, Barbara's
company monitors and manages those pods remotely collects all the data for
all the growing conditions for each individual plant, the yields, et cetera.
And she calls it hardware as a service.

Now, here's what's exciting. L'Oreal can for specific high value, high risk
ingredients, things they really need. They can grow exactly the plants where
and when they need them. And I'll give you a tangible example. There's a
plant called Vertivae. It grows in Indonesia and India, and currently the
way they harvest is they rip the plant out of the ground, they chop the
roots off, and they have to start over again.

With her system, they grow Vertivae in this pod. It's an aeroponic system,
so they pick the platform up, they clip a little bit of the roots off, they
put it back down, the plant continues to grow. The yield for the ingredient
in this pod compared to the wild is 1, 000 percent higher, and it's
improving every day.

Now, what does this mean for L'Oreal? They have exactly how much of that
ingredient they need where and when they need it with zero supply chain risk
worldwide. They don't care for that ingredient. They don't care about what's
happening in the Red Sea. They don't care about whether there's a conflict
on some island in Indonesia.

They’re completely absolved. That's an example of taking proximity
technology and business model, digitally enabling, putting it in your supply
chain and giving you enormous value for high risk things. Now, over time,
Karthik, we're going to find more and more examples of this. The technology
will get better and better.

It'll get cheaper and cheaper as it always does, and it'll start to
transform entire supply chains, but that's going to take a lot of time.

Karthik Chidambaram: But that would mean that the plant is not naturally
growing, right? So it's kind of true.

Robert Wolcott: Yeah, well, it is naturally growing in the pod and by the
way, because of her customers this is not a statement for or against GMOs,
but because of her customers and their requirements, none of these plants
are GMO.

They're all- they're selectively bred like we've been doing for thousands of
years, but they're actually the plants growing in far better optimized
conditions than they would find, say, on an island in Indonesia. Yeah.

Karthik Chidambaram: And what is GMO?

Robert Wolcott: Oh, genetically modified organisms.

Karthik Chidambaram: Oh, yeah.

Robert Wolcott: That's a whole nother can of worms, or modified worms, I
guess. Genetically engineered worms that we're, we probably don't have time
to open up right now.

Karthik Chidambaram: So you have invested in a lot of companies, you know,
you've invested in over 30 companies. So share with us some investment
advice.

Robert Wolcott: Investment advice?

Well, I tell all my students at Kellogg and Booth, if you take any of my
investment advice, you will lose all of your money. I just want them to know
that, if they make an investment and I'm wrong, you know, they're adults,
right? So but fortunately I have had some success in this.

It's very different to talk about public markets. Then it is to talk about
private investments in say startups or venture funds. I guess one, one
guideline I have now is any venture investment I make, I have to see how
they're leading the proximity revolution. And two, I really want to see that
they're doing something that would be difficult for the existing incumbents
to do on their own.

Whether, I mean, maybe they could do it, but it would directly conflict with
their existing infrastructure, their existing business models. Then I'm,
then I start to be interested. Second, there are some spaces that I don't
touch myself. I don't invest in biotech for instance. I love biotech. I'm
super interested.

I don't feel I have the expertise, the focused expertise to be good in that.
So I avoid it. Somewhere in the middle though, would be like digital health.
I have great interest in that and some quite a few investments, but I rely
on experts as an LP. I'm an LP in a couple of venture funds that focus on
digital health.

I do not make digital health related investments myself. Why is that? Not
because I can't understand what the companies are trying to do. Of course,
you can understand if you pay attention, but because the healthcare industry
ecosystem in the United States is so incredibly complex and non obvious and
the dynamics are peculiar.

So I rely, for instance, in Chicago on 7Wire ventures. Fabulous operators
who became venture capitalists. They're not finance people by background.
They build companies. They founded Livongo before the COVID crisis. And of
course you might know that that was publicly traded. It shot through the
roof and then was acquired by Teladoc and for 19 billion, the largest in
history at the time in the digital health space.

But I rely on Teladoc, the team at 7Wire, because they know healthcare, they
know digital, they know the industry, they know how it works. And I put my
trust in them as an LP, a limited partner. In some other cases, I'll make
direct investments very early. But I tend to avoid healthcare on my own, for
instance.

Karthik Chidambaram: And how do you invest your personal money?

Robert Wolcott: Well, sometimes directly in private spaces, sometimes very
early. In fact, I told my wife when soon after we were married, we're
looking at doing some angel investment and, and she comes from a finance
background. So she's very sharp, really knows her stuff great with a
spreadsheet.

And I said, honey, you know, I'm in this innovation space. We're going to
start doing some angel investing. Here's what you have to know. It's very
early. These companies don't have any revenue. They think they know what
they're going to do, but whatever they're doing today is not what they're
going to be doing in three years.

That's just the way it is. And so here's the thing I promise to you, I'm
never going to touch our retirement money. I, if we have kids, I'm never
touching the college fund, right? We're, we're never going to lose our
house, but here's the thing. When we make an angel investment, very early,
earliest of early stages, Just assume you've lost all the money right up
front and then you're going to sleep well.

And she said oh, okay, Rob. Yeah, I get that. So why would we do it? But I
mean, it's a fun story, but it is, it is accurate. If you're going to be in,
in the earliest stages of investment, you've, you've got to be able to lose
a lot of that because your hit rate's going to be, you know, two, three,
four of those out of 10 will make money that covers the rest of the
failures.

And that is actually how it's worked out. We've had a, a few really big
successes and a couple of dismal failures, but if you're going to get into
this game, one piece of advice I got very early before I even started angel
investing a couple of successful angel investors told me if don't even get
into this, unless you see a path over the next.

I don't know, five or seven years to get to at least 10 and hopefully 20
investments in early stage companies. Cause you must build yourself into a
portfolio. And now, today, of course, I have investments in stage B and C
and D and later stage, mid stage and a lot of publicly traded companies. I
guess the last thing I'll say is if you get into this game.

Hopefully you also have some much more dependable investments. You're
diversified. You've got some equity in a company like Costco, which is just
an absolute star and pretty dependable. And then you've got some really,
really safe money. If you have money, you can't afford to lose. So, I'm not
the right person to give financial advice.

You get this from your financial advisor, but if you're going to dip your
toe into the very earliest stages of business, it's nothing like investing
in the stock market.

Karthik Chidambaram: Totally. I love the advice of, hey, don't touch the
retirement funds. Don't touch the college education funds. Yeah. It makes a
lot of sense.

On this podcast, we interview a lot of leaders and one question we ask them
is what is the question they would like to ask the next guest we interview.

Robert Wolcott: Okay.

Karthik Chidambaram: We recently interviewed Clint Autumn. He's the
co-founder of Sugar CRM one of the leaders and the pioneers in the CRM
space.

Robert Wolcott: Great.

Karthik Chidambaram: And the question he wanted to ask is - How can
companies trigger growth from within? What should they be investing in?
Let's say I'm really looking to grow. Where should I invest?

Robert Wolcott: Wow, it's interesting he asked that. He didn't know that you
were interviewing me, right?

Karthik Chidambaram: He didn't know.

Robert Wolcott: Well, here's an interesting kismet.

My first book, 2009, is called Grow From Within. So, if you want my answer
to that question, look up the book Grow From Within. You can still get it on
Amazon. I, there, that's a long answer to that question, how to generate
growth from within. But I think one thing that I- one piece of advice I give
people all the time is we have to ask better questions.

We have to pose better challenges. The essence of innovation strategy is to
have a portfolio of options on the future. It's just like your financial
portfolio. When you face uncertainty. You've got to make sure you have
portfolio optionality. And the way, one of the ways to build that is to make
sure you're exploring broadly.

If you only look within your existing industry and existing supply chain
with your existing customers and suppliers, you're going to miss really
important stuff, opportunities and threats. And so I think we have to become
a lot better at posing exploratory challenges. What do I mean by that? There
are directives like, Hey, we should build a rooftop solar business.

Okay. That could be the best decision in the history of your company, but
that's a directive. You've already decided the answer. Let's go build it.
And exploratory challenges. I'm not really sure what I'm going to find, but
I, I believe, I hypothesize that if we put some smart people to do some
exploring in this particular area, we're liable to find some valuable stuff.

We need to do more of that. And the great news Karthik about those kinds of
exercises is they don't cost much at all. It's just some time and attention.
Our most limited resource is the attention of our best people. But you also
want to get some of your best people looking in these new spaces, because
they'll find things before they're a threat.

They'll find things when there’s an opportunity.

Karthik Chidambaram: Thank you. Yeah, thanks for the book recommendation as
well. So that's very helpful.

So what question would you like to ask the next guest we interview, Rob?

Robert Wolcott: Ooh, by the way, Karthik, I love that question. It's really
neat. You generate serendipity. What I would like to ask whoever your next
interviewee is -

What's a headline you would love to see five years from now? And it can be
about anything, something important to you, could be business, could be
personal, could be geopolitics, could be really anything. What is a headline
you would love to see five years from now and why?

Karthik Chidambaram: I love that question.

So, Rob, my last question to you, as you're a professor, you read a lot you
know, you're an investor, entrepreneur, you wear multiple hats.

How do you keep yourself updated, and what book are you reading right now?

Robert Wolcott: Oh, great. Well, in terms of updated, I, as you might guess,
I know a lot about a lot of different technologies and industries, but I'm
not the number one expert on any specific technology or industry. So what I
love to do is find people.

Who are super experts and specific technology areas or industries and stay
connected with them. And when it's important, like for instance, AI, I have
a couple of daily newsletters. They're not even a newsletter. There's
emails, here's stuff going on. And I glance at them every day. And when I
see something interesting, I'll dig in.

But I rely on individual people who really know their stuff, who love their
stuff, who love to share what they're seeing, I rely on them. And then if I
need specific advice or support for something I'm working on, then I reach
out to them and say, Hey, can we have a chat in terms of the book I'm
reading, actually, I'm going to get it in terms of the, in terms of the book
I'm reading right now, it's called world on the brink by Dimitri
Alperovitch.

Dimitri is the founding CTO of CrowdStrike, the cyber security company. By
the way, he's one of my go to people for cyber security. Nobody knows more
than Dimitri does. And he's shifted his focus much more broadly to look at
the relationship between the United States and China in particular, but
global geopolitics in general.

But the United States and China specifically, and he offered some really
powerful advice and some challenging questions for all of us to consider,
especially by the way. If we're reliant on global supply chains. So I'm- a
big shout out to Dmitri and World on the Brink.

Karthik Chidambaram: Thank you Rob. So, I'm actually reading a book on
Swami, so he was in Chicago as well. Some of his learnings and some of his
speeches, you know, it's a small little book. That's what I'm reading.

Robert Wolcott: What's the book?

Karthik Chidambaram: Swami, it’s just the speeches, you know, I'm just
reading the speeches. Are you familiar with him, or no?

Robert Wolcott: Give me an example.

Karthik Chidambaram: So he talks about, he's like a guru, right? So he talks
about- let me get it for you. Give me one second.

Robert Wolcott: Yeah, please.

Karthik Chidambaram: So this is what I'm trying to read right now. You know,
so his address. So he was in Chicago.

Robert Wolcott: That's the Art Institute of Chicago, isn't it?

Karthik Chidambaram: Yeah, I think so. Yeah, that's right there. So he gave
some speeches in Chicago. I'm just trying to read, you know, I've just got
this, you know, very little read. So yeah, this is what I'm reading.

Robert Wolcott: When was he around? How many years ago?

Karthik Chidambaram: He was born in 1863.

Robert Wolcott: Wow.

Karthik Chidambaram: So, 1863 and he died when he was 39.

Robert Wolcott: I have heard of him, Vivekananda. Yeah, that's right.

I need to look him up again and make sure I understand what he- that was a
fascinating period too. I don't, many people don't know this, but In 1893,
Chicago was the fastest growing city in the world.

That's when we had the Columbian exposition in Chicago. And, and basically
at that time, Chicago was what later, like you think of Shanghai. You know,
a decade or two ago, Chicago was that city. It isn't now. It's still a
fantastic city. I love Chicago very much, but at that time it was creating
the future full stop.

Karthik Chidambaram: That's right.

Robert Wolcott: And that would be about the time, you know, Vivekananda came
in the early 20th century, right?

Karthik Chidambaram: That's right. Yeah. I didn't know that Chicago was the
fastest growing city at that point in time.

Robert Wolcott: 1893. Yeah. When it hosted the Columbian exposition, the
World's Fair.

Karthik Chidambaram: That's amazing.

Yeah. So Rob, I just want to thank you. I mean, I learned a lot about
proximity and congratulations on your new book. It offers a lot of value and
the book is also available on Amazon - Proximity. So thank you so much for
joining the Driven by DCKAP podcast. Thanks for telling us about proximity
and also working us through the future.

I enjoyed chatting with you and it's been great. Thank you again for joining
Driven by DCKAP.

Robert Wolcott: Thanks, Karthik. And if anyone wants to reach out, I'm
always available on LinkedIn. I'm, I'm there all the time. Just mention that
we met on the DCKAP podcast.

Karthik Chidambaram: Yeah. Mention that you met on the DCKAP podcast. That's
a bonus for all of you. Thank you, Rob. And nice chatting.

Robert Wolcott: Thanks Karthik.