Lessons from Matt Ocko

As a prominent figure in the world of venture capital, Matt Ocko, Co-founder and Managing Partner of DCVC (Data Collective), has shared a wealth of knowledge over the years. His focus on "Deep Tech" and companies with a distinct "algorithmic edge" has set him apart.

On Investment Thesis and Strategy

On DCVC's Core Idea: "Our meta thesis, the thing that we want to see in any company is that they are exemplifying the use of compute and novel, highly defensible algorithms to themselves." [1]
The 'Cheat Code' of Data: Ocko's firm looks for companies that use data and algorithms to "cheat," which he defines as substituting massive amounts of operational expenses, capital expenditures, and time with simulation, analytics, and approximation. [2]
Investing in 'Must-Have' Tech: DCVC focuses on "must-have' life-or-death technologies for large enterprises." [3]
The Problem with 'Fluffy SAS': He expresses skepticism about investing in overly crowded markets, referring to some as the "seventh click three hearts on a survey to show that you're not a disgruntled employee fluffy SAS deal," where the risk is as high or higher than in deep tech due to lack of differentiation. [4]
Life or Death Technology: When a deep tech company is successful, it "almost by definition has life or death technology." He gives the example of a company that can predict medical emergencies in NICUs, stating, "no one is going to shut that off." [5]
Avoiding Bidding Wars: Ocko prefers to invest in areas with less competition, where companies aren't fighting "73 other companies all taking your prices down to zero in a desperate bid to survive." [5]
The Inefficiency of Fund Structures: He argues that the traditional ten-year venture fund lifecycle is too short for deep tech companies, which may have a 15 to 30-year adoption arc, to reach their full potential. [2][6]
Fund Size Models are Flawed: Ocko believes that the strict categorization of VC funds by size is suboptimal, as it can destroy valuable information from early-stage investors and bias investment choices. [6]
The Power of a Thesis: He emphasizes the importance of being "relentless about our thesis," which helps guide investment decisions and earns the respect of the investment community. [6]
Capital Efficiency is Key: A core aspect of his investment thesis is capital efficiency, both for the company's internal operations and the value it delivers to customers. [6]

On Deep Tech and Innovation

The 30-Year Adoption Curve: Ocko notes that truly transformative technologies often have a long adoption curve, sometimes close to 30 years from the lab bench to broad adoption. [2]
Timing is Everything: In deep tech, "you can just completely screw the pooch" by investing too early in the 30-year adoption curve. [2]
The Danger of Being Too Late: Investing too late in a hard-tech company leads to a "race to ruin," where undifferentiated companies burn through capital competing with each other. [2]
The Convergence Driving Innovation: He points to the convergence of Moore's Law, software advancements, material science, and robotics as a key enabler of innovation, making complex solutions more accessible. [3]
Solving Problems for the Pleasure of It: "Innovation flourishes and hard tech innovation flourishes people solve incredibly difficult problems sometimes just for the pleasure of doing so." [2]
The Reality of Deep Tech Investing: He describes the experience of building a deep tech company as "a profoundly unpleasant dark grim unhappy experience 99% of the time." [7]
The Uniqueness of DCVC's Model: DCVC employs a network of "equity partners"—experts from various tech fields who help with sourcing and due diligence—a model Ocko claims is unique. [2]
Institutional Memory is Crucial: He argues against outsourcing diligence to external experts because it prevents the firm from building "institutional memory." [5]
Modeling the Firm After a Deep Tech Company: DCVC is structured to have a "virtuous spiral self-sustaining competitive advantage," where knowledge and capital feed back into the firm, much like the companies they invest in. [4]
The Nerd Flywheel: He describes the internal culture at DCVC as an "inner nerd flywheel" amplified by their equity partners, all focused on getting to first principles. [4]

On Entrepreneurs and Risk

The Necessary Brain Chemistry of Founders: To deal with the immense pressures of building a company, founders need a certain "brain chemistry that keeps you from from basically hanging yourself." [7]
The Danger of the Messianic Entrepreneur: A significant risk in deep tech is not necessarily malicious founders, but those with a "legitimate messianic belief that their stuff is going to work," which can be harder to discern from reality. [7]
Success is Largely Random: "Success is relatively stochastic even with a very good CEO." He uses the word "stochastic" to mean "largely random." [4]
The Need for Humility: Ocko stresses the importance of humility and open-mindedness for investors, and the ability to admit when you're wrong to recognize new opportunities. [3]
Sleeping Like a Baby: "Good VCs especially deep tech ones sleep like babies. we wake up every two hours crying in in abject fear and hunger." [7]
Avoiding Hubris: He warns against the danger of VCs becoming "petty tyrants who confuse the stature or authority that they enjoy for exogenous reasons with their own capability." [7]
On Passing on Theranos: While not recalling a direct meeting with Elizabeth Holmes, he expressed skepticism about the "drop out to create a blood testing company" narrative, stating he wouldn't want his pilot or brain surgeon to have dropped out of school. [5]
The Anti-Portfolio: Ocko admits that most of his "anti-portfolio" (companies he regrets passing on) comes from his time investing before co-founding DCVC. [5]
Taking Risks to Create a Utopian Future: A theme in his discussions is the necessity of being brave and taking calculated risks to bring about a better future. [4]
The Importance of Being Contrarian: He advocates for investing in "unloved, contrarian markets or massive markets" that others may overlook. [6]

On Technology and Society

Technology for National Security: Ocko has a long history of involvement with national security, stating he has been "building tech to advance the security and prosperity of the United States since 1983." [8]
The Long-Term View of Big Data: Years ago, he stated, "we see big data as the same rich and long-term opportunity that it was broadly in the 1970s and early 1980s." [7]
On Artificial Intelligence Hype: While a proponent of AI, he has also spoken about the hype surrounding it, suggesting a need for a nuanced understanding. [1]
The Societal Impact of Fund Structures: He argues that when early-stage investors are biased towards what later-stage investors will find palatable, it can negatively affect the societal impact of the companies that get funded. [6]
Investing with an Ethical Framework: Ocko highlights the need for an ethical framework to guide investment decisions in powerful technologies. [3]
Technology to Prevent Atrocities: He has expressed that one of his firm's companies made it "literally impossible for anybody to get away with uh with genocide ever again." [7]
Combating Financial Fraud: He also mentioned a portfolio company that made it impossible for someone like Bernie Madoff to "commit as large a structural fraud." [7]
On Controversial Views: Ocko has faced public criticism for his statements on geopolitical issues. Reports have cited now-deleted tweets where he allegedly made inflammatory remarks about various populations. [9][10] One source claimed he compared Russian society to a plague, and another alleged he referred to supporters of a free Palestine as "subhuman." [9][10]
Advocating for Collective Punishment: In another controversial statement, he was reported to have advocated for the collective punishment of Palestinians, referring to their society as an "inhuman 'death cult'." [9]
Calling for Deportation: His criticisms have also extended to protestors, allegedly calling for the deportation and criminalization of those participating in "Free Palestine" protests. [9]

Personal Learnings and Anecdotes

Started Programming at Age Seven: His technical background is deep-rooted, having started programming at a very young age. [2]
Inventor on Over 50 Patents: Ocko is an inventor on over 50 granted or in-process patents in diverse fields like computer systems virtualization and fraud detection. [8][11]
The Loneliest Investor: He recounts a time early in his career when he had two of everything—cars, places to live, furniture—but "no social life," making him the "loneliest investor." [6]
Mentorship from a Real-Life 'Most Interesting Man in the World': His early solo LP was a fascinating character who once walked naked into a cave in West Africa and emerged with a billion-dollar gold deal. [6]
On His Own Productivity: When asked about his late-night work habits, he humorously suggested his investment returns speak for themselves: "I would, with a joking but ever so slightly sincere rejoinder, say that our returns speak in favor of my strategy and not hers." [6]
A Deep Thinker: He is described by interviewers as a "truly deep thinker." [4]
Still a Builder: Despite his success as a VC, he "still writes code and builds robots for fun with his kids." [7]
Tech Preferences: He admits to "liking Erlang better than Clojure, and Fischertechnik better than Lego Mindstorms." [7]
Family History in China: Ocko has mentioned his family's long-standing relationship with the Chinese government, which has been a subject of scrutiny. [12]
The Goal of Investing: For Ocko, a key motivation is doing "something material" with his work, as opposed to simply generating content online. [7]

Sources:

[6] Deciphr AI, "20VC Data Collective's Matt Ocko on Why All Fund Size Models Are Wrong and The Lifecycle of Current Venture Funds Is Inefficient" - https://www.deciphr.ai/podcast/20vc-data-collectives-matt-ocko-on-why-all-fund-size-models-are-wrong-and-the-lifecycle-of-current-venture-funds-is-inefficient
[3] Glasp, "Matt Ocko: The Art of Funding Deep Technology | Video Summary and Q&A" - https://glasp.co/youtube/p/matt-ocko-the-art-of-funding-deep-technology
[1] YouTube, "GIC Insights 2017: Matt Ocko On AI Hype" - https://www.youtube.com/watch?v=6Ebmene2teU
[2] YouTube, "Matt Ocko: The Art of Funding Deep Technology" - https://www.youtube.com/watch?v=XEc7B9r-Isc
[4] YouTube, "DCVC's Matt Ocko on deep tech w/algorithmic edge, difficult markets, seed, risk taking | Angel S3 E3" - https://www.youtube.com/watch?v=vkxHcTRCxfc
[5] YouTube, "DCVC's Matt Ocko on deep tech w/algorithmic edge, difficult markets, seed, risk taking | Angel S3 E3" - https://www.youtube.com/watch?v=cuZqI8_yDUU
[11] Wellfound, "Matt Ocko" - https://wellfound.com/p/mattocko
[13] Genocide VC, "Matt Ocko" - https://genocide.vc/tag/matt-ocko/
[8] DCVC, "Matthew Ocko" - https://www.dcvc.com/team/matthew-ocko/
[7] YouTube, "Matt Ocko: The Art of Funding Deep Technology" - https://www.youtube.com/watch?v=XEc7B9r-Isc
[9] Genocide VC, "Matt Ocko of DCVC believes Palestinians are sub-human savages" - https://genocide.vc/matt-ocko-of-dcvc-believes-palestinians-are-sub-human/
[14] GIC, "Matt Ocko" - https://www.gic.com.sg/event-speakers/matt-ocko/
[15] The Org, "Matt Ocko - Managing Director at Archimedes" - https://theorg.com/org/archimedes-1/org-chart/matt-ocko
[10] Charles Johnson's Thoughts and Adventures, "Dear Mr. Ocko: An Open Letter to an Israeli Spy Posing as a Venture Capitalist and to his LPs" - https://charlesjohnson.substack.com/p/dear-mr-ocko-an-open-letter-to-an
[12] Special Operations Warrior Foundation, "Matthew Ocko" - https://specialops.org/who-we-are/board-and-staff/matthew-ocko/

Learn more:

Lessons from Matt Ocko

On Investment Thesis and Strategy

On Deep Tech and Innovation

On Entrepreneurs and Risk

On Technology and Society

Personal Learnings and Anecdotes

Written by Antoine Buteau

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