Welcome to the confession booth.
Michael Dempsey started in hedge funds, built the data and research team at CB Insights, and now runs Compound, a research-centric, thesis-driven firm that writes some of the first institutional checks in frontier technology. We ask him what led him to start funding people through small, no-equity grants.
In this episode, we explore what it means to believe in someone before there’s proof, what it looks like to be wisely unconstrained, and how pedigree, signaling, and sacrifice factor into funding.
We talk about:
Michael’s story
From hedge funds to CB Insights to building Compound [00:48]
“Dreaming about the future and romanticizing the past” [02:16]
Friends across life stages [04:28]
Soulmates and belief before proof
Professional and creative soulmates: Matisse & Picasso [05:12]
Belief as a form of patronage: being seen before you can see yourself [07:19]
What is a great coworker, what is a career soulmate? [09:34]
Wisely unconstrained
What tech underrates about lack of constraint [11:11]
The case for deep thought [13:37]
Funding weird ideas
Why micro-grants? [15:37]
The one question that filters 90% of grant applicants [19:50]
Enabling someone’s direction versus finding it for them [19:00]
Pedigree and signaling
Redefining pedigree, and how diffusion of knowledge erodes it [21:56]
The Thiel Fellowship, Goodhart’s Law, and getting into YC and not going [24:47]
Sacrifice as the signal [25:55]
Time and finite games
Is life an infinite or finite game? [30:29]
Philanthropy’s bi-coastal split
East Coast versus West Coast framings of giving [31:05]
Effective altruism lacks romanticism [34:43]
Giving away $$$
If you had $100 million and could never know what happened to it [41:25]
An undercover campaign for more free jazz [42:10]
Our favorite lines from this episode include:
On career soulmates:
“A great coworker is one plus one equals three, and a career soulmate is one plus one equals infinity.”
On being wisely unconstrained:
Quoting his friend Cristóbal Valenzuela, co-founder of Runway: “If we had set out and defined what we were going to be, we would be in such a different place. But because we never defined it, we have this kind of infinite bound of what could be possible over and over and over again.”
On pedigree:
“We’ve done such a good job of backing people with pedigree being able to accumulate capital that actually you should intentionally rotate away from pedigree in certain times.”
About Michael: Michael is the Managing Partner at Compound. Prior to Compound, he helped build the data and research team at CB Insights, invested in public and private markets, and helped co-found an AI animation studio. Michael’s investing career and conviction has been shaped around a native understanding of frontier technologies and categories and how they shape the future.
If you want to go deeper, here are the references from this episode:
Books, articles & essays:
“Power & Technology”: Michael Dempsey, written ahead of the 2024 election [16:01]:
“Beyond Tech’s Power: On Status, Sacrifice, and the Search for Legitimacy”: Michael Dempsey, the essay on philanthropy and status signaling he mentions [25:55]:
Religion and Society among the Coorgs of South India: M.N. Srinivas, on Sanskritization [26:41]: Internet Archive. One correction from us: Srinivas’ doctoral work was at Oxford, not Cambridge.
“Science: A New Golden Age”: White House Office of Science and Technology Policy, Michael Kratsios [38:44]
Concepts and projects mentioned:
Compound Reverie Grants [15:19]
Goodhart’s Law [25:08]
Discovering Hands, the Berlin organization that trains blind women to detect breast cancer lumps [40:24]
