There is a new key term to know as this artificial intelligence revolution unfolds, at least according to Antonio Gracias, the founder of Valor Equity Partners. While speaking at this year’s Upfront Summit in Los Angeles, he introduced the term he coined: “proentropic.” This descriptor is for startups specifically designed to thrive in chaos and disruption. Such upheavals include the increasing volatility of climate and geopolitics, and, of course, rapid technological change.
The term has its roots in physics, where entropy is a measure of the amount of disorder or uncertainty in a system. The second law of thermodynamics states that disorder in a system will increase over time, and this process cannot be stopped. It is natural for any system, much like real life, to always move toward a state of more disorder.
Gracias admitted the term might be hard to grasp. He started thinking about it back in 2013, when he believed a combination of deglobalization and technological change would globally “shift all the power structures.” He said the world has been leaning toward chaos since at least the end of the last century as human populations have grown and technologies have evolved.
He explained that his firm is looking for businesses that are exceptionally good at predicting that future state of disorder and figuring out where to go within it. He cited his portfolio company SpaceX as a prime example. The strategy is not just about being in a viable market today, but about baking into a company’s strategy and people a probabilistic way of thinking about the world. This means operating with the understanding that anything can change at any moment. Such a company, he added, really takes into account what might happen at the edge cases and actually benefits from them.
Elsewhere in the conversation, he spoke about his firm’s strategy of conviction and again referenced the world’s macro situation. He believes we are entering a period in the economy where building a better world will require moral courage. He discussed the intersection of climate, energy, and hardware, using Tesla as an example of building great products with efficient integration of software and hardware without excessive compute power.
Gracias also shared his thoughts on the future of this moment in time. He countered the prevailing narrative that artificial intelligence will lead to job losses and social unrest. He does not believe this is true and stated he will work hard over the next five to ten years to make sure it is not true. Instead, he sees greater opportunities than ever before.
For example, he believes that as low-code and no-code tools become more effective, more people will be able to start companies, unleashing unseen levels of productivity. Who knows what they will build, he continued. Ultimately, he concluded, we will collectively decide whether we have a utopian future or a dystopian one.