A Conversation With Steve Jurvetson, One of the World’s Most Successful Venture Capitalists & Investors.

A Conversation with Steve Jurvetson, early-stage VC investor in SpaceX, Tesla, Hotmail, D-Wave & The Boring Company.

Steve Jurvetson is the Co-Founder of Future Ventures. He is an early-stage venture capitalist with a focus on founder-led, mission-driven companies at the cutting edge of disruptive technology and new industry formation.  Steve was the early VC investor in SpaceX, Tesla, Planet, Memphis Meats, HotmailD-Wave, The Boring Company, Zoox and the deep learning companies Mythic and Nervana.  He also led founding investments in five companies that went public in successful IPOs and several others that became billion-dollar acquisitions.

Before co-founding Future Ventures and Draper Fisher Jurvetson, Steve was an R&D Engineer at Hewlett-Packard, where seven of his chip designs were fabricated.  He also worked in product marketing at Apple and NeXT and management consulting with Bain & Company.  He completed his undergraduate Electrical Engineering degree at Stanford in 2.5 years, graduating #1 in his class, and went on to earn a MSEE and MBA from Stanford.

In 2017, Steve received the Visionary Award from SV Forum. In 2016, President Barack Obama appointed Steve as a Presidential Ambassador for Global Entrepreneurship. Steve has also been honored as one of “Tech’s Best Venture Investors” by Forbes, and as the “Venture Capitalist of the Year” by Deloitte.

In this exclusive interview, I speak to Steve Jurvetson – one of the world’s most successful venture capitalists – about disruptive entrepreneurship, the technologies and concepts changing our world, and how to invest in the most innovative entrepreneurs in the world.

Q:  What are the character traits of the greatest disruptive entrepreneurs?

[Steve Jurvetson]: Sometimes the distinction between those ‘heroes’ and us ‘mere mortals’ is subtle and sometimes those attributes aren’t so clear at their founding. The question of what it takes to be a great disruptive entrepreneur is something I’ve been trying answer my whole career- for over 25 years in venture capital. I have arrived at a few thoughts…

Visionary leaders that build great companies have some personality attributes they share. They are self-confident enough to be humble. They have a reservoir, a personal drive, passion, belief in their capabilities, and they’re willing to admit what they don’t do well and to seek those people to join their team from the very beginning. The best entrepreneurs are rarely individuals. They are usually a founding duo at minimum- think of Jobs and Wozniak. At any start-up that’s been successful, there’s at least two key people in the founding journey… An introvert and an extrovert… some combination of complementing cognitive diversity. This is also true for the likes of Elon Musk. I’m amazed at his ability to build teams and to sculpt incredibly different pools of people, often with backgrounds unrelated to the industry he’s trying to change… so not hiring automobile executives to create Tesla…. Not hiring a bunch of executives from the aerospace industry to make SpaceX. This ability to spot talent and build diverse teams (cognitively) is critical.

Vision is critical and visionary leaders (by their nature) have vision. Not all visions are inspiring however, some are pedestrian… so I think it’s the case that we draw our attention to the most audacious of these visions like making humanity a multiplanetary species. That’s probably number one in any list of audacious goals, a list that also includes removing our use of oil and gas… creating a sustainable energy transition starting with electric vehicles…. Audaciousness and vision have only been able to combine at this level in the past 10 years.

When I started in venture capital, you would only invest in software, semiconductors or life sciences. Computers were considered a variant of semiconductors, as was data and communications which came later. It started to broaden when we realised a computer would take on the telecom industry. Computers and software have will take-on just about every industry over time, and 25 years ago that was not obvious.

The scope of entrepreneurial fulfilment, the scope of new entrants changing the world is broader than ever before, and that’s great for society.  That’s great for everyone.

Q:  How do you adapt your working style to effectively collaborate with disruptive entrepreneurs?

[Steve Jurvetson]:  Whatever answer I give you, take it with a grain of salt… it will be heavily filtered by my own personal experience. If you ask a VC what it takes to be successful, they will inevitably, and confidently, describe themselves- maybe with a little bit of abstraction- but they will effectively project that the only way to be successful is to follow their framework. The first thing I’ll say therefore, out of humility, is that I’ve seen every framework of possible backgrounds work well for investors. The most opposite to me would be the non-tech, never-used-a-computer in their life investor who succeeds in technology investment. Believe it or not, there are people like that. For me, the key has been to become more and more humble over time in a way that I realise that I shouldn’t be interfering with the magic and beauty of what an entrepreneur can do.

When I started in venture capital, the natural assumption was that you had to wrap governance around the entrepreneur to help them stay on the right path and to make sure they didn’t make any big mistakes. Some firms actively replaced the CEO when the company needed to grow, and I think that was a fool’s errand. The better job is to spot entrepreneurs you want to bet on for life. You need to find entrepreneurs you want to back for life, and not take an activist stance. That’s the polar opposite of the activist style of investing you see in public markets. My job is to be a coach, confidante and mentor.

I didn’t have a deep operating history prior to becoming a venture capitalist. I worked at Bain & Company for a few years, did chip design as a low-level engineer at Hewlett-Packard, worked briefly in product marketing at Apple and NeXT but never long enough to have direct reports, and never long-enough to start to think I’d be a good manager or CEO. I have enough self-awareness to realise I’d be a horrible manager.

You need the team on the ground to own the business, to run it, to take it into directions when needed- not because you told them to- but because they knew it was the right decision. Stepping back, to be an investor you have to be OK with vicarious accomplishment – you haven’t directly done anything, right? You didn’t ship the product… it wasn’t your baby…

Q: To what extent are your own interests and passion relevant to your investing theses?

[Steve Jurvetson]: Most investors are focused on making money, full stop. That’s what they’re supposed to do, and what they’re getting paid to do. If that’s your goal, you’re going to be like all the other investors- maximising sort term opportunities to make money. Taking a long-term strategy usually involves some larger, iterative process of learning how to differentiate yourself from everybody else by knowing more than them in any given domain before that domain gets overinvested. Entrepreneurs in disruptive sectors tend to find you rather than you finding them- that’s because they see you as someone they may want to work with in a sector that’s emerging. For many it’s quite refreshing when all they hear all day is banker types and analyst. We dial into the domain of ideas and make money is a by-product of investing in the best entrepreneurs who are going to change the world. Our singular filter is to find the people, projects and opportunities that we think are going to be game-changing for humanity. If you succeed at doing that, you’ll make plenty of money (even if you fail half the time).

Q:  How do you determine the areas you invest in?

[Steve Jurvetson]:  We apply a filter to our investments and try to invest in companies that are unlike anything we’ve seen before, yet adjacent to other areas we’ve seen. When people look at our portfolio, they see a nuclear fusion company, a tunnel boring machine company, a psychedelic science company and they might wonder what the pattern is, so let me talk to a few examples.

Nuclear fusion has been a dream for decades, but it’s finally become an engineering challenge not a science project. A company called Commonwealth Fusion has figured out that if you can make a strong-enough magnet, you can make a nuclear fusion reactor. Fusion doesn’t have the radioactivity concern that people tend to think when looking at nuclear energy. It uses hydrogen isotopes that can be found in the ocean as fuel- no uranium, plutonium or anything like that. Once they get to net energy generation (which I expect they will in the next 2-3 years), they will put-out 10x more energy than they need to run, and this will replace coal around the world very quickly. We anticipate tens of thousands of these plants around the world and it will help us remove our dependency on coal and gas to provide the baseload of power generation. You don’t have to be a domain expert to understand how exciting this is going to be.

Innovation can inspire a whole generation to go into math, science and achieve amazing things. For society now, we could use more of that hope. In the lifetimes of our children, we will have a permanent presence on Mars. Imagine looking-up with a telescope at night and seeing activity on the Moon, activity on Mars, blinking lights from buildings and vehicles.

Closer to earth, we have Starlink. A network of satellites being ramped up that will give relatively inexpensive broadband anywhere on the planet. This will bring 3-4 billion people online who are not currently connected to the internet in a meaningful way and will likely cause a boom in entrepreneurship like the world has never seen before.

We also have planet labs, who are photographing every metre of earth, every day. If anything changes- a natural disaster, a humanitarian disaster- or if you want to count trees, see water levels, see populations…. The data are now there. When you add machine learning and pattern recognition to this satellite capability, you suddenly have the ability to count every house on the planet, to map every road on the planet, to view and measure economic activity, to monitor retail activity, industrial activity – it’s astonishing. The cost of going to space is falling by 10x, 100x – but imagine if the cost fell by 1000x, can you imagine what our capabilities would be then? It would be a new frontier.

[Vikas: What about platform technologies such as blockchain, ML, AI and others?]

[Steve Jurvetson]:  There are definitely investment themes that span multiple companies. The broadest are machine learning and deep learning. Every company you start today is a software company. You can call it Tesla, you can call it SpaceX but the basis of competition is a software stack. The reason a customer will buy a Tesla 5 years from now is 100% because of the autonomous driving stack. Every company today starts with software at its roots. Then you realise it would be weird to start a company today and ignore mobility and the internet, right? If you were starting a business in 1999, ignoring the internet would be really weird. If you were starting a business in 2005-2010, ignoring mobile phones would be weird. Today, if you start a software company and do not have a pillar focussing on machine learning or deep learning, you are in a similar place.

We are building complex systems that transcend human understanding and which are richer than any human can build for themselves. We are shifting from purposeful design and engineering to purposeful exploration. The human intellect is creating algorithms which can iterate billions of times better than we can. It’s humbling for humanity but is certainly the future of how we will do engineering.

Q:  How can technologies on our horizon help to tackle some of humanity’s greatest challenges?

[Steve Jurvetson]:  We try to make sure that everything we invest in has a democratising impact on humanity. With cheap, abundant fusion energy for example- many other challenges can be addressed. You can desalinate seawater for example and reduce pollution. That alone would be a massive change for the world.

Meat production is currently barbaric; we’ll look back from some period in the future and wonder what we were doing. There is no possibility that we will be continuing to slaughter animals for meat in a few hundred years. Meat consumption is going to go up with wealth as it does everywhere in the world…. It was the meat consumption of the United States that has been the largest source of deforestation in the Amazon. We destroyed the Amazon for meat, and China is about to do the same to Africa. We need to find a better way to make meat. Imagine you could make all the meat you want without the slaughter, without an animal being grown. We can grow steak in a lab now. I know it sounds weird, but I’ve tasted it and it’s indistinguishable from the real thing because it is the real thing, you’re just not killing animals to make it. It will be Halal by default, will avoid the diseases that are transmitted by animal proximity and- importantly- will cut methane which is the worst of greenhouse gases. That doesn’t’ even include the land use impact of reducing animal farming. About 40% of our usable land is taken-up by animal production and the feed for those animals, its insane.

This is all great, but there is a shadow. Imagine that the 4 billion people we’re getting online decide to go into cloud-based programming work. They can study online, devote their resources and intelligence to becoming a programmer, but the job opportunities in the information economy follow a power-law. The best programmers are more than 100x effective as the worst, it’s not linear. We’re not creating employment at the same scale as we’re creating wealth.

All of these technologies I invest in… all that we do in Silicon Valley… we’re perpetuating and accelerating inequality whilst also raising the bar for all. Imagine Maslow’s hierarchy of needs… the baseline is getting higher all the time. The average person in poverty lives better than the average rich person did a century ago, but the disparity is growing. We need to fix that.

[Vikas: How can we fix these problems?]

[Steve Jurvetson]: It’s bizarre how few levers we have to make society fairer. We need to change the fundamental economics of information technology businesses to get them to move away from the power law where a few people take all the spoils at fractal scale. The same is true at the nation level. It’s going to continue to polarise, and one of the most powerful tools we have to counteract it is philanthropy – which is voluntary – and that should worry all of us.

There’s a correlation between the speed you made your wealth and how philanthropic you are. If you took a lifetime to achieve wealth, there’s perhaps a notion that, ‘I worked hard… I deserve to keep it for my family…’ Whereas in Silicon Valley, if you have been able to make multiple-billions of dollars from 2-3 years of hard work, you simply cannot hold out that you are smarter, better or harder-working. You got lucky. That’s inconsistent with hoarding and that notion of giving back correlates with that.

Q: What do you hope your legacy will be?

[Steve Jurvetson]: The question of legacy is something we all ask ourselves- sometimes throughout our lives, and sometimes on our deathbed. Steve Jobs, for whatever reason, thought he was going to die young and just felt this huge drive to make a difference while he was alive- it was almost poetic.

We have a desire for symbolic immortality. We want to create and contribute to humanity – things like art… companies… sometimes we bake our names into the companies we found like Hewlett-Packard. I see this all the time; entrepreneurs refer to their companies as ‘my baby…’ it quite literally feels like the thing you are leaving to future generations- something which we also see through the vector of children. This is common to humanity, right? That our children and grandchildren are the vessel by which some part of us carries on.

For me, even if I have played a small part in helping facilitate a Tesla or SpaceX in achieving success, it’s hugely rewarding. More so than that, being able to give my children the opportunity to grow and achieve, hopefully will be something I can look back on with pride one day.

It’s like investing in start-ups, you can’t take credit for their accomplishments, but you can feel proud about what they’ve done.

The long arc of human advancement, of human progress, is a cultural and technological advance. The human body is identical today to the body we had 2,000 years ago. Biological evolution hasn’t changed- yet we are ‘smarter’ and ‘wiser’ – that’s cultural and technological evolution. It’s the ideas, science and methods that we have used to accumulate wisdom over time. We put bad ideas aside and accumulate the ones that are helpful and true, allowing us to do the amazing things that we do.  Every one of us is a contributor.  Some of us contribute more to that than others.  And I would say I want to contribute to that as much as I can.  Because I realise that’s the vector of progress.  The past is a steppingstone to the future, and our legacy must be how can we help facilitate human flourishing, advancement and happiness for the most people possible.

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.