About this episode

In our entrepreneurial journeys, we need to think much bigger and therefore set our expectations and goals much higher. By doing so, we’re forced to shift our perspective to play the long game. Steve Jurvetson knows this well and has a comparable perspective when it comes to investable technologies. While most investors want to know what your three to five-year plans are, Steve wants to know what your company will look like in 50 years.

Steve is the co-founder of Future Ventures, current board member of SpaceX, and former board member of Tesla. Prior to Future Ventures, Steve was the co-founder and managing director for Draper Fisher Jurvetson, where he led the firm's investments in SpaceX, Tesla, Planet, Memphis Meats, Hotmail, and Skype. In 2016, former President Barack Obama announced Steve's appointment as a presidential ambassador for Global Entrepreneurship. He has also been honored by Forbes as one of the text best venture investors and by Deloitte as the venture capitalist of the year.

Steve is arguably one of the most brilliant individuals I have ever spoken to. Tune in and enjoy a conversation that will blow your mind.

In this episode, you'll hear.

  • What Steve thought he wanted to do as a kid and what his parents encouraged him to do.
  • His experience in electrical engineering and business school.
  • How he progressed from Bain to venture capital.
  • The moment he realized he wanted to do venture capital for the rest of his life.
  • How he developed an intuitive approach to the market.
  • How he connected with Elon Musk for an investment opportunity.
  • The core areas he invests in now.

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The Startup Story is now on YouTube: https://www.youtube.com/jamesmckinney
The Startup Story on Instagram: https://www.instagram.com/thestartupstory

Steve on LinkedIn: https://www.linkedin.com/in/stevejurvetson/

Learn more about Future Ventures: https://future.ventures/

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Episode transcript

The Startup Story - Steve Jurvetson

Steve Jurvetson: Hi, this is Steve Jurvetson. I am the cofounder of Future Ventures and before that Draper, Fisher, Jurvetson, and this is MY startup story.

Every wildfire began with a spark. Every superhero has an origin story. And every single startup has a moment that they point to as their beginning. And every founder has a purpose that drove them in the midst of all obstacles. THAT is The Startup Story.

James McKinney: Welcome to episode 97 of The Startup Story. Have you visited Grindology.com yet? I mean really, just before we even get going yet, have you visited Grindology.com yet? Well, you need to because Grindology is now open for subscription so reserve your Q1 box today. Every box of Grindology will include two 12 ounce bags of coffee that is uniquely crafted to fuel the grind of entrepreneurs, creators, makers, and founders just like you.

In addition to the great brew, every box will include an exclusive Grindology magazine chock full of real tactics and strategies used within some of the most successful brands in the world. I mean, the reality is the Grindology magazine shouldn't even really be called a magazine. It's more like a tactical manual. Each page contains information and action items that you can immediately utilize to grow your business. Everything about the Grindology subscription is focused on providing you with the necessary fuel for your grind. The first box will ship this January but the very first box is also an exclusive offering, so secure your box today by visiting Grindology.com. Now let's jump into this week's episode.

My guest this week is Steve Jurvetson, cofounder of Future Ventures and current board member of SpaceX and former board member of Tesla. Prior to Future Ventures, Steve was the cofounder and managing director Draper Fisher Jurvetson where he led the firms investments in SpaceX, Tesla, Planet, Memphis Meets, Hotmail, and Skype. In 2016, former president Barack Obama announced Steve's appointment as a presidential ambassador for global entrepreneurship. Steve has also been honored as one of the Tech's Best Venture Investors by Forbes and as the Venture Capitalist of the Year by Deloitte.

Look, I'm not even going to pretend for a moment that my conversation was like all other conversations that I've had. Steve is arguably one of the most brilliant individuals I have ever spoken to, and the technologies that he is investing in are so forward thinking that it will truly blow your mind. While most investors want to know what your three to five year plans are, Steve wants to know what your company will look like in 50 years because the areas that he invests in take considerable time to develop. The market's just not ready for them yet.

But now that I say all that out loud, I realize that his perspective on investable technologies is really quite analogous with how we should approach our individual entrepreneurial journeys. We need to be thinking much bigger and therefore setting our expectations and goals much higher. By doing so, we're then forced to shift our perspective to play the long game. Steve's experience, the brands he's invested in, the entrepreneurs he's surrounded himself with, they're all incredibly impressive. But like all Startup Story stories where he is today is not how he started which is why we need to go back to the very beginning.

Steve Jurvetson: None of the ultimate career choices that made me happy were something I had any consciousness of as a child. So I was born to eastern European immigrants, both from Estonia. Interestingly though my dad basically helped start the semiconductor industry in the United States in 1966. That's why I'm a US citizen because he was allowed to immigrate given some of his talents. He didn't really have much of a direct background. He had a physics training but enough of a scientific background and curiosity, and he was at the right place at the right time to be at the opening and the blossoming of the semiconductor industry. I just share that in that technology and technology business were fascinating influences to me throughout my life from earliest memories, but never entrepreneurship per se.

That being said my dad did join a startup, which is so weird for me to think because I don't think of it that way. I was six years old. We moved from where I was born in Arizona, Phoenix area, to Corpus Christi, Texas where he helped start a company called Power Monolithic. Helped start, he joined… let me rephrase that. He wasn't a founder. So this is why I never thought of it as an entrepreneurship story, I thought of it as oh he's just joining a smaller than average company. And probably an accurate way of thinking about it because if you're not taking the startup risk and the initial funding risk and like laying your career on the line to get it going, you're not the founder. So he wasn't a founder. That's why until today, in this podcast, I never really realized yeah I guess he joined a startup. And that startup failed and he got fired, and everyone got laid off. It was one of those great stories for a three year period.

But to your question, no I didn't know any entrepreneurs and more importantly I didn't know, nor had ever heard, of a venture capitalist. So I never met a venture capitalist until I started interviewing for the job many years later, and we can get to that if you want. But in my childhood influences, there was never an, "Oh here's what this ecosystem is all about." Nor did anyone in my family or anyone I ever worked with could tell me what it was like because they hadn't done it themselves.

James McKinney: So growing up and I love the immigrant story. I've had a few first generation Americans on the show and there's this common thread among the children of immigrant story that it's about stability, right. So when you think about your upbringing and what your parents were pouring into you from a career projection perspective, what did you think you wanted to do and what were they encouraging you to do?

Steve Jurvetson: My memory on encouragement was not heavy handed. So unlike some families I hear of where there's the overt pressure to become a doctor or a lawyer or something reputable for the family, whatever, reputation, none of that. In fact, I might go so far as to say that there was never an overt suggestion, pressure, hey maybe you want to do XYZ. The only exception is very late in my life, like maybe junior year of high school, my mom did spend… yeah right?

James McKinney: The later years of life.

Steve Jurvetson: I still think of myself as a… yeah, at my peak maturity when I really peaked in my personal maturation journey in 11th grade, she did this fascinating survey work with some psychologist or career counselor and we actually have the whole audio tapes that were recently rediscovered. Unbelievably, back in 11th grade they suggested that I would be much happier doing something like entrepreneurship or venture capital than joining any large company which was like-

James McKinney: Wow.

Steve Jurvetson: … fascinating for me to hear, because I don't remember it at the time. I don't remember going into college with any career advice from that episode, but I probably heard it and forget it. Anyway, but the other half of your question, the richer one was what did I think I wanted to do and I thought I wanted to be a scientist slash engineer. I didn't have a clear distinction in my mind what the difference was. I probably fancifully imagined it'd be great to be an astronaut, it would be great to be a scientist astronaut, but I didn't for a moment consider that a path worth pursuing given the incredibly slim chances of success. My perception in the mid-seventies would be I have to devote myself to being like an Air Force pilot, and the actual selection for the Apollo program was amongst the rarified group of folks pursuing careers in advance of that, that I did not want to consider. I didn't consider the military path, I didn't consider aviation, I didn't have enough of a passion for that. I probably was as excited about being a firefighter when I was five years old as an astronaut, just everything was exciting.

In fact, there's this wonderful quote from Kissinger. I didn't hear it until college but I want to share it to you. It was incredible. I'll be paraphrasing but he said there comes a time in every person's life when they realize that all the myriad possibilities of their childhood dreams, their life has followed a path of progressive narrowing. It's kind of chilling to me to think back to let's say 60, 70, 80 years old, back on your life and realize you could have been anything, a firefighter, an astronaut, a scientist, an engineer, a venture capitalist. And you only did a tiny fraction of what you imagined you might have done and I found that insanely depressing. What's even more depressing is this is an undergraduate thesis that Kissinger wrote, so he was just an undergrad like me when I was trying to figure out what I wanted to do with my life. And I was like wow, that is not what I want. So I might be jumping ahead here, but I wanted something that would be progressively widening and expanding my horizons and technology learning, not progressively narrowing the way a PhD might or career track.

James McKinney: It's interesting with that quote, and hearing just the idea of an astronaut being something of a career ambition, I immediately go back to my kids generation. I have a 15 year old and a 13 year old, and astronaut is not part of that vocabulary for career opportunities because of how the space programs have tweaked. And of course there's an element to that story that we'll get to with yours, but I find it fascinating within the context of that quote how the narrowing is not just of our own journey and our own opportunities to be pursued, but it's also there are things that just fall to the wayside. I remember wanting to be an astronaut. I remember wanting to be a military pilot.

Steve Jurvetson: When you were young and when I was young, it was exciting. Exciting stuff was happening and your kids unfortunately live during the space shuttle era when it was very boring.

James McKinney: Yeah and now my kid's kids will live during an entirely different era, and I can't wait to see what that looks like. But nevertheless, so you have this idea within science to be a scientist, an engineer. What was that next step for you? Obviously, at college has to be part of it.

Steve Jurvetson: Yeah. So funny little memory jumps up, when I was six years old my first purchase of any kind was a chemistry book that had nice illustrations and pictures of all the wet lab work. It was so fascinating to me. My parents thought that's bizarre. I remember a tape recorder, Motorola tape recorder - my dad worked for Motorola - before most people had one. This idea that you could record your voice, listen to it back. I mean, this shows you how old I was, I found this amazing.

So the path towards where I am today, went through high school where I was convinced that I really enjoyed math and science coursework more than others, and really decided by high school that whatever I did college would be something engineering related as opposed to econ or law. I flirted with the possibility of other things because it turned out I actually was better in high school, strangely, in debate and English, at least according to the awards they gave the senior year, than math and science. I mean I guess I had more competition in math and science, I don't know, but anyway. There were at least some question marks in the back of my mind. It wasn't 100% obvious what I wanted to do, but by the time of my freshman year in college it was like 100% obvious. I didn't really consider anything else other than I'm going to go into electrical engineering slash computer science, that field.

And a major step I left out, a super influential stepping stone along the way, was the Apple 2 computer. So I got one for the first time in seventh grade. Prior to that I would do intricate drawings of computers and imagine having what you might today call a data center, even though that word didn't exist back then, in an underground lair in a James Bond volcano of course, but I'd draw these eight or nine page wide drawings of the stuff. So I dreamed of computers before I had one. Got one in seventh grade. I was smitten.

And anyone who is a computer scientist by personal choice, meaning they're drawn to it and got into it, knows what I mean when I say it is insanely empowering and unlike any other academic experience I can name in terms of its sense of personal empowerment, that you can explore algorithms in real time. You can explore, in an engineering sense, does whatever it is you're creating, how does it work or not work, and with immediate feedback loops. Versus the longest term, like the people I have the most distant respect for because I don't understand how they do it is some of these astrophysicists or others who might spend decades in a single research endeavor before they get feedback on whether their thesis is right or wrong. Like waiting for a particle collider to get built to test your hypothesis. Dedicating your life to one question, as opposed to a few per day, can I speed up my algorithm by doing this.

There's such, and by the way as I become an investor this has become a thesis, there's so much richness in the array of learning that can occur if you have a faster feedback loop. If something can be simulated than physically built. If something can be in an engineering sense you can just run more experiments per day. It's actually a fundamental driver of innovation. So computer science is like crack. There's nothing better.

So starting in seventh grade I wrote games, I wrote a little specialized word processor to help me in debate where quite simply I wanted something that could put onto 4x6 cards and basically print something out that I could then cut and paste on a cart because we physically use card to make arguments together in real time when we're debating. Archaic system, I don't know what they do today but it worked pretty well. The key was I needed to be able to print within certain bounds that you normally would never consider. I'm sure you could set up a template in Word today, but back then with the primitive word processors that existed there was no way to easily do it so I wrote that from scratch.

I wrote the game Mastermind from scratch, a bunch of adventure games that kids in my neighborhood would play with me, stuff like that. Nothing too serious, but enough to sort of when I entered college I was ready to hit the ground running and went through college and undergrad in a ridiculously short period of time in electrical engineering, and loved it, and rolled right into a master's degree. Loved that too because I enjoyed being at school and being in the dormitories back when we could be in dormitories. Oh, the days of social encounters. And actually started a PhD without intending too, but left soon afterwards because of that progressive narrowing. But that was sort of up through college days. I did electrical engineering. Did summer jobs in it.

James McKinney: But with all of that experience you talk about the programs you've written, the games you've written, there wasn't this thought of I want to if we put a time stamp on that, because I don't know where the gaming culture was at the time, I don't know if Atari was a thing at the time, but with all the things happening there was never this idea that this is the discipline within electrical engineering you wanted to go into?

Steve Jurvetson: Oh, no, no. I knew that I wanted to do something related to computing and computers, so whether it's design the chips that go into computers, whether it's the software, a bit of both. But I wanted to keep a little bit of an open mind, and I always have in my career, around the edge of what I think I want to do. So if it's like computers generically, well what part? Is it the software, is it the hardware, which would I like more? Is it the chip design? So I actually did a little bit of all three in summer jobs. One of my earliest summer jobs was writing Apple 2 software in a chemistry department at University of Texas at Dallas.

Another summer job was getting to see the insides of a memory chip company but I was doing just technician work, literally loading chips into a testing machine and seeing if they work. That was the extent of the mental engagement but I could at least see with it was like inside the walls of a chip company. And then I worked at Hewlett Packard back when they were more of a high flying company. They were probably at the time one of the top five computing and semiconductor companies. And I did work both in the personal computer group and in chip design, so I actually designed I think seven or eight chips that went to manufacturing. All again summer jobs. A series of three summer jobs at Hewlett Packard to get a sense of which part of engineering I liked most.

What I discovered in that exploration is I think I want to be in a smaller company. Weirdly, I had blinders all throughout like should I sell my games? I didn't think they were good enough frankly to sell the software when I was in high school. Do I want to join a startup? I didn't know of one so I didn't happen to have a personal connection of hey my buddy Joe starting a company, I'll go join him. So like where do I find one? There was one actually I think in my freshman year or sophomore year of college. I actually did actually sign a contract to be the head of marketing of a startup. The startup though was just a friend of mine, just the two of us, and my sole job was to sell off the software that had been written. We were trying to liquidate, trying to find a buyer for actually what today would be called a neural network package or a machine learning, deep learning package in the mid-eighties, or late eighties rather. Yeah, so there was that but not enough to really be serious. I didn't have employees, it wasn't a full time job.

Okay, so again the blinders when I was, fast forwarding again to what do I really want to do when I leave college and have a fulltime job I thought I wanted to be an engineering manager. I transferred from the design side, the engineering side. I tried to transition to the product marketing side and failed so instead I got diversity of engineering experiences. But I had this sense that I wanted to be… and HP again was my primary work experience in terms of seeing real organizations, real company operating. It seemed like the managers made more important decisions.

I as a grunt engineer could really tell when a program got cancelled, funded, why, and it just felt like in life that would be the more impactful place to be. How would you get there? Shoot, I better know something about business. And I hadn't really at that point, other than some coursework, knew much about business. So I thought, and this was the only time in my life I purposefully set out to gain some work experience that would help me do what I actually want to do later, which generally I don't advise younger people asking about career advice. I think you want to kind of directly do what you want to do, but for the situation you don't know what you want to do. I was trying to figure it out.

So I went to go join a management consulting firm called Bain and Company. Great place to learn a lot about different industries. And it served its function exactly as I'd hoped. I learned a lot of things about business, I saw a diversity of industries that I did not want to join. The actually end customers, the client industries. And it got me into business school as a transition and that was the plan, that from business school something in my mind or maybe nudging from my mom, I don't know, told me intuitively that if I make it somehow to business school I'll be able to figure it out there.

And now I can tell you in retrospect that's absolutely true in that business school is probably the only academic program I know where everyone around you has had some prior work experience. That's not true in law school, it's not true in med school, it's not true in engineering master's programs. Everyone is just going straight through the academic path, and business school is this weird place where almost everyone who has done consulting is trying to get out of it, anyone who has been a banker is trying to get out of it and do something new, and they're actually giving you honest feedback on what life is like in their firms because they feel less beholden to wherever they came from. So if you want to know what it likes at Goldman Sachs or Bain or any of these companies, business school students can tell you.

James McKinney: That's awesome.

Steve Jurvetson: And so that was fascinating and I learned a lot about choices, everything from product marketing to consulting to banking. These were all possibilities coming out of business school, and I don't want to do any of those. I actually don't even want to do product marketing. Jumping ahead, I did summer jobs at Apple in business school, and I don't want to do that either. It's almost like the void. Everything I've ever experienced I don't want to do.

James McKinney: What years were you in business school at that time?

Steve Jurvetson: So the business school years were '93 to '95.

James McKinney: Okay.

Steve Jurvetson: Just before the internet boom.

James McKinney: I find that fascinating about your experience in business school because, I don't know probably 15 episodes ago we had Dave Bolotsky of Uncommon Goods. His story is similar, not from the business school perspective but the management company where he didn't know what he wanted to do. He wanted to do something in music and so he went and joined a management company where he managed a ton of early stage retail companies around music like Guitar Centers and things like that when they were early on.

And it's in that experience that he knew I want to be in the retail side of music, and I know I want to be online because at that point in '96 and '97 he started seeing Guitar Center being interested in moving online. And so he said I want to do something online, and that's where the early days of Uncommon Goods, which is now like a $600 million company, has started because of similar to your experience being in a management company, seeing lots of different things within for him it was a certain discipline, but for you it wasn't really a specific discipline inside of your management firm experience right?

Steve Jurvetson: I asked to work entirely for high tech clients, so at least I knew this much that if I'm going to be learning business I want to learn technology business, I don't want to learn about abstract other areas. And I guess, I'm trying to think how best to think of it, it's almost like a mini business school. You see mini case studies, little snippets of companies at different stages of maturation going through some fundamental strategic crisis or opportunity. Like they need to pare back after a merger, which I didn't work on luckily because that's the least interesting. Or whether they're considering expansion, should we acquire new business to expand in new areas. You know really important questions the CEO was wrestling with. It's like wow that's really fun, I'd like to do that in some sense.

Let me come at your comment/question another way. The thing that I took most from Bain or consulting is that I enjoy learning new things in perpetuity, and that there are actually careers where you can do that. And I believe consulting is absolutely that, and maybe banking is. I don't really know because frankly I've never worked for a bank and I still don't understand what life is like there. All I hear from people who leave is it's not something I think of as joy, but it may or may not have the attribute of learning from your clients. I certainly do in consulting because you actually aren't just dealing with the finance question, you're dealing with marketing questions, manufacturing questions, supply chain optimization, everything right.

So the one thing I learned is I like some kind of career where I'm not just doing one thing forever, which would be for example being an entrepreneur with a passionate idea and pursing it for decades, that is pursuing one idea. You can wear many functional hats over time as a CEO in terms of your focus, but it's not for me. Maybe I had too much ADD attitudes of oh my gosh that's interesting, let's learn this. When you eventually get to the venture capital years, it's like I found the perfect job for me, I can't think of anything better, I don't know of anything better in that regard. But I got my first taste of the possibility of if you will almost like a portfolio career strategy. It's a portfolio. You're doing many things, you're leveraging one to the next. You can grow into new, if you're following technology business you grow as it grows into new sectors that didn't exist a few years ago. There's a renewal, a perpetuity. You can imagine doing it for decades and not getting bored because you know, I know in venture capital 10 years from now will be completely different set of things than it is today, as it was 10 years in the past.

Consulting is almost like that and so you do see a lot of lifers as I call them, people who never make it out of consulting even though maybe initially they thought they would because you can kind of get pretty good at doing that and not so good at doing anything else. Which by the way is probably true for venture capital as well. I don't know if you'd to hire a venture capitalist to be a CEO of a company or anything frankly.

James McKinney: You're probably correct on that.

Steve Jurvetson: You know any other job.

James McKinney: So how do you get from Bain to venture capital? What is that jump and what is that progression for you?

Steve Jurvetson: That happened entirely at business school, and I was blessed in one way with having a certainty of a job/career option I could fall back to which was going back to Bain. As is common for the consulting firms, they'll pay for your business school if you come back. And so business school was getting paid for at the time, so I faced an interesting safety and security path which is go back for a couple years, work down the debt would disappear, all my school debt, and they know this, be probably in the consulting career path for a while. Or change paths to anything else, leave Bain, and owe them a whole pile of money in one fell swoop. And so I at least had the opportunity to explore.

And the way it happened is a person I worked with at Bain, this guy named Chip who was on the east coast, was working for a venture firm at the time called Greylock which today is much more well-known I think today than it was then. Back then, it was, actually I shouldn't say that back then it was probably in most people's top 10 or top 20 list of venture firms in terms of just brand awareness, but they were a very different firm back then. Very conservative, very white shoe. On a spectrum, wherever you think of as conservative, in every sense the word. Politically, risk taking, and I got the most initial traction because out of nowhere this guy I worked with, and who knew me, knew my technical chops and my business acumen whatever, he thought I'd be great. Suggested I interview. I knew nothing about this career path but coming out west, give it a swing. I loved what I heard, even when described as a conservative firm. This is what I want to do a deep dive to understand more about. And this is before the internet again, so in the sense that maybe one or two venture firms in the entire world had a website.

James McKinney: Wow, wow.

Steve Jurvetson: So you couldn't, nor were there any articles written really. There was actually the biggest goldmine of information I found on what actually are the differences between the venture firms was a guy who cofounded Red Herring magazine. Fascinating fellow, Chris Alden. Love him to death because he was a classmate of mine at the time and he wrote a column every single month where he interviewed a venture capitalist to try to find out what makes your firm special-

James McKinney: Oh wow.

Steve Jurvetson: … and he'd been doing this for many, many months. So he could give me the lay of the land like no one else. It website far and away the most important career input I've ever received by far, because here's someone who actually can tell you what no one else knew, what is it actually like. Because everyone positioned themselves the same. Oh, we do early stage venture in companies that are going to change the world. Like yeah, that's what everyone says right? Okay. So I actually ended up doing 60 interviews, I remember this, across 13 different firms. And the thing about that ratio, there were some firms that did a lot of rounds of interviews. Because some of them were like one interview, we're done, no thank you. Like Greylock, I think it was around the eighth or ninth interview they said, "Well we're going to have 13 rounds of interviews."

James McKinney: Wow.

Steve Jurvetson: Like what? How do you know that? How do you know you're going to have 13 rounds of interviews? Who has that much process and rigor? Like really? So make a long story short, I lasted about seven, eight rounds of interviews before I slipped up and allowed my true nature to slip out, because I was trying to fit what they were looking for. I could tell what they were looking for. I could tell what they were looking for. This is conservative, but as opposed to playful, whimsical, childlike at some point I made some disparaging comment about being conservative just in an offhand matter and they're like, "What'd you say?" And literally, and I was being disparaging of the word conservative, and they said, "Well we never knew that had negative connotations." Like oh well it does.

Anyway, if you're an entrepreneur you want conservative on your board or a risk taker? Anyway, so to make a long story short I did finally find through a random over the transom, as it was called meaning sending a resume blind with no connections, no introduction, no help from anyone to this random guy named Tim Draper who literally had a job listing on this basically back then paper job listings on cork board-

James McKinney: Oh wow.

Steve Jurvetson: … in the career center. Like anyone, companies that can't afford marketing or advertising that you'd never heard of. So Draper Associates, never heard of them, no one had well except for the guy from the magazine who I'd heard of him quite well. Anyway, to make a long story short I interviewed there and it was night and day. Here's a guy, even though he's in a suit and tie, who slid down the banister of a stairway as we're exiting a building. I'm like this is the place I want to be. This guy just slid down the bannister at a job interview! That's perfect.

James McKinney: That's awesome. I love it.

Steve Jurvetson: Anyway, yeah to make a long story short a lot of interviews, a lot of informational interviews. A deep dive because I knew I could fall back to consulting and I finally did get a job offer from Draper Associates. Had two other firms were very close to making an offer but just from culture and fit, and the entrepreneurial-ness of joining a firm that was the smallest I'd come across, I was the third person and they wanted me to become a full named partner, and that was something discussed in the interviewing process from the beginning. It's like taking the biggest risk, the biggest salary cut by the way. I took a 50% salary cut twice in my life. Once when I left Hewlett Packard to join Bain, the initial salary and once when I left Bain to join Draper Associates. So my current income dropped 50% both times. And that big debt that I have to pay back, leaving consulting, all the sudden my entire business school debt appears in a single check which I had to finance and find a way to manage myself. And it was the best decision of my life.

James McKinney: I love it.

Steve Jurvetson: Taking that short term sacrifice for the long term gain of better learning, better trajectory, better mentors and a better life.

James McKinney: So you find yourself at Draper and Associates. Do you remember the moment when you realized yes venture capital is what I want to do for the rest of my life? Was it an investment? Was it meeting a certain entrepreneur? What was the moment?

Steve Jurvetson: The part… so I don't know, because no one's asked me that question before and I'm trying to be… so the answer that jumps to mind and let me give the answer and then give it a second thought. Was it really the case that even in the interviewing cycle I had the sense this would absolutely be for me, and so a related question would be when did I get confirmation that it isn't a bait and switch or misrepresentation in the interviewing cycle. But the stories I heard from folks who came to speak at Stanford from the guest lecturers from the venture industry blew my mind. I took classes where they were the occasional guest lecturer. I went to every and all talks from any venture capitalist because this was my learning phase at business school. And I actually ran this thing called the High Tech Club where I got to invite speakers to come in that I chose, like Steve Jobs who came to my house and gave this famous talk-

James McKinney: Oh, that's awesome.

Steve Jurvetson: … famous at least in our class. Amazing stuff. I could cherry pick who I wanted to invite. And from those stories, I was like wow, I know that I'm going to enjoy this I think because of all the attributes I heard. Now, is it the case? So I think it was something in the first six months for sure, because I was promoted to partner within six months of joining. I had invested in a handful of companies already, I had already joined boards of directors. I hit the ground running because it was internet era, and the internet years there's a mantra that says everything happens on internet time, is especially true for learning loops. You can invest in more companies, go through more rounds of investment, see what might normally spend years happening in months to quarters, and almost like in dog years just see rightly or wrongly what it's like to build a company hyper fast and be granted as I was in the firm that I joined authority more quickly than ever before to take some risks and invest in a portfolio of companies.

So normally it would have probably taken, meaning normally meaning normal firm and normal economic cycle, a few years to accumulate as many investment points of learning as I did in the first six months. Talking about Hotmail and a bunch of others who went public, probably three or four companies that went public from that first six to nine months. And that was all confirming, meaning it wasn't the moment where the record scratched from what I thought it might be like, even though I couldn't have told you… and it's hard to remember when you didn't know something.

Try to remember what your life was like before you could do math. It's like really, before I could add what was the world like? No concept of two plus two, right, kind of a weird thought experiment. So it's hard to reverse back. From what I know today being in this job when was it that I realized I was in a firm where analytics is not essential to the job? And remember being blown away somewhere in the first four or five years on the job that we hadn't used an Excel spreadsheet for anything.

James McKinney: Wow.

Steve Jurvetson: That was my tool of daily use at Bain. I mean there was always something we could be modeling, or analyzing, or adding up, or putting in a pie chart or whatever. So again to give you a sense I'm a power user of Excel relatively speaking. I use it for my expense reports. I did all my own personal income taxes in spreadsheets I built from scratch throughout this entire time period, for like 20 years, and that's crazy in its own special way. I'm not shy of using a spreadsheet if it could help me. Other than putting together a term sheet at like the kind of thing you could easily do with pencil and paper, the "spreadsheet" that's like six lines, other than that never used it.

So what I mean is no market forecast analysis. No looking at what the numbers are and any of the financials of any startup and analyzing them. Now there are people today by the way in enterprise software where they'll want to analyze all these ratios they like to look at in that sector. But in the areas I was investing in and in the firm that I was in, we instead were saying, "Let's try to find entrepreneurs whose ideas are so big, the business change they'll bring so dramatic, that if the right… and if they're wrong by a factor of 10 they're still an enormous business." In other words it's so big that being 10X too optimistic is fine. Companies like SpaceX and Tesla and others.

I love that because even though I'm analytical, I enjoy learning in a slightly more associative way, in a slightly more synthetic way. Synthetic meaning thinking about the connection between ideas and how ideas combine to form new ideas as opposed to analytical rigor of fitting things into a framework, a box, a ratio that you either go or no-go based on your ratio. That to me is not a social learning. That is to me a form of crystalizing prior knowledge and just implement. So I think any venture capitalist who says I have a set of analytics I apply over and over again, that may be great for a while, that's a strategy that works for years not decades. Either you're going to get bored-

James McKinney: Interesting.

Steve Jurvetson: … 10 years from now, or that's a brutal framework that how do you grow and change your framework over time? It's just to me it seems incredibly boring. So I like forming intuitive judgements about people, markets, and technology, and seeing if I'm right or wrong. Some of these lessons take decades, or is my timing off. Like yes quantum computing is important but shit that was 15 years too early on that one.

James McKinney: So is that process that you just talked about, that intuitive approach to the market, the technology, the founder as opposed to the analytics, is that something that was started in your time with Draper and Associates or is that something that is current for where you are today with Future Ventures? Or something that's been in the process the whole time?

Steve Jurvetson: No. But just for context, I was at what was initially Draper and Associates, eventually became Draper Fisher Jurvetson, or DFJ for short when they added my name. There I was for 23 years, so those were the formative years plus some, and a lot of lessons learned. Most everything I could tell you about… certainly a lesson learned would have to come from there because my new firm, Future Ventures, we're only a year and a half old, just over, not quite two years old yet. So any investment we've made we're only beginning to see the repercussions like was it a good/bad decision, did we make a good call, is a certain entrepreneur the kind of entrepreneur we like to back, is an industry maturing. Most of those lessons take five to ten years minimum, sometimes more. And by the way lessons learned about what works and doesn't work as a venture capital strategy, what should I be doing differently, not the entrepreneur but me. Those take decades, multiple decades.

In other words, very few lessons that are worth learning occur in one to three year timeframes in venture capital. And if you are focusing on what happens, you probably have a brittle short term strategy. Have I chased the best market? Should I be doing space investment or enterprise software or what's hot? You could imagine as theme chasing or you'll be a fast follower, and there's a strategy I'm imagining you could pursue there. But the lesson learned there aren't going to last a career I don't think. Things like team size. How productive is a venture firm when it has one, two, three, five, seven, twelve partners? And the fact that there's a curve that it quickly drops off after five and goes to incrementally the firm I think gets worse, and worse, and worse the more partners they add past seven.

James McKinney: Interesting.

Steve Jurvetson: Where in the world would you get that firsthand experience in anything like one to five year timeframe? Because you don't have that kind of variation over a one to five year timeframe to study or think about.

James McKinney: Since you've been in venture for 25 years, you've seen a lot of things happen economically, and of course culturally as well. I'm just thinking if you were now the dotcom bubble, the 9/11 events, two recessions, there's a lot that has taken place. Do you think the rocket ship of the technology that took place in the '95 to 2000 era, especially on a venture capital side, do you think that is something that repeats itself every so often? Do you see it now or have you seen it since I should say?

Steve Jurvetson: So first off, the premise to your question is right in that I have seen a lot of economic cycles and that's really valuable. I work with other venture capitalists who haven't and to be able to share that well, yeah, I remember when kind of stories about when things are very different and paying attention that is valuable. But the specific question, so the dotcom boom, the '95 to 2000 part of technology, because if you step back a lot of other interesting things were happening in technology as well. The whole genetics revolution was just starting. In fact, some argue that the stock market crash was precipitated by a patent issue that the Clinton administration and the British put in place specifically around genomics not being patentable in the way that many business people had hoped they might be, that triggered the whole tailspin that then took the whole internet down from its bubble shall we say.

So there were innovations happening, just to recap, in optical integrated circuits, in semiconductors, in enterprise software clearly, and in consumer software even more so and service layer and all that around the internet. And so when we think about what we're comparing, let's not just focus on a Pets.com or Amazon and Google and a handful of other companies that come out of that era, actually Google more after that era, and Facebook certainly after that era. So first off, the internet opportunity clearly went past the dotcom crash when you think about Facebook and everything that came afterwards, and it wasn't a burst.

So my gut is that we have a richer array of entrepreneurial opportunity by industry sector than ever before. Meaning when I started in '95 you were either a semiconductor investor, a life sciences investor, or the sort of computing and software, and that would include… But literally people's entire firms and entire careers were like I just do semiconductor. Why would you do anything else? I do chips. I do Intel, I do Fairchild, like that's all there is. And then obviously in life sciences that continues to be a reasonable niche to say I only invest in human health. I'm doctor in my background and I invest in therapies, how could a non-physician invest in therapy? You could imagine having that point of view. And again different strategies to pursue that.

Everything else, at first it wasn't obvious. Back in the nineties investing in software as a sector worthy of its own name and saying that's all we'll do is pretty rare. Hummer Winblad was a firm that staked that claim early on in their branding and they stood alone for quite some time. Other firms were like just software? Like really? Your portfolio isn't going to be diversified, everything is going to go up and down with the software market as if it were this niche.

We now realize, fast forward to today, that software whether you like to use the term of Andreessen that it's "eating the world," I like the idea that we're basically dematerializing everything and turning every industry into an information age business or an information technology, which means the locus of competition shifts to how you process information, which means it's all about the software and service stack meaning either software as a service or software as software. Everything else is window dressing, by the way. So in a car of the not too distant future it'll be obvious that you're buying the AI stack for autonomous driving. You would never want a car that's less safe than the best one. Everything else is going to be do you have good brakes, do you have good tires, it's like who cares. How good is your software, for who makes it and who doesn't? Same is true for SpaceX why one company is rising head and shoulders above everyone else, better software. It's not better metallurgy, it's not better… there's no patents in SpaceX. Not one thing has been patented, for example.

James McKinney: Really?

Steve Jurvetson: Yeah.

James McKinney: Wow.

Steve Jurvetson: And Tesla made all the patents open source. The idea is don't rest on your laurels that you've invented something that you're going to seek rent from for the rest of your career, because then you'll have in a sense a naturally sun setting opportunity. Instead, think of a process innovation where you'll be the magnet to attract the best engineers in perpetuity to join your mission, because A your mission is important like making life a multi- planetary species versus milking the government for as much as you can on some government contract. Like which, if you're an aerospace engineer which would you rather do? A really boring backward company that milks the government and has no commercial customers, or are we going to go to Mars? Okay. It's sort of like stating the obvious, but that's more important. And so in the case of SpaceX they realize that their primary competition is China, and if they patented something China will just rip it off, the patents are false. Don't print a blueprint of what you're doing if you don't have to, especially when you see the rocket go in the air, you don't realize what made it work. It's not like you can reverse engineer the rocket that's in the air. China can't just grab one and study it or get the code base hopefully, unless they hack us. Anyway.

Back to this notion of, to roll back to the original question, because you'd ask how was technology different then. So the most important takeaway is today every industry is at some stage of this transition of realizing or actually being in this transition. So obviously software, computing, networking, life sciences. So genomics, immuno-oncology, everything siding in life sciences slash biotech is itself an information vector of improvement when you can double click on it if you want. Aerospace, automotive, agriculture with synthetic meat and all kinds of new ways of treating agriculture as an information product.

And maybe this is a good example just to make sure people know what we're talking about. If you asked yourself 50 years from now do you believe that any high volume, important contributor to food production in the world will compete based on the quality of their labor? Meaning sort of the hardworking farmer in the field and the muscle. No, the human muscle, are you working long hours as a human will not matter. It will be what seeds are you planting, what satellite imagery are you using to adjust your crops, what other parts of the information puzzle are you pulling in to adapt and learn season over season. If you're growing in a field, then oh by the way in 50 years most of meat production will probably go to cellular agriculture, grown in a lab which is like a radically new way of making meat.

James McKinney: That's like Memphis Meats is I think a startup that does that, yeah.

Steve Jurvetson: Well funny you should mention that one. I led their Series A. they were angel funded prior, so that was the one I really bet on after a five year search for a new way of manufacturing meat, they were the one and only that stood heads and shoulders above the rest. So I was on the board of directors there back at DFJ and then we invested also from Future Ventures more recently.

James McKinney; Oh, funny I knew about Tesla and SpaceX, I didn't know about Memphis Meats so it's interesting that was the brand that came to mind and your part in it.

Steve Jurvetson: I love it.

James McKinney: You mentioned SpaceX and Tesla a few times, and obviously the fact that you're attached to those two brands from an investment perspective and on the board as well is incredibly impressive and I just don't know how often someone like myself will have the opportunity to sit with someone like you to ask some of these questions, but I have to from an investment VC perspective how did you and Elon connect for even the investment opportunity? Whether it be with Draper Fisher and Jurvetson, or Future? How did that engagement happen?

Steve Jurvetson: We first met, Elon, Kimbal his brother, and I, and we both remembered. I remember the year 1996, he remembers the month. Strange that we have this memory. For a pitch they were doing for a company called Zip 2. And the reason it's bizarre we both remember the meeting and all kinds of details of the meeting is that we chose not to invest. We didn't even present a term sheet. And normally those would fall by the wayside because there's like 100 of those kinds of meetings for each one where we actually do invest, which creates more memories. You obviously would think it's more salient and memorable when you then invest in them and stay with them for years. That's memorable. Single meeting declines usually fall by the wayside so that was very memorable. But then put that on hold. I guess it was memorable that we both formed an impression of the other that we remember to this day, but chose not to move forward on that particular business opportunity on the table.

I then invested and led investment in a company at its very beginning, so its first round, like generally the very first round of investment as an early stage startup VC. Went A, no one else investing, the only ones investing. B, if we did invest maybe no one else would because it's so bizarrely off the beaten track that it's not considered a normal company in any sense of the word. It's like one of a kind. And one of a kind usually don't, even though you think that's what venture capitalists look for, the vast majority don't. They want to invest in something that's in a proven sector, but that's an aside. To correlate this, when you do bet on someone and you're like after 20 meetings finally someone says they like what you're doing, it's really reassuring for that person-

James McKinney: Yes.

Steve Jurvetson: … and they remember that really well. So in the case of Hotmail, getting turned down 25 times and then finally finding someone who gets it for both of us was a very memorable moment. So I invested actually in Elon's cousins. Three brothers all in the same family tree who started a company called Everdream. It morphed a bit. Actually when they were starting it was just two of the three brothers at that point selling compute maintenance and IT services door to door, in Santa Cruz, by skateboard. So they literally skateboarded door to door, and would be like, "Hey Grandma, is your computer not working? Pay us a monthly fee, we'll keep it working, no virus. Any problem you have we'll fix it." Kind of a pretty simple services business model.

To make a long story short, when they pitched us they realized from what they learned there's an opportunity to make this a whole lot easier than door to door service. Let's preinstall a bolus of software that makes it impossible to install new software. In other words, you can't get a virus, you can't install anything. It's almost like a sandbox at the operating system level. Pretty clever stuff actually. So the idea is lock down the compute. Anything you want to add to your computer you have to do through us. We manage, make sure, we vet, in a sense manage desktop is what it eventually got called. Morphed a bit from small business to more midsize and larger businesses because they need it more than anyone else. They got acquired by Dell for cash and it was a bit of a rollercoaster. The company did not go straight and up to the right. It had its ups and downs, and that was important because we got to see each other in good times and bad times.

And this is a bit of a long winded preamble, but I think when I was starting my firm if I'm going to have a cofounder, as an entrepreneur myself it really matters that I know this person, that I've ideally worked with them before, in some way know them more than I would learn from an interview if you're going to commit to that. And in some ways, that venture capital relationship should be the same level of scrutiny if you can. If you can have someone invest in you, who you know each other from years of working together or some other thing, that's better than it's a brand new slap together relationship. Kind of like arranged marriage versus… that's probably a bad analogy for certain cultures, but you could imagine you'd feel more comfortable knowing the person before you get married.

So the reason that's relevant is when we come back to the Tesla story and certainly the SpaceX story the fact that Elon who was on the board eventually of Everdream saw myself, saw my firm DFJ at the time and just how we operated. By the way, it's not like every venture fund. A lot of venture funds get really scared when times get tough. They start wanting security and safety, and maybe I want my cash back or make foolish decisions to sell the company early because things are scary. And you can really tell. You really can through a few interactions, and ups and downs.

So Elon had the benefit, third party observer, to see how I and how our firm and my partners reacted to everything. And it was probably what he wanted. And I think if you have a choice of who you're going to work with, you're going to want to work with people you've seen before versus not. So come Tesla, it helped. It certainly helped with SpaceX. In fact, I'm jumping because we did Tesla first and then SpaceX, but when it came to a SpaceX investment this was not a company that needed money. They weren't pitching for it. We sold them on the idea that we could put, at the time, $20 million into the company for a company that was doing quite well. It was on gap accounting actually profitable at that point. Why would they ever take our money?

James McKinney: What year was this?

Steve Jurvetson: That was 2008 agreement to invest. The check cleared just given the legal process in early 2009 for SpaceX, and it was 2006 for Tesla.

James McKinney: Got it, okay.

Steve Jurvetson: So our Tesla investment, fast forward from… by the way, I think Everdream was either '98 or '99 I think for investment and it took a long time before it finally was sold. In fact at the time it sold to Dell… I know exactly when it sold, and then when the cash cleared it arrived just in time for Elon to save Tesla personally in December 2018 when it was in its toughest straights. That's a whole other story we can get to if you want, but when Tesla was at its closest confronting of death, and just complete the roadster was negative gross margin, and everything was falling apart. It was the great recession and more, and he personally saved the company in the most incredible gesture I've ever seen an entrepreneur take. Anyway the cash to pull it off came from Everdream, which is kind of a little funny detail.

James McKinney: Oh wow, that's fascinating. So there's a couple questions I have because the way you've spoken about that moment when Elon took his earnings from the exit of his cousin's company and brought it, put it into Tesla to save the company, the way you spoke about that was with incredible respect and regard. And from a VC perspective, from an entrepreneur perspective I see that. Again maybe it's foolish on my side where it's like if I have this influx of cash and my startup is suffering, I'm going to sustain life and I'm going to bring that cash into that. Now, I know some entrepreneurs probably may walk away from it and say sorry this didn't work out, I'm going to take my earnings from this opportunity here but my mind doesn't work that way. My mind is like I have to keep pumping life into this because I believe this is going to happen. From a venture capitalist perspective, what did that show you about either the opportunity or Elon?

Steve Jurvetson: Okay let me start with what it told me about Elon the person, because that's a more powerful emotional response if you will. That just jumps out. I was in shock. Because you know by this point, 2008, I had been in the business for 13 years so I had seen a lot of companies fail. I had seen a lot of companies get down to I can only make one payroll. I had seen all sorts of analogous situations. I had never quite seen one as dire in magnitude as actually Tesla was in. so in other words, the extent to which they were on the ropes was brutal. So what do I mean by this? A fairly sizable enterprise at this point, so we're not talking chump change, building physical things not software. So your flexibility to say well let's just pair back to, because I've been in companies where we paired back to five people from like 50 and made it, and turned the company around in the software domain. You can't do that with cars. It's just not an option.

You had Goldman Sachs fail to do a fundraise over the summer because of the melting down of the financial markets. You had your major investor, Vantage Point, openly hostile to the company saying we will not put another penny in as long as Elon is CEO. And in fact did even more dastardly things. Refused to sign the IPO paperwork. Would interfere with attempts to hire management. Like I'd never seen this behavior from any venture firm, or even reputationally never heard a story of worse behavior so you've got that going on. And you have Elon stepping in as CEO without that being the plan. He was an interim CEO in the exact same way that Steve Jobs was at Apple for a while. I'm not sure, like in the case of Apple Jobs wanted the job. In the case of Elon, he wanted to transition it to a good CEO who would shepherd the company forward.

So we have all that going on, so you can't raise money. No one's offering to invest. The insiders aren't going to cover you. This is the other thing a startup can often do is say okay insiders, we're in a pickle. We need X million dollars, can you guys come up with it because you've already got some investment don't you want to save your investment by giving us a slight bit more? When your biggest investor Vantage Point said hell no, you're stuck. Because we couldn't make up the difference. We couldn't fill that gap even if we wanted to. We could write a big enough check, because they needed $50 million.

Okay, so Elon in this incredible gesture first writes a bridge single handedly to the company in December when like cash reserves were down, they weren't going to be able to make the Christmas payroll. That's pretty, sort of we'd knocked the wind out of the sales of the employees. So he writes what we call the most risky check one could ever write, a $3 million bridge to nowhere. There was no term sheet, there's no funding being discussed with anyone, and it buys them a few more weeks to figure out what can I do. And so then he says he'll do the whole round. I think it was $40 million. I'll do all $40 million myself. If you guys want to participate you have the right to, so feel free. Any insiders who want to participate, this train is leaving the station. Here are the terms. It'll be a convertible note into the next round at a slight discount, and off we go.

And it single handedly, when you think about the effect it had on investors and what we thought about the company, shifted fear to greed. There was miasma of fear in the public markets, in the banker's failure to raise money, and if you're a fear centric person there was a lot to be scared about. When you learn in a finance surprise that you thought was a profitable business line is in fact negative gross margin, the more cars you make the more money you lose, that's you immediately fire your CFO, fire your CEO. Not me personally, but that's what they did. You have a lot of unanswered questions that could be scary.

And so the change in mentality is okay, here now instead of we don't have enough money to get to any amounts then, we now have $40 million. Imagine a company actually has $40 million in the bank account, somehow snap your fingers and boom there it is. That gives you enough time to find out if the government loan guarantee program is going to come through for us, because that was a discussion. By no means did we know if we were getting it or not. Or at partnership and investment from Daimler, which was the other. One of these two things hopefully would happen to save us, because if both didn't happen there's no future. Turned out both happened. We needed just one or the other, we got both. That didn't happen until months later but the greed cycle is okay, do I want to join this investment round with $40 million where I know I'll have enough money in the bank to get the answers to those two questions. And if either one of them is a yes then really interesting upside potential ensues. The business possibility unfolds once again and so that's what we did. So we loaded up the boat. We brought in our growth fund and they entered in that round as that first investment. Turned out to be the best round of any to invest in Tesla. I think it was $3 a share.

James McKinney: Oh my goodness.

Steve Jurvetson: Yeah, yeah. And we did as much as we could. As a small, early stage fund we couldn't write arbitrarily large checks so we just basically did as much as we could and knew that we weren't like another bridge to nowhere, we were part of a $40 million round. Make a long story short, it saved the company. It's just incredible.

It didn't really change your belief in the company. So when we first invested in Tesla, I know because I led that investment that we fully believed what Elon said succinctly, which is if you look out far enough in the future it is inevitable that all vehicles will be electric. Every type of vehicle, from train, locomotive, tank, car, truck, bus, there is no internal combustion engine in our future. It is an impossibility. And by the way I've used this in a number of talks I've given, even to people like Castrol British Petroleum division, that all they sell is lubricants for internal combustion engines. That's all they do. I'm like zero. Not like you go down, you go to zero and the only debate is when. They laughed. They just thought I was out of my mind, and I'm like think 500 years in the future you really think we're going to be pumping oil out of the ground? Think 5,000 years in the future, there's no more oil. Oh yeah, anyway. And of course any management in those firms, I don't live 5,000 years, I couldn't care less. I don't live 500 years, why are you even talking about this? Right?

James McKinney: Yep, yeah.

Steve Jurvetson: And if all you care about is maximizing this quarter's profit, they're wildly profitable. They're doing great until they die, until they're the buggy whip of the future. So this just highlights how a passionate entrepreneur is painting a picture - all vehicles are electric - chaining back to the present, and motivating employees to work harder than they otherwise ever would-

James McKinney: I love it.

Steve Jurvetson: … to make that dream a reality.

James McKinney: I love it. And you know his story is so fascinating to me. One because I think he gets blasted a lot for just some quirkiness and some of his boldness in some of his claims. But for me, what resonates with me is the interviews I've seen him in where the interviewer happens to be a good interviewer and lets him speak, and lets things breathe a bit. There's so much authenticity that comes from him when he speaks. Like I will never forget, and this is probably when I started waving the Elon flag if you will. I will never forget I don't know if it was a 20/20 or 60 Minutes or whatever it was where he's speaking about the challenge of SpaceX. And how I didn't know with the detail that you shared about the Tesla financial situation, but I did know about the SpaceX situation where it was on a Christmas Eve where they find out from the government that they won a contract and how that saved SpaceX at the time. And in that interview you see him crying.

As an entrepreneur, I felt every bit of what he was sharing in that interview and the weight and burden on his shoulders. From that moment on, I've just been a massive Elon fan because of what I saw in that moment, the humanity I saw as an entrepreneur in that. Let alone the brilliance and everything else. But you did mention Steve Jobs earlier, so I do want to ask because you had proximity to Steve Jobs, you worked at Next as well, you now have proximity to Elon Musk. Are these possibly some of the greatest minds that we will see, that we have seen in the last 50 years?

Steve Jurvetson: Well that's interesting. You say greatest minds, because to be fair there's all kinds of other minds.

James McKinney: Yeah, let me correct that. I will say greatest minds probably isn't the right phrasing, but I'll just I'll go even more niche, the greatest entrepreneurs that we've seen in the last 50 years.

Steve Jurvetson: Yeah, bingo. Let me start with Elon and then I'll back process on the Steve Jobs question. I would say, and this is going to sound like hyperbole but I believe it with every fiber in my body, that I think Elon is the greatest hit of the American dream.

James McKinney: Yes.

Steve Jurvetson: Meaning the singular best example of that concept writ large, meaning not just an American story but anywhere in the world where there's been that notion of an immigrant, a new entrance, someone who didn't come from prior wealth or prior business experience in that domain, meaningfully making a difference in an industry. I think he's the greatest hit of the American dream in the history of the world. So not just living today.

James McKinney: Wow, yeah.

Steve Jurvetson: But of any time past or… and I can't think of any contenders currently in the mix. So now Steve Jobs was a great entrepreneur. He wasn't the same quite immigrant, I mean second generation if you take his dad I think was an immigrant, but he was adopted so it's kind of a mixed bag on his, and is that so important. He was definitely an entrepreneur, right. He definitely didn't come from great wealth and he didn't rely on his dad's computer industry connections to get started, unlike some politicians we know. And so he gets all the full credit of being an entrepreneur, but and maybe I'm stating the obvious, his domain of impact is pretty much in digital computing/media what were seen as discrete and disparate industries integrating into one.

So what we now think of when we walk around with an iPhone that it is a super computer in your pocket, that's also your phone and takes photos. That is the digital manifestation of this little nestle of code, this little dematerialized thing. But it's not as, imagine if Steve Jobs actually went off and revolutionized agriculture as well. Now that's different, at least by most people's, and it's not becoming a computer, it's still agriculture, or commercial banking, or you name it. So the range of industries over which Elon has had impact is breathtaking and begs a whole set of different questions, what is this formula that works and hasn't failed yet in an endeavor which he's undertaken which is astounding.

Okay, and also one may want to compare them only on high level. High level would be starting trillion dollar companies, or soon to be trillion dollar companies if you add them all up and I'm speak rough orders of magnitude. Being CEO of two companies at the same time, having great impact on our lives. But then suddenly think that the analogy goes deeper, like there's similar personalities or they're cut from the same cloth. They're very different. So Elon is an engineer at heart. A physicist, a product person. Jobs is also a product person but marketing, aesthetics, calligraphy induced fonts. What is for him, actually for both, any imperfection in a product especially visual imperfection was a visceral cause of agitation, almost painful agitation when something wasn't perfect. In the minimalist design aesthetic of Jobs it was like removing buttons, removing keys from the keyboard.

It turns out that's a wonderful way to build a product that's software centric and no buttons, no physical thing. Your iPhone today looks exactly like the one from five years ago physically. You know the chips have gotten faster but it's the exact same thing, so software. Whether he premeditated that I don't know if anyone knows. Or if it's lucky byproduct that it shifts all the value to the software services layer, or if it was never stated as a strategy like here's the master plan of Apple the way Elon does, here's the master plan of Tesla, of SpaceX, and literally just executes and everyone else in the industry just denies that it can exist as opposed to like oh shoot, he's doing a master plan. Anyway, so they're both amazing entrepreneurs, they both created more wealth for America than other entrepreneurs so that puts them in the, and obviously Bezos is up there in the top three. Incredible people. I feel blessed in my life to have worked with two of the three, and known all three in some business context or another.

James McKinney: It's unbelievable, absolutely incredible. I feel like there's so many more questions about really Elon and your investment with SpaceX and Tesla, but I want to get back to your story a bit. Now you're with Future Ventures, your firm. What are your core areas that you invest in? You still hold to the premise before of just audacious goals and ambitions, technology, it's not about the process and the spreadsheet, it's still your process. But what things interest you right now?

Steve Jurvetson: So I'm going to answer in two ways, the way I think you intended the question which is some actual industry sectors and kinds of companies, and then the real answer which is what are we actually doing that leads this to be the byproduct, in other words this is the symptom of our strategy.

So the symptom of our strategy is we're actively looking to invest more today in companies in construction, in some weird corners of life sciences but most of all food production just writ large, how do we manufacture food. Well, I'll bridge to what we've done over the last year and we're still looking for more pieces to this puzzle. Basically helping to push AI or neural networks, or machine learning however you want to call it, out to that edge, to all of the little dumb currently devices. Whether it's your car, your security cameras, your Roomba, whatever. To call them intelligent is clearly overstating their capabilities but they have true… Imagine like super computer like neural network intelligence in anywhere you want for like less than $1 kind of vision. This is really important we think to intelligence moving to the edge, to scaling to the internet of things, and all other kinds of other stuff.

We have four investments we've made in the last year in that area and we're looking for others that may open our eyes. We are theoretically investing but have not in the last two years, in fact frankly in the last 10 years in space, interesting. So invested in SpaceX and then Planet which is the leader in small sats. Haven't invested in a single other space company since but just keep looking. And when I get to the actual answer to the question what we're doing where this is the side effect, it'll be more clear. We are today are closing, actually just closed yesterday, in a radical use of bacteriophages, or viruses that infect bacteria, to create vaccines. Cancer vaccines, coronavirus vaccines, any interesting technology platform. Nuclear fusion. And increasingly alternative energy generation opportunities. So fusion was the first. We're talking to and interested in finding a company in the nuclear fission space, even though that's like the most regulated. Certain to lose your money. Just like Tesla was prior to Tesla, any automotive investment for the prior 50 years, there have been lots of them 100% were bad ideas in terms of investment opportunities. You would not have wanted to invest in any of them. The same can be said for nuclear energy for the last 50 years, you probably didn't want to invest in anything. So that's great, we love that.

So then let me give you the real answer just so I don't miss it. What we actually are doing that is not as externally visible, isn't easy to explain per se and is interestingly very hard to replicate in a perfect copycat mode, is Mariana my partner and I, just two of us, we invest in things that are unlike anything we've seen before, yet adjacent to prior areas of expertise. So the first half, one of a kind companies the way we'd think of it. Bold, change the world in a world positive way. If they succeed, history books will be written about them, that kind of audacious, breathtaking ambition, and we've never seen anything like it. Like there aren't like four others. Boring company was one of these ones we invested in, neural link, these are kind of like okay. A sewing machine for the brain, there aren't that many that we've seen. We've seen one other that's close but when we first invested it was the only one we knew of. Well that's easy to say. You can say I'm going to have that filter alone, but then you might be pogo sticking around areas you have no business investing in like real estate, oil and gas. There's a lot of things I've never seen before. Other people have seen them.

So if in my gut I'm like hmm, if it's a mainstream life sciences investment that any life sciences venture capitalist would likely invest in, chances are low that if I meet one it's the only one. And I wouldn't invest unless I'd done a lot of work to convince there's really only one company doing this, and that's hard to do if you aren't completely in the field. So over that long arc, meaning over decades, it tends to be a slow migration along tech watch. I know there's a better metaphor, expansion outward of technology frontiers. So nanotechnology, a synthetic biology to using microbes to make proteins, oils, and nutraceuticals to full on Memphis Meats let's make a million cells. Oh by the way we had prior investment experience in making a million cells for other things in the therapeutics domain, making it for consumption leads to some interesting questions, learnings, what scales, where the bottlenecks for scaling up a bio manufacturing process. So it's not like out of the blue.

If you'd asked me in 1995 will you ever invest in agriculture I would have been like never, like what? Food? No. there are no venture activities in food in the 90s. Like restaurants maybe, but that's retail. Automotive? No, it's capital intensive. That's ridiculous. Aerospace going up against the military industrial complex, are you crazy? What startup would ever think to go up against the military industrial complex? You can't compete with a non-market force, government graft. Imagine you and I are like I'm going to, like Elon Musk as an immigrant to America, we're going to pick up and go to Russia and take on Russia's military industrial complex and Roz Cosmos with a better rocket. Good luck, right? There's zero chance of that.

James McKinney: Yep, yep.

Steve Jurvetson: So you could imagine the only way we got to where we are today is a series of incremental steps of other industries where you realize ah, it's not automotive in the brute force, goes head to head against GM and Ford in their power alley. You're not even building an internal combustion engine. Most of the engineering effort in a car you don't even do that, you're doing an entirely different drive train and the sales model, and everything is different as you know. So we're looking for those opportunities for change. So let me just sum this up to say very few venture firms do this as far as I can tell because the corollary or implications are A, you're investing in areas that most venture firms aren't so you have to have the strength of your own convictions, and avoid the fear is the mind killer if you will, this notion that I'm going to look dumb if I invest in nuclear fusion and it fails. Well duh, everything fails in fusion why'd you do that? So you have to be able to withstand that scrutiny, and by the way have investors like in signing up Future Ventures we told of course every LP we're going to be doing this stuff, the stuff I've been doing for 20 years. It's going to be crazy, it's going to be of high companies. Hopefully most of you will think they're bad ideas when you first hear them, and a few you'll think they're brilliant because if everyone thinks it's an obviously good idea it's too obvious.

So we condition them that's what we do, it tends to be differentiating and so the LPs love it. It tends to when it works change the world for the better in a way that you can take eternal pride from. Like oh my God if my career ended today I'm incredibly happy about everything I've been involved with. So if I'd only done consumer internet, making advertising networks a little more efficient to exploit and manipulate human minds and exploit human frailties and investing in cannabis or Juul or something, oh man I don't think I'd be happy in my life. In fact I think a lot of late stage investors face midlife crises, like what have I done besides make money? And that has never been my motivation to maximize money making. It's been to maximize the good I can do over the long-term, and the learning I can compound over the long-term tightly coupled to money making, meaning where the money is the byproduct. That if the mission succeeds, money will be made, not how can we make the most money.

Because if you have the strategy to just make the most money, as many venture firms have, you would stamp and repeat something that you've hit upon as unique goldmines. If you were one of the very earliest investors in you name it, Facebook or WhatsApp or any of those things that were a little different, whoa let's do more like that. And in fact in the book E Boys which is about the early days of Benchmark, they openly say let's just do all the B to B exchanges, and all the B to C exchanges because it's like printing money, and it was for a short while. For a short while, it was just that easy, just do them all. And then they all crashed because there was systemic risk across the whole thing.

James McKinney: You know this is fascinating. And man I looked at the clock and I'm so bummed our time is coming to an end because there's so many more questions I have, but I do want to honor your time because you just brought so much value to my audience. But at the same time I need to honor my audience with the three questions that I ask every founder at the end. That first one, and I'm really fascinated with your answer to this because of the amount of entrepreneurs you've worked with at such a high level. The startup founders you've seen and even invested in. do you believe that anybody can be an entrepreneur? Not do you believe anyone wants to be, because that's a flat out no, but do you believe that anybody can be an entrepreneur?

Steve Jurvetson: Yes. And I didn't hesitate. For your listeners, I didn't actually know the questions ahead of time. I probably should have listened and known that you ask this every time, I apologize. So you're getting me without prepared remarks, but my answer was instantaneous. I believe there are a couple of important areas where it's a learned skill, not an innate skill. The other important one is public speaking just as an abstract. I think everyone can be as good of a public speaker as they want, and there's no difference between those if you watch them seem good, and those who are too scared to even try. It's just an experience curve, the more you do the better you get. I think entrepreneurship could be somewhat similar although you don't that many chances at bat. It's not like you can have 10 startups. You might, but it's rare especially if it's your passion.

And I'd say, that leads to the second point, which is I don't think you want to be a dilatant entrepreneur and take venture capital. The subset of startups that I'm focused on really are trying to go for the long-haul. They're taking large sums of money as fiduciaries that are trying to make some bold change, especially the stuff I'm doing but they're really trying to make a bold change. You don't just do that on a whim. So we actually filter very hard up front to make sure we're dealing with people that have a deep personal passion for this, and usually only this when they're starting. It's not like oh I'm doing this because it's fun. And the most important question I ask them is what does your business look like, and depending on which kind of a business, 20 years from now or 50 years from now. Actually there's an insect protein company I just asked them that question, what does your business look like 50 years from now. And if they laugh at the question or have no idea like deer in the headlights, I literally don't need to know anything more than I'm not investing.

If on the other end of the spectrum, the best possible answer is a sigh of relief, thank God someone finally asked the question I hoped they'd ask because I've had to pitch all the short-term, one to five to ten year opportunities, because that's what you need to do to get money. I really like what happens over 50 years and here's how everything unfolds. So that latter point means you probably don't have too many of those in your life. That's what makes Musk and Jobs kind of so bizarre is that repeated entrepreneurship, and I think it's actually rare to be a wildly successful entrepreneur multiple times, again within the venture domain, because I think you have to have the passion for it.

So I think anyone can do it. There are many different models of success. So if you ask a venture capitalist what does it take to launch some venture capital they will inevitably describe themselves, whether they're conscious of it themselves or not. They really have that kind of blinders, like whatever I did is what everyone must do and there can't be an alternative. There's a little bit of that homophony bias or that sort of bizarre self-belief that your cognitive process is the only way in entrepreneurship. Many entrepreneurs have only done it once, which most have, think that whatever they did was kind of important to where they got as opposed to I'm seeing it's all over the map. You have introverts, you have extroverts, you have people who are people- people versus product people versus tech geeks. It's all over the map. They can all be great entrepreneurs.

And the other thing I'd say is unless you find you don't running the company, stay running the company as long as possible. The companies that actually change the world are still run by their founders. It is very rare that professional management, outside CEOS, any of that have been brought in and the company ends up being wildly successful over the long haul. The big, shining counter examples of that statement that has led many venture firms to think let's do what we did at Cisco, let's be proactive and replace management. Being an entrepreneur, sticking with your company through thick and thin is the best way to go. And it'll make you happier too, unless you hate managing people in which case sure, transition to a different job but stay at the helm of product or whatever it is that's a passion for you.

James McKinney: What an incredible perspective. I knew I was going to love giving you that question. So the second question that I ask every founder, and part of it is the reason I ask this question is that there's this idea that we got to where we got to because of our own effort, our own wisdom, our own experience. But it's not really an accurate statement. We got to where we got to because of the shoulders of many before us. And so this question is about gratitude. When you look at your life journey and all the people that contributed to where you are today, who are the people that you point to with such immense gratitude for their contribution to your journey?

Steve Jurvetson: It's weird. I'm actually tearing up. There's so many. My dad deeply influential to me. JT Setcliff in 12th grade math, BC Calculus. Steven C, eight grade earth sciences, the first science teacher that opened my eyes to science being so marvelous. I knew I liked it, but there were no good science teachers I had K through seventh grade. That guy I mentioned, Chris Aldan who opened my eyes to actually being able to find the right firm, because I could have easily joined any number of other firms. I was trying really hard to get into two or three other firms that would not have been a good fit, and I may have easily wasted 10 years, specifically the dotcom years, struggling to have opportunity. Tim Draper believing in me, betting on me in a way that almost no VC would do. I'm eternally grateful for him. And his partner John Fisher for agreeing, but for whatever reason I think of him first as the person who took the chance on me and said, "I want to hire him," and opened the door that was really hard to open.

And all the entrepreneurs who've worked so hard, the ones who have succeeded and the one who's failed, in the sense I've learned from every one of them. They've shared their greatest dreams, their biggest concerns. If you just step back and say where in the world can you get tech business people to share the actual details of what they're focused on for the future. New product plans, competitive landscape analysis, whatever it might be. They openly discuss all this in every pitch meeting. It's kind of remarkable. Big companies, you can't get that. If you work at IBM or Microsoft, no one comes and tell you their software startup secrets to Microsoft, Google, or anyone.

So incredible platform for learning and enrichment. My partner Mariana, believing in me when we left DFJ. We worked together there, and when I left it felt a little bit like a Jerry Maguire moment. You know a fishbowl and no one's leaving. Fast forward, my assistant Nora actually did just like in the movie, and so I started a new firm with two people from that I worked with prior, and then all the investors. Slightly less so but in the same vein that were willing to invest in a brand new fir, brand new initiative where I was leaving a firm and no one knows if you do it by yourself or if you'll do as well as you did before, a number of questions. So people who bet on me in that sense betting on me.

Certainly Elon Musk in that regard. Deeply, deeply appreciative of what he's taught me, what I witnessed in his dedication to his businesses, and sticking by me and sticking by others through thick and thin. I'm eternally grateful.

James McKinney: I love that. I've said it so many times, if I had to trim the show to 20 minutes that question never gets cut. I just love hearing from my founders just the people… because again, there's just so much false narrative about what entrepreneurship is, and one of those is that it's just heads down and you're on a solo journey and it's all you or nothing. It's like that is just not the case. For some it works out well, but for most it doesn't. And so right now we've been talking to tens of thousands of listeners at jut a high level of your story and how you got to where you are today.

I'd like to afford this opportunity to bring it down to the one, just a mentoring minute if you will where it's just you and one of my listeners. Maybe that's the entrepreneur who just constantly is battling cash issues. Maybe it's the entrepreneur that because of COVID is having a hard time finding funding for anything that they're working on to keep their business alive. Or maybe because of COVID it revealed some weaknesses in their business and they don't think they can recover at this point in time.

Or maybe it's the wantrepreneur that because of the false narratives that are out there, they have this book full of audacious dreams and ideas they want to pursue but they are a little bit hesitant to move forward because they don't think they're the ones to execute, because they maybe don't fit the mold. Maybe they're 50 or 60 years old and the narrative is that they're too old for this, you have to be a 20-something straight out of college. Whatever the case is, whatever the persona is, what would you like to say to just one of my listeners if you were to sit down for a coffee chat?

Steve Jurvetson: So in the way you've framed the question I can imagine there is a lot of uncertainty in the environment, the world at large. Tumultuous change socially, politically, economically, uncertainty not to mention the great recession that most likely we're in the middle of for the next couple years if not longer. One may think wow, what am I thinking? Do I want to add more personal risk at a time like this, do I want to be an entrepreneur? So I suppose the message I'd want to convey most is that there's been no better time to start a company and there are two major reasons. One is sort of cyclical in this particular moment, and the other is more secular, meaning that the next year will be even better, and the year after that better still.

So the cyclical one is it actually is no better time to start a company than the middle of a financial crisis, versus a bubble. Imagine just as a thought experiment you're near the peak of a bubble and financing is super easy to come by but it's going to crash. That's the worst actually and instead if you think about starting a company today you have less competitors that are highly funded, like in the sort of vision fund like oh there's $100 million slopping here and there funding variants of your idea perhaps. You can hire people a little more easily, less competition for human resources obviously in this labor market. Most importantly, you're not chasing in this weird treadmill like it felt in the dotcom, the next round of funding, A, B, C, D, E IPO, right, all within the year in some case, or a year and a half in the case of Hotmail, literally a year and a half. You're instead growing your business with customers. You're iterating in a much more healthy way for building a business that's meant to last, that's meant to last decades or generations to be focused on what's important, not an arbitrage seeking opportunist play to make a quick buck.

Learning from customers, developing products and services and growing them over time in some vector towards a big star like colonizing Mars, but doing it with a series of products in thoughtful succession instead of one big hunker down for 20 years and then solve all the problems of the world and iterating with customers, learning. It's just healthier in all regard. In fact, I noticed at DFJ that there was an inverse correlation between the size of your first round of funding and your likelihood of success. The bigger the first round, more likely to fail so small funding, parsimonious… building a business by the way that generates cash and is a good business model is more obvious to come if you have to. Anyway then so that's the cyclical because that'll come and go, and that's particularly good right now ironically.

So what is then the secular, every year is better than the prior, and that's Moore's Law is emblematic of the pace of technology change. That Moore's Law the way I think of it is simply how much compute power can you buy for a buck. Constant dollars, inflation adjusted. I've got a buck to spend, how many calculations per second do I get. That has been on a straight curve for 120 years, a straight exponential curve that is a straight line on a logarithmic paper. It has transitioned from Intel to NVIDIA to now custom silicone. It's gone through all kinds of transitions but it has gone for 120 years without interruption. The Great Depression, World War I, World War II, no impact on this. So takeaway, humanity's capacity to compute compounds independent of the economy. It is exogenous to the economy. Independent of individual companies and their fate like Intel. Don't listen to Intel. You can count on that for the next 50 years just like you could in the past 120, and that means all kinds of industries that were not information businesses will become this, so this was the earlier thing we mentioned, aerospace, automotive, becoming information businesses, becoming software centric, that's going to ripple through every part of the economy. So there's no better time in a way to be an entrepreneur to say what has it not yet revolutionized let's say in fintech and construction, and still a lot of stuff in food production, and everything.

And whatever as an entrepreneur your personal background is, it's probably quirky and strange in some way. Something you've done in life is unique to you. Maybe you had to take care of an elder grandmother in a way that really gave you empathy for what the aged are going through right now. That actually is a huge asset if you're an entrepreneur, because there aren't that many young entrepreneurs thinking about them, the people that are near end of life. There's probably a whole bunch of entrepreneur opportunities unmet there, and you may be the best person to take that on. And especially if you have a cofounder. Almost every great company has a pair on its founding team as opposed to an individual. Find someone else where the two of you are cognitively diverse, have mutual respect for each other, you can build amazing businesses if you start with that seed so you alone may not have the answer is the point. You may not have the epiphany like what the world needs now is this, and I alone know it. It could be you plus one other person in your dialogs will figure that out, and especially leverage weird, quirky things in your past that you don't think everyone else or very few other people have as your background, and that's us where entrepreneurship comes form.

James McKinney: Once you've had a few moments to process all the value that Steve Jurvetson brought us in this week's episode, please hit me up on LinkedIn, Facebook, or Instagram and share with me your thoughts on this episode. And lastly if you've been around The Startup Story for any length of time then you know how much emphasis I put on the idea that entrepreneurs support other entrepreneurs. With that in mind, Steve is always looking to discuss new technologies that he's looking to invest in with those who actually might have a deeper understanding in that area so that he can gain new learning in that domain. So visit future.ventures to access all their social platforms that they use for these discussions. You know I say it in every episode because I believe it with my very being, entrepreneurs support other entrepreneurs so let's show up for Steve and visit future.ventures as a thank you to Steve for all the value he brought us today. And now for my personal ask.

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November 03 2020
Steve Jurvetson, co-founder of Future Ventures

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