Please enjoy this transcript of my interview with Steve Jurvetson, an early-stage venture capitalist with a focus on founder-led, mission-driven companies at the cutting edge of disruptive technology and new industry formation. Transcripts may contain a few typos—with some episodes lasting 2+ hours, it’s difficult to catch some minor errors. Enjoy!
Listen to the interview here or by selecting any of the options below.
DUE TO SOME HEADACHES IN THE PAST, PLEASE NOTE LEGAL CONDITIONS:
Tim Ferriss owns the copyright in and to all content in and transcripts of The Tim Ferriss Show podcast, with all rights reserved, as well as his right of publicity.
WHAT YOU’RE WELCOME TO DO:
You are welcome to share the below transcript (up to 500 words but not more) in media articles (e.g., The New York Times, LA Times, The Guardian), on your personal website, in a non-commercial article or blog post (e.g., Medium), and/or on a personal social media account for non-commercial purposes, provided that you include attribution to “The Tim Ferriss Show” and link back to the tim.blog/podcast URL. For the sake of clarity, media outlets with advertising models are permitted to use excerpts from the transcript per the above.
WHAT IS NOT ALLOWED:
No one is authorized to copy any portion of the podcast content or use Tim Ferriss’ name, image or likeness for any commercial purpose or use, including without limitation inclusion in any books, e-books, book summaries or synopses, or on a commercial website or social media site (e.g., Facebook, Twitter, Instagram, etc.) that offers or promotes your or another’s products or services. For the sake of clarity, media outlets are permitted to use photos of Tim Ferriss from the media room on tim.blog or (obviously) license photos of Tim Ferriss from Getty Images, etc.
Tim Ferriss: Hello, boys and girls. This is Tim Ferriss, and welcome to another episode of the Tim Ferriss Show.
[Foreign language] my beautiful, little [foreign language]. This show, as some of you may know, is about deconstructing world class performers, teasing out the habits, routines, life lessons, thought processes, frameworks, and so on from people in many different industries, many different areas of expertise that you can hopefully apply to your own lives. And my guest today is Steve Jurvetson, who really has his hand in many, many different worlds. You can say hello to him on Twitter @dfjsteve. He is a venture capitalist, but a lot more than that focused on founder led, mission driven companies at the cutting edge of disruptive technology.
Now, you might think to yourself that’s what I might hear many venture capitalists say. But he was recommended to me by a past guest as a guest, Matt Mullenweg who, I trust very implicitly.
If you don’t know D Wave, you will very shortly. He has been the founding venture capital investor in four public companies and many rapidly growing companies like Planet, Memphis Meats, Mythic, and Nervana, N-E-R-V, Nervana. He also led investments in startups that were later collectively acquired for $12 billion, probably much more, at this point. Before co-founding the firm DFJ, Draper, Fisher, Jurvetson, Steve was an RND engineer at Hewlett Packard, worked in product marketing at Apple. And next, many, many stories about his mentors there. And then, spent a short stint in management consulting at Bain.
He completed his electrical engineering degree at Stanford in 2.5 years, think about that for a second, graduating No. 1 in his class and went on to earn all sorts of degrees, MSEE, MBA, etc. In 2016, President Barack Obama appointed Steve as a presidential ambassador for global entrepreneurship. Steve was also chosen as one of “techs best venture investors” by Forbes and as the venture capitalist of the year by Deloitte.
Steve will be launching a brand new venture fund sometime later this year. And you can read about it at future.ventures. So, not future.com, but future.ventures. That’s how you would spell it out. Not surprisingly, he will be focusing on passionate founders who are on a mission to make the world a better place with penchant for unique ideas and disruptive technologies. And disruptive may be an overused term, but Steve really understands what that means. And we dig into some very, very, very specific examples that might make your mind explode.
So, without further ado, please enjoy this wide ranging conversation with Steve Jurvetson. Steve, welcome to the show.
Steve Jurvetson: Thank you. Happy to be here.
Tim Ferriss: I am looking here at all my notes, and you were kind enough to send links to various resources, interviews, discussions. And I have to tell you, I feel a little overwhelmed because, usually, if I have someone on the show, it’s like okay, we have Person A, they’re really good at rock climbing. I think we’ll start with rock climbing. And in this case, we are not even going to cover 10 percent of the notes that I have in front of me, and they’ve already been winnowed down. But there is, I think, one story that I came upon that I’d love for you to describe for people just as a starting point. And it’s a quote, and then, you can give the background from Professor David Deutsch out of Oxford. And it begins with, and please correct me if I’m wrong, the only way this computer could be as powerful as it is … What is this quote?
Steve Jurvetson: Sure. And I may be paraphrasing because stuff you wrote back in 2002, 2001, at least I read the book of Fabric of Reality in 2002, and he’s talking about the power of quantum mechanics and the potential for quantum computers. And in so doing, he and Richard Feynman both realized that a quantum computer would be fundamentally unlike anything we have in this world today.
And the way that quote roughly ends is that the only way to explain the power of these computers is to invoke the notion that it is sort of engaging the resources across parallel universes. That if you just use the resources of one universe, there’s so much you can do. But in this case, you actually are, in the most poetic sense, harnessing almost refractive echoes across parallel universes to do computation in a fundamentally different way. And that usually bends the mind of most scientists and even physicists to the point of breaking or looking the other way. And the common response to this is I don’t understand one bit of that. And it had me captivated.
Tim Ferriss: So, I want to jump into a number of areas that I know nothing about or very little about, even though I might use the words occasionally, as people who spend a lot of time in Silicon Valley are wont to do. But for people who don’t have the background, I want to highlight a few things about you or, actually, one just as we’re delving into some of the science.
Steve Jurvetson: Sure.
Tim Ferriss: So, your background or a lot of your background is engineering. So, electrical engineering?
Steve Jurvetson: That’s right. I did a bachelor’s, master’s, started a PhD.
Tim Ferriss: And you were able to do so much of that partially because you finished your undergrad in 2.5 years?
Steve Jurvetson: That’s right.
Tim Ferriss: Okay. The point I wanted to make with that, and we’re going to come back to that because I don’t know how that even happens, is that you have technical literacy.
Steve Jurvetson: Some. I’m also learning like a child.
Tim Ferriss: So, could you walk us through one of the terms I was hoping to understand for myself, and that is quantum computing? What is a quantum computer?
Steve Jurvetson: Right. A quantum computer is a device. It’s usually something that is either cooled down to almost absolute zero or has some other phenomenon that it takes advantage of that is at the edge of what is the known universe. Meaning, when you cool something to zero, behavior of materials changes dramatically. If you have a super conductor, the way it works is dramatically different from normal conductors.
And so, what people have found is that rather than look at quantum mechanics as something that is spooky and bizarre, the way Albert Einstein even described it, the spooky action at a distance, this ability to entangle things, to have their fates intermingled can be not just sued for things like really unbreakable cryptography and data transmission.
It can also be used in a very bizarre way to build a computer. And this computer looks something like a row of let’s say rings that either magnetically in one direction or the other. You think of it in a traditional computer, it’s a one or a zero. But, actually, it could be everything in between simultaneously much like when you dive into how an atom actually works. There isn’t an electron at any given point. It’s a cloud, it’s a probability function around the atom. Well, that cloud is something we’re not used to in the real world. We’re used to the statistical aggregation of many atoms, just like there’s a table, it’s hard.
I can’t put my hand through the table. It’s not sometimes here and sometimes over there. But the farther down you look, the closer and closer to let’s say the atomic scale, you notice the behavior of physics becomes quantum physics. And rather than being something spooky, you can actually harness this to compute in a very peculiar way.
In a way that – in a very simple – well, we could say it’s as if all of your memory bank, in a computer, was a one and a zero simultaneously. So, you instantly jump or tunnel to the answer you’re looking for to a particular problem. So, rather than exhaustively searching millions or billions or trillions of possibilities to find let’s say the key that unlocks the digital lock, you just jump to the answer.
Tim Ferriss: That’s seemingly science fiction, but these computers do exist.
Steve Jurvetson: Yes. And even within scientific communities, there is some back biting that says, wait, do they really exist? Is this one an example, or is that just a fast analog computer? So, it is at the edge of A) what people believe is possible, and I think actually, literally, at this period of history where these computers are starting to come out. I’ve been on the board of directors of one for over 15 years now. So, it was a little early for thinking when this is ready for prime time. It’s now at the point where, for example, Google says that their quantum computer that they bought from a company called D Wave outperforms their entire data center on certain computational tasks that are important to what they do.
And in other tasks that are meant to really show how fast is it, they found 100 millionfold speed up over the best computer they could buy from anyone else.
Tim Ferriss: How big is such a quantum computer?
Steve Jurvetson: They’re almost all about the same size, not because the computer is big but because the cooling apparatus and the shielding from magnetic flux is high. So, think about a refrigerator size, slightly bigger, like two refrigerators. The actual computer is just on a little silicon chip that is just as small as any other silicon chip. It’s just cooled to literally 500 times colder than the most remote part of outer space. Like a few millikelvin above absolute zero, which is really cold.
Tim Ferriss: So, to put the speed or power in perspective, could you please describe a graph that I’ve seen you present, which I believe might start with is it 2002?
Steve Jurvetson: Right.
Tim Ferriss: And it looks like it progresses up to the right almost at a 45 degree angle, not that the angle is that important. It depends on what’s on the axes. But could you describe what these different points represent?
Steve Jurvetson: It’s something I have affectionately called Rose’s Law, with a sort of homage to Moore’s Law because Moore’s Law is actually named by Carver Meade. It wasn’t Gordon Moore himself who labeled his law Moore’s Law, nor did Jordie Rose the founder of D Wave. But when I was first speaking with him in 2002, having just read David Deutsch’s book, he had produced a single qbit. They’re called qbits for quantum bits. So, I’ll just use the acronym qbit. He had manufactured one of these and tested and characterized it and had sent to the manufacturing facility –
Tim Ferriss: Now, is the qbit the entire computer?
Steve Jurvetson: Think of it as, by loose analogy, like a memory array. It would be like a 1 bit memory array. But that’s a really powerful memory array. So, when you go from one to two, you’re now able to explore all possibilities of two to the second power, so four memory states. If you have three qbits, you could simultaneously explore eight possible memory states, if you have four, sixteen and so forth. It’s a doubling. So, as you add a single qbit, you’ve roughly, with some hand waving, doubled the power of your computer, roughly speaking, on the order of a two to the end phenomenon.
So, if you were to add one new qbit every year, which he just stated, so coming to where did this graph come from, he just stated in 2002, I think we’re going to double the number of qbits in a functional quantum computer every year in perpetuity. And so, I had to ask is that just because Gordon Moore said something that sounds kind of similar? And we had a conversation. I don’t remember being particularly persuaded other than it’s a semi conductive process. It takes roughly a year to digest the prior generation.
Yeah, why shouldn’t we be able to do this? And sure enough, that’s held until today. So, it’s been 16 years of doublings. The way the graph gets interesting though is, as with Moore’s Law, it comes out of nowhere. So, Moore’s Law you could actually trace back hundreds of years, arguably, that our capacity to compute as a species has been doubling roughly every year since we started to compute, since we had any kind of abacus. It’s kind of weird how this has been growing. And the semiconductor industry is just the modern version of that.
On a quantum computer, that doubling starts to reach thresholds where you could do things that you could do with any computer on earth.
So, on this graph, if you look forward, and here’s where there’s been a little bit of a time delay, by the way, just full disclosure, where the power of some of these computers, there’s been a bit of overhead. There’s been a bit of set up and read out times. There’s been a bit of noise and other things that have made the power of it not – it still scales like the original curve. Like that 45 degree angle you were painting in people’s minds. But the power that the represents is – imagine you have to go two or four times bigger to hit some of these thresholds. But unless something falls off the rails, we will soon, in the next couple of years, have computers that can out perform any computer on earth.
Then, you give it another couple of years. And it would out perform all computers that could ever be built on earth, even if you use the entire matter of the earth to build them. And then, this is where David Deutsch started to run this thought process out, give it another couple of years. You would outperform all computers that could possibly be built, if you use the entire matter of the universe at your disposal to build, in the best possible computer any human could ever design, and you gave it the length of the universe in time to work on a problem, it still couldn’t solve these problems, and the quantum computer could in due course, in less than an hour.
That’s when, if your head hasn’t already drilled out of your ears, it just really explodes like pulp. There are places where nature gives you a peek into its wonders. And as a scientist or engineer, we get these, in almost any field of exploration, whether it’s inner space of quantum physics or outer space in the frontiers of the unknown. And here’s one of those examples that just opens your eyes to how little we know in that you’ll sometimes see this, and maybe in an experiment. I’ll give you an example of one that David Deutsch also likes that some people might remember from their high school physics.
If you have two slits, two very narrow slits, and you shine light through them, you get this diffraction pattern on the screen, on the following side of the table. And that’s always been something we learned at the bulk statistical physics of a lot of photons, a lot of light going and interfering with each other because of the interference patterns. Well, what’s fascinating is if you show single photons at a time, they will shoot through.
And if you just tally up the statistics, they’ll end up creating a distribution pattern just as if it were many photons interacting. So, the whole explanation of the wave theory of light is that waves interact with each other. And that’s what creates this pattern, this ripple pattern on the other side. But there’s no interaction when you’re a single photon at a time. It’s not interacting with anything, other than its sister photon in a parallel universe. And David Deutsch is like that’s obviously the explanation that makes all of this work other than it bends people’s minds. And so, the two schools of thought are that’s the answer or I don’t want to talk about it.
Tim Ferriss: What is David’s background? Is he –
Steve Jurvetson: He’s a physicist.
Tim Ferriss: Just to make sure.
Steve Jurvetson: Yeah, he knows a lot of what he’s talking about, way more than me.
Tim Ferriss: Okay.
Steve Jurvetson: Yeah. He’s not a charlatan.
Tim Ferriss: How do you even make sense of that, in terms of considering the implications? Because we’re not talking about thousands of years away, potentially. This is in the relatively near term future. What are the implications of that?
Steve Jurvetson: So, the key to answering that question is what are these computers good for?
Tim Ferriss: Right.
Steve Jurvetson: And either good news or bad news, depending on your point of view, is they’re very hard to program at least historically speaking. Years would go by between major advances in the software, if you will, the algorithms that one can run on a quantum computer and do anything useful. There was something called Shore’s Algorithm that came out a few years back that said you can actually factor integers, meaning break the number 15 into its prime factors of 3 times 5 is 15. So, if I give you 15, tell me what the prime factors are. If the number is small, we can kind of work our way randomly through it through either exhaustive search or some [inaudible].
But we don’t really have a mathematical way to get the answer. And a quantum computer now can just give you the answer, which it turns out would break most of cryptography. Any of these mathematical symmetries are at the core of public crypto. So, that’s kind of worrisome. What it’s useful for beyond something that spooks should be interested in is we literally are also in the renaissance of software discovery. So, things that really seem to be coming to the top of near term opportunities or quantum chemistry and deep learning or machine learning, both of which are very interesting.
The quantum chemistry is quite simply predicting accurately what a small molecule will do. It turns out, if you use a normal computer, and you try to solve [inaudible] equations and do what’s called the bottoms up [inaudible] model like what does a water molecule do, what does aspirin do, how does it behave, you can’t actually model this. It just computationally grinds to a halt. Quantum computer could do this almost on a one to one mapping. So, a quantum computer of about the same complexity as H2O and all of its electrons is about the size of computer you’d need to model it perfectly. Like when does it freeze?
What [inaudible] transitions. All of these weird properties of water that we take for granted that really don’t come from the physics. We learn this in chemistry, but you don’t learn it in physics because the math. It’s computationally too complex. More interesting to me, personally – by the way, I first invested in quantum computing for quantum chemistry. That was the reason I got excited about this is we would be able to design drugs more quickly. I’ll give you an example. Let’s say you have some new H1N1 virus, and you’re trying to figure out how can I design a molecule that would dock to this virus at a particular place.
Like if I could only attack there chemically, I could kill it. Well, that’s very hard to do, very easy to state, very hard to solve. So, you can test a drug, but you can’t ab initio just design it out of scratch. And that’s what these hopefully will be able to do soon. They rapidly accelerate drug design. The other are that has enormously wide applicability is in deep learning. And we can talk more about that field later. But, generally speaking, building little brains that can learn something very quickly. Let’s say it’s pattern recognition or image recognition for any number of applications and do that much better.
So, that’s why, perhaps, it’s not surprising, Google has been the primary customer of quantum computers for the last 10 years is they use deep learning everywhere.
Tim Ferriss: So, we’re going to, I’m sure, get to deep learning. I shouldn’t be so confident. I have 75 pages of notes. I will do my best to come back to deep learning, folks. I’m not yet a deep learner, clearly, with all of the notes that I have.
Steve Jurvetson: Or neural networks. That’s the same thing, basically.
If you want to come back to that, we can.
Tim Ferriss: Great. So, I’ll put those on my mysterious pad here. But a question that is tangentially related, but since you mentioned entanglement, this is something that’s become very interesting to me as a non-physicist, of course, my ability to dig into it is limited. But I heard I believe it was Radio Lab, I could be making that up, but an episode of Radio Lab where they talked about some of the experimental design and results of using lasers to impact entangled I’d suppose it would be atoms, does that sound right, or I’m not sure, maybe sub atomic particles
Steve Jurvetson: In some cases, they can create what’s called the Bose Einstein condensate with lasers, in a sense trapping light and making it stop or doing really bizarre things.
Tim Ferriss: Yeah. So, they were looking at entanglement across not just distances within a room but –
Steve Jurvetson: I think they sent it in a loop at [inaudible] or in Europe.
Tim Ferriss: Yeah, 60, 70, 80 miles. And so, I started wondering to myself, again, as a professional amateur that’s not terribly good at any one thing.
It’s like wait a second. If you were to ask David Deutsch, he might just laugh this off as a ridiculous question. But if the big bang happened, as many people imagine it to have happened or think of it to have happened, is it possible that everything that we can see, hear, feel, touch is entangled? Is there the possibility that everything is entangled? Anyway, that’s a question that I think about, but I’ve never asked a physicist.
Steve Jurvetson: I’m not sure. My gut is not in the powerful way that the quantum computer takes advantage of it. But there is the possibility of – first off, for those who don’t know the experiment that you’re referring to, they sent two entangled photons down sort of opposing fiber optic rings. And then, when they were far apart from each other, miles apart from each other, they would observe one and notice that the other resolved its state instantaneously at the same time. So, in other words, this notion of quantum indeterminacy that you don’t know whether it’s a one or a zero or somewhere in between until you look at it.
But the moment you look at it, it changes the state. It’s this really both strange and provocative notion of the quantum physics. And literally, we look at one of them over, let’s say, on the left field, miles away, it will instantaneously resolve the other one as well, as if they were a single unit. And, in fact, you can’t imagine information passing between them because it’s faster than the speed of light that this is at the exact same moment that these things resolve.
Tim Ferriss: I’m going to get out of my depth on so many of these subjects.
Steve Jurvetson: I think the main takeaway that fascinated me and maybe hopefully every listener is we are just beginning to scratch the surface of understanding what these phenomena are about and taking advantage of them in any useful way. So, usually, quantum physicists, literally, since the beginning of the field have been more theoretical than experimental, more theoretical than useful.
And I think the potential crashing of this onto business shores is potentially upon us where, again, when we talk about, let’s say, the power of deep learning, if you could build an artificial intelligence, broadly defined, of any kind, a simple one that plays games or a simple one that recognizes cancer in pathology slides or recognizes anything in an x-ray in medical imaging sense, if you can do that better than anyone else on earth, that’s a business opportunity.
And that capability might start to lend itself to those who have the cutting edge of computation. And in the past, anyone could buy a computer and catch up with someone who has another computer. It was a commodity. I’ll just go buy some more computers myself. But what if the practitioners of this sort of field are so esoteric and limited that there’s only a handful of companies that know how to do powerful computing? That’s kind of a worrisome future, potentially.
Tim Ferriss: So, not to dedicate too much time to worrisome futures, but what do you see as the most likely existential or greatest existential risks to humans, animals, people, things on this plant?
Steve Jurvetson: I think it would be very for humans, animals, and things.
Tim Ferriss: Let’s talk about humans.
Steve Jurvetson: Yeah. Because I think there are all kinds of things we can do to hurt ourselves that nature won’t have any problem with. It will march right along. The cockroaches will still be out there for many years.
Tim Ferriss: Since my cockroach audience is still very small, we’ll go with humans.
Steve Jurvetson: They’re incredible creatures. They’re going to last through a lot. So, I worry about the way in which cultural evolution is, while it’s progressing, it’s not progressing fast enough. And we, as a society, are going through more rapid and gut wrenching change of various sorts that we may or may not be prepared to handle.
So, for example, we may be in the midst, I would argue, of an ever accelerating rich/poor gap that politicians and policy makers just don’t have their head around and could lead to a future of abundance, as Peter Diamandis writes about where everything is great because physical things are so inexpensive that even the poorest of the poor could live like kings of just a few years prior. But I think the cultural, in a sense, set up for this is not necessarily right, which is we don’t have a lot of people thinking about it.
Whether it’s how we’ll, let’s say 10 years from now, 20 years from now, will we provide for basic human needs globally? Is it going to be normal capitalism in a democracy? Is that going to work just fine for everyone? Or will there be some that are horribly left behind? And I think social unrest is something that worries me more and more, I guess, in a succinct way. There are other things. I’ve been involved with a nonprofit looking for asteroid defense. That’s an existential threat of another kind that’s easily addressed. For less than $400 million, you could take that one off the table. So, hopefully, that will happen. Pandemic flu or bioterrorism –
Tim Ferriss: Just to pause for a second. So, take it off the table by building or destroying the –
Steve Jurvetson: No, the key is just detecting them long before they hit earth. So, unlike the movies Armageddon or Deep Impact, you don’t want to wait until final approach to try to do anything about it because breaking it apart turns a bullet into a shotgun shell. It’s way too late. What you want to do, and this is what’s so interesting is, for the first time ever, we can put satellites up that have these infrared sensors that can detect these objects at great distances and track them.
And we have enough computational power, from three observation points, model out the end body problem of what will the next 100 years of this object’s orbit look like, and will it hit earth at any point, in the next 100 years? So, that is a computationally complex thing we can do today. So, putting up one of those satellites in a near Venus orbit looking out to capture all of the threats to earth we could do today with less budget than some museums have. And the key then is, when you see something that will hit earth let’s say 50 years from now or 30 years from now, you just bump it.
All you have to do is give it the slightest little [inaudible] today, and all of its orbits around the sun, by the time it eventually intersects with earth, it’s in a totally different place. And we can computationally know, yeah, just rear end it by a tiny bit, or hit it head on by a tiny bit, and then, you’re done. Problem solved.
Tim Ferriss: Wow.
Steve Jurvetson: But you need time on your side. It takes years for that tiny nudge to accumulate enough distance delta that you miss something as big as earth.
Tim Ferriss: So, I interrupted, I think, your segue to bioterrorism.
Steve Jurvetson: Yeah. Bioterrorism worried me a lot post 9/11 because I realized, looking into it, and from investments I had made, that it’s increasingly becoming the case that a small number of people, in fact, an individual with let’s say a college education in this field could build weapons of mass destruction. It used to take armies. It used to take despots and fascists leaders of countries and resources of countries to wield a weapon of mass destruction, to build one.
Tim Ferriss: Using CRISPR gene editing, things like that.
Steve Jurvetson: Exactly. So, synthesizing small pox, weaponizing it, doing something like injecting and looking for a gene, which makes it incredibly deadly and mouse pox. Pox viruses affect all organisms that get to a certain concentration level on the planet. So, ants, deer, anything that live in dense areas, chicken pox develop a unique pox virus, so that it’s kind of nature’s way of telling you there’s way too many of you people on this planet. You need to thin the herd. They can be bioengineered like crazy.
And this worried me because, when I spoke to people in various government agencies who spend their time modeling and doing red team simulations of bioterrorism outbreaks, their only answer, at the time, was well, we hope they wouldn’t do this.
Like just kind of like a leap of faith that this is such a horrible thing to wield that people would stop short. And, at the time, that gave me no comfort. And as time passes, I actually think there is an element of truth to that. It’s not the kind of thing the typical terrorist cell can get someone fired up about. There is a weird thing, even within the worst, what everyone put in quote marks, “worst” parts of societal trouble makers, if you will, on the planet where this isn’t a place they tend to go.
Flying a plane in a building is a more natural vector of getting attention for your mission and getting someone to volunteer for the duty than saying I’m going to go kill a bunch of innocent people with a contagious agent. It’s a kind of weird cross product of threats.
Tim Ferriss: How did you convince yourself of that?
Steve Jurvetson: Oh, I haven’t. I worry about it, too. Yeah. It’s on my top three list of worries.
Tim Ferriss: What are the others?
Steve Jurvetson: So, inequality/unrest, bioterrorism, what is my other one?
Oh, climate change, of course. Oh, my God, climate change. So, the thing about climate change that worries me is the things I didn’t know. I’ll give one example. Last week, I learned of a new thing that I really didn’t learn to worry about until last week, which is, of all places, out of NASA Aims, the former director was telling me they had been doing these interesting studies trying to figure out how can we induce hibernation in mammals, which, for interstellar travel, would be great. In the movies, the humans somehow all go into hibernation mode in all of the movies we see. And they were doing studies with rats.
And they could actually get rats to hibernate for two days, at a time, by exposing them to hydrogen sulfite. And that immediately led me to ask why is that adaptive? Why would we have this sort of latent pathway that really doesn’t seem useful for anything that puts rats to sleep for two days at a time, and they would die, if it was longer than that. And it turned out, back at one of the major extinction events, and I’ll try to be more concise here than I might otherwise be, there was a major volcanic outburst. It led to major climate change. And the polar ice caps melted. And the greenhouse effect.
And the problems with the ice caps melting wasn’t the sea levels rose.
That just affects Bangladesh and Miami, but it doesn’t take out humanity, if sea levels rise. The thing that could take out humanity is if the ocean currents stop going. And part of that was driven by fresh water melt off the poles. So, potentially, long before the poles are completely gone or perhaps completely unrelated to temperature change, if the ocean stopped circulating, you get this complete dead zone where organisms depend on the circulation of nutrients to survive. And, basically, purple and brown bacteria took over. And they are these hydrogen sulfite bacteria.
You’d have these waves usually coupled up to two days at a time of just, literally, lethal gases sweeping across the landscape that the survivors learned how to hibernate through. So, in a long winded way, the thing that both was most interesting, and maybe here’s a hint of how we can induce hibernation in mammals like humans, but also reminder that we’ve had climate change many times on this planet, and really bad things can happen that have nothing to do with carbon or methane or all of the things we’re focused on. It could be the hydrogen sulfite gas that kills us, which is the rotten smell of eggs.
It’s nasty stuff.
Tim Ferriss: On the social unrest piece, just because I know there are many people out listening who will be wondering this, what do you see as the preventative steps, if any, that can be taken to mitigate that risk?
Steve Jurvetson: Yeah. So, first, I was looking at like does it feel like it’s self-correcting? Is it self rectifying? Is there something that’s a natural governing feedback loop, a negative feedback loop that says the rich get richer. Is there something that naturally makes that not continue further? And, unfortunately, there’s a lot of “positive” feedback loops, not in the normative sense but in the regulatory sense of it just is a runaway thing like runaway climate change. And that is you can get – first off, every business becomes an information business over time.
What I mean by that is, if the basis of competition, why is Company A winning over Company B, is it the way they process information? Is it a software layer to their business? That I think is rippling through every part of industry, whether it’s the aerospace industry, the automotive industry, agriculture.
It’s not oh, he worked harder. He was an artisan in his field, that’s why he or she is a better farmer. It’s oh, he’s got better gene scripts from [inaudible] or whoever. And the basis of competition in agriculture has moved to information tech. As every industry goes that way, those industries will start to look more like where you see Google and Facebook, a winner take all kind of dynamic where between firms, you have very few winners. And within firms, you have very few winners. So, every fractal scale, it’s kind of like a winner take all. There’s a few people within these firms that garner most of the wealth.
And there are a few companies that garner most of the wealth in each industry. Now, that’s perhaps – so, that trend is somewhat negative, and that technology takes over more and more, innervates more and more of the economy. It subsumes or eats the world, if you will. I think that would be a side effect. One other side effect that’s negative is people sometimes reject modernity when they can’t keep up. You sometimes subscribe to a different belief system, not science and math as the progress vector of humanity.
It’s like I’m going to reject science. I’m going to reject math. And there are entire countries that are taking this stance, which is scary because they’ll fall farther and farther behind, perhaps, with an inability to catch up to modernity when and if they choose to. So, that worries me. The only current “negative” feedback loop, the thing that prevents wealth from going completely crazy, is that, luckily, and I think maybe understandably, the wealthiest tech entrepreneurs tend not to live like rock stars or rap stars in LA. They tend to give back.
And a simple explanation for me having seen many of these people before they made billions of dollars and after is that, if you’ve made billions of dollars in let’s say under five years, you don’t tend to ascribe that to your incredible hard work and superior intelligence. It is a farce to hold onto the belief that I am better than others, that’s why I’m a billionaire. So, they give back in droves. Incredible acts of philanthropy. And so, right now, the philanthropy governor is the one thing I see that’s at least a positive that says maybe this actually will allow people like Gates and others to take on multiyear quests like eradicate malaria or polio.
Well, right now, polio and next malaria, in a way the governments can’t even take on. You have projects that exceed the budget and the GDP of nations. You have projects that exceed the lifespan of any politician. And luckily, this is what these people are choosing to do rather than just show off. And so, I’m really happy about that. And I’m trying to live my life that way as well. So, the question of going forward is there are a lot of debates about basic income, universal basic income and experiments that are trying to get funded to see if it works the way people think it might. I think there could be all kinds of experiments in almost corporate health plans, at large.
So, right now, most companies who have more than 1,000 employees will manage the health plan of their employees. So, it’s cheaper than going to a third party. I will actually pay for your healthcare because paying some third party, they’re just making money off of that. And I’ve got enough critical mass with 1,000 employees that that makes sense. Well, imagine food, shelter, clothing, and healthcare are all equally cheap. Meaning everything costs $1.00 a pound in the world that’s a physical thing.
That’s where we’re heading in the end point. All physical things should be the same cost. Bag of potatoes, $1.00 a pound. Bag of chips, $1.00 a pound. A car –
Tim Ferriss: Why is that?
Steve Jurvetson: Because and then, what you’ll pay for is the software, the intellectual property, the thing that, in certain places, could lock up. Yeah, maybe that Ferrari costs more because it’s the design, not the materials. But it’s just manufacturing methods are all converging, whether you think of it as additive manufacturing or just traditional manufacturing that stuff is not the rare commodity. You pay for intellectual content like entertainment and software. That’s what all future economies will be based on. And physical stuff is all about the same.
Tim Ferriss: What are the means of manufacture?
Steve Jurvetson: Well, we’re going to grow things, I think, increasingly, in the future. I think we’re going to grow with algae and other things, chemicals. So, I think about sheer metric tons of stuff. Liquid chemicals is a big part of it. And we get almost all of that, 90 plus percent from oil today and the petrol chemical economy. It’s all going to shift to renewables. And so, that sort of manufacturing stuff like the stuff that goes into plastics, which is more and more of the physical world that we’re in. Obviously, metals will still come from, unfortunately, metal sources.
But I think it will shift to carbon and other kinds of materials increasingly for structural stuff. This is, potentially, in the nano tech/carbon economy of the future that building things out of carbon nano tube like structures and meshes is just much lighter materials, effective, and just efficient way of doing things. So, we could look to nature. How does a spider’s silk thread outperform almost any other modern material? And there are startups that are building synthetic silk now with these little nano machines that reproduce what the spinnerets does on a spider.
So, across – but coming back to just this inequality point and the corporate path potentially there, or it could be a Peace Corps equivalent that says, if you work for X number of years, you get healthcare, in theory, for a longer period of time. And why couldn’t that start to subsume, the way some companies already provide lunch for free, why couldn’t, in a sense, basic food, shelter, clothing, and healthcare be provided for free?
And the healthcare part, by the way, right now, is a huge part of the economy, but it shouldn’t be. I think we’re also, and this is something I want to invest in, we’re going to find a way to make the information search of health free, so we don’t have to pay for the diagnosis. And I can’t imagine a future where knowing what I need to do to make myself healthy would be something I’d pay for. The actual doing, if it involved surgery, maybe. The pills, they should all be $1.00 a pound, the physical thing. And that future, I think, will be incredibly enabling for changing a society to a stable one where you don’t fear for the health of your children or their ability to live.
Then, you could have almost like a renaissance where you pursue the things that are meaningful to you, whether it’s poetry or science or what have you, meaningful work online. People do this all of the time. We spend a ridiculous amount of our time on things that aren’t paid but are meaningful to us. And that, I think, increasingly is what the world will look like in the future. Meaningful work and contributions, not a job, in the traditional sense.
Tim Ferriss: If the pills are $1.00 a pound, how do you maintain the ability to develop and innovate those drugs?
Is it just because the computational power becomes so inexpensive that you have then competitors to the current incumbents who are, of course, highly incentivized to protect their –
Steve Jurvetson: Exactly. It’s the long run because you could imagine any current phase or even long term, whether you call it transition phase or this is how the new ones come on the market, you have to reward, of course, that effort to the extent that effort is still as expensive as it is today. You need to recoup it. And that would be an intellectual property question. It’s almost, again, like the software of it. The generic manufacturers know how to make the drug. It’s but for law around intellectual property that it costs more.
So, the physical manufacturing is still going to be a $1.00 a pound. Now, the question is is it priced as such? And so, in my model of this, you’d start with the generics and have this massive distribution channel. If you want to reach a billion people, you could sign onto this platform for the poorest of the poor and reach a billion people at some sort of reasonable cost position for a generic. But I think the cost of discovery will also come down back to the computational and quantum chemistry side, so that it doesn’t need to take so long and be so expensive.
And right now, you have an FDA regulatory system that’s a bit archaic, in that regard, where they aren’t quite set up yet. And they’re trying to transition, but they’re slow at this, into a world where you have personalized medicine and a world where my medicine is different than yours. And, therefore, the clinical trial concept really changes.
Tim Ferriss: So, we’ve been talking mostly current or I’ll say present and future tense. I want to go back to that 2.5 years undergrad. How does such a thing happen? How is that possible?
Steve Jurvetson: It’s interesting. I took it as a challenge. When I started at college, I was going to Stanford, and I realized it was expensive. And my folks are immigrants from Estonia. And I kind of found it difficult. And we were middle class people, at the time, so I didn’t get financial aid. And I was looking at this. And I was like this costs a lot. I just felt guilt. So, I looked at the various rules for graduation, and it felt like a simple system of equations. Like this plus that has to equal this.
Like I actually boil it down to, oh, I see, they’re just trying to get four years of tuition out of you. So, where can I explore the corner cases? And so, I came in with the maximum number of AP credits. So, it actually goes back to my high school, St. Marks in Dallas, that incredibly well prepared me for college. So, I took the maximum number of AP units that I could. But, of course, universities limit, not surprisingly, how much of that applies. I also took a couple of summer classes that I could transfer in from another school. They have a certain number you could do. I maxed that out one summer, while I was doing summer jobs at HPS.
I took night classes. But, most of all, I learned a trick from the grad students. This is the key answer, actually. By the time you get to be a grad student, you realize that you’re limited to something like nine units a quarter. And that’s kind of limiting, if you take five unit classes, shoot, you can take a class and a half. So, what they realized is you can sign up for a class for less units than it’s listed, just not more. So, the check sum on the computer algorithm was not did you say it was a five unit class or say it’s six, and it’s only five. It’s is it that or less. So, you can just say it’s even a zero unit class or one.
You just make it whatever you want. So, you’re not taking more than 20 units a quarter, so you meet that algorithm, yet, you’ve got all of the pre-requisite classes you needed for the next one. You have to map this out early on. You have to start freshman year to make this work. Oh, and I had to get a physics teacher to let me take a class and a double E teacher sort of against the pre-requisites saying like I really can do this. Let me try to take your class a year earlier than I should, so that I can get the pre-req chain going. All of these simultaneous equations you have to solve. But the signing up for more classes was the key.
There was like one winter quarter where I took the equivalent of eight classes where you would normally take a load of four that made that possible.
Tim Ferriss: So, when did, if it did, when did the budgeting stop being a concern? Because you then went on to continue your schooling.
Steve Jurvetson: Right. It all flipped completely like total mode shift, when I started my master’s program, and I became a research assistant because that paid for school
Tim Ferriss: Oh, this is at HP?
Steve Jurvetson: Well, it was working summer at HP, but I started a master in electrical engineering.
So, it’s still at Stanford. I was a research assistant for Professor Hennessey who went on to do amazing things there and was an entrepreneur himself, at one point. And I shifted gears. I didn’t want to leave school. Going through 2.5 years, the problem is wow, I kind of missed out on a lot of social life and living. And so, I, basically, at that point, stretched it out and tried to stay as long as I could.
Tim Ferriss: Got a balloon payment of recreation.
Steve Jurvetson: It’s kind of funny how it suddenly changes. Now, I want to stay. I don’t want to leave. And I found a way to be in the freshman dorms as a grad student, which was awesome. I was the computer coordinator there, which meant that I kept the computers running and kept the paper in the printers. But it meant I could have freshman dorm life all over again as a grad student. And it was fun.
Tim Ferriss: So, if we look then at your master’s, and I suppose it would have been – maybe it was simultaneous or after, you could tell us, the MBA –
Steve Jurvetson: Oh, that came later.
Tim Ferriss: That came later. So, the MBA, why did you decide to get an MBA?
And would you do it again, why or why not?
Steve Jurvetson: A lot of folks who I knew and know are asking that same question. And I think it’s a challenge that a lot of higher ed is facing, which is is this a vocational thing, is this – and one unusual thing about business school, it’s the only educational program I know of where everyone comes in with prior work experience. Even law school and med school and what have you, you just go straight in from undergrad. And so, it’s got a very different kind of feel to it that way. And people might ask, especially when there’s something like a dot com boom going on in the ‘90s, do I want to step out for a couple of years from the economy and miss maybe that window, that opportunity that might be so ripe?
So, the main reason I went is networking really to expand the – and to learn, frankly. But the networking came first in mind. To meet a bunch of people who come from all kinds of different backgrounds that I could learn from, not only at school but throughout my life. And one of the sub points on that is, for example, pretty basic questions like what do I want to do in my life. I had bounced around from engineering to management consulting, prior to business school and thought well, from what I know today, maybe I want to go to product marketing.
I thought that’s what I wanted to do. But I don’t know. I don’t know anyone who has done that. And well, if I go to business school, no matter where I look, there’s going to be plenty of students who have done that in the past, and they’re looking to do something new. And so, you have all of the consultants trying to leave consulting. And you have all of the I bankers trying to leave I banking and learn about something new. What better place?
Tim Ferriss: Especially when your employer hoping to leave is paying for it.
Steve Jurvetson: Exactly. So, that’s exactly right. In fact, that was exactly what happened to me. I was financed by my former employer. So, I had that sort of safety net. And then, I decided not to go back, I had to pay for all of my tuition in one check.
Tim Ferriss: Yeah, I was wondering how that worked out.
Steve Jurvetson: That was a tough decision.
Tim Ferriss: They don’t let that one go.
Steve Jurvetson: No, they don’t let it go. It’s a loan. And rightly so. I didn’t expect to get a free ride and not go back. But it did raise a barrier to leaving. The other thing is learning. Business was not what I went to learn per se. I knew there would be some classes about business that I thought would be helpful.
But I’d done so much at Bain that I kind of had a small business degree already. And I had taken classes back when I was an undergrad and a grad student prior in accounting and finance. So, I had already taken a lot of, again, the core courses. I placed out of every core course at business school, too, and went right into the electives and the more interesting classes. But I also knew that it was an opportunity to take classes in other departments, to brush up on actually molecular simulation of all things. And one of the classes I took was on modeling quantum mechanical properties of materials.
You normally don’t take a class like that. And that really all played out. So, did it to what I expected? In a way, it did. I didn’t know venture capital existed. When I grew up in Texas, I had heard the term. I never met a venture capitalist. Never knew anything about them, wouldn’t know how to reach one, no idea. When I grew up, there wasn’t there internet. So, I literally would not know how to reach one. They’re not in the phone book. There’s no way to find them. They really aren’t putting up billboards or advertising in any way. So, the entire transition of the venture occurred because of people I met there.
And I learned a lot.
Tim Ferriss: I should point out good location for it, too.
Steve Jurvetson: That’s true, in the middle of Silicon Valley, that’s true, yeah. And that’s the only school I applied to, by the way. If you think about do you want to go to business school, I did not apply to any other school because there was no other school that would have met that goal. Also, I learned a lot. And back to the network, almost every investment I made, I think it was almost for the first year or two out of business school, and there was a lot because it was the middle of the dot com boom for me, had some business school connection.
It was, literally, the entrepreneurs were from business school, or it was sent to me by a professor from that business school. For the first year, that’s how I jump started everything I did.
Tim Ferriss: So, my madness/method is usually not chronological. So, we’re going to zoom out a little bit. What mistakes do you see otherwise very smart venture capitalists making? Are there any patterns? Are there any particular types of mistakes? It could be investors, broadly speaking.
Steve Jurvetson: Oh, my God, tons. All over the place. And to be fair, I’ll try to drop in and mention, when I made those same mistakes, by no means am I trying to judge, as if I know better, but two that jump to mind, one is way too many seem to be loss avoidant or fearful. And I’ll elaborate that in a moment. And then, but the other one that jumps to mind equally is they think they’ve hit upon the formula for success. And yeah, that has – at many different levels at which that’s worrisome. So, the first one, this notion of being fear driven. I’ve come across so many investor who will say something like we have a strategy to try not to lose any company, as if that’s like we’re in the trenches.
Every company will succeed. And if you’ve just been at this game for a few decades, you’ll realize that’s just folly. The earlier you go, the higher your death rate is going to be as a startup. So, the majority will fail. Just give them time. And that sad reality took a while to sink in for some. But until it does, you’re going to be very timid in your investing. So, most investors I see just let all of the biggest home runs pass them by.
Almost every term sheet I’ve written to a company that’s turned out to be a spectacular home run, I had no competition, at the time of the series. Nobody else would invest in the company.
Tim Ferriss: What were the reasons for not investing?
Steve Jurvetson: It’s crazy. It’s way too early. It’s a science project.
Tim Ferriss: No traction.
Steve Jurvetson: Yeah. There’s no product. So, first off, almost everything I’m doing, there’s no product, no customer yet. It’s an idea. It’s in prototype stage of development, or there’s not even a prototype yet. Or they just don’t agree that the world is going to change in this way. So, and, in often cases, conventional wisdom would support their point of view. Like let’s not invest in any automotive company because every investment since Henry Ford has failed like 100 percent of them. They’re just road kill scattered on the highway. And by the way, many, many start ups funded well over $10 million.
So, decades ago, that’s a lot of money, in the automotive sector, all of which have failed. Many in batteries, many in solar, just scores. Maybe hundreds of companies have failed.
So, when you’ve, let’s say, lost four times in a row, you just give up on the category. So, sometimes, it’s the more experience grizzled investor that’s like that whole sector, I’m just going to steer clear of it because I have too many scar tissues there. But that’s not really the thing I’m talking about. I’m talking about new entrance to the venture business, people who you would think would take a strategy of differentiating myself from my peers, having a basic strategy, let’s say, to say why would an entrepreneur want to work with me versus all of the other firms. And if it’s like well, I’m investing in the hot sector.
Pick whatever it is du jour. Consumer internet or social this or block chain that. It’s like it’s the hot thing. Yeah, but there are also 100 other people who have the exact same idea you just did. It’s the hot thing. Why are you different? And there’s no answer. So, this lack of strategic thinking and also lack of thinking of a long term strategy. Like okay, whatever you’re doing today, is that going to work 10 years from now, whatever that strategy is? And I don’t hear strategy from anyone. Like okay, here’s how I’m going to stand out over a sustained period of time. Here’s how I will – and it can be simple things.
I’ll have a niche. I’ll only do XYZ, and I’ll be known for my niche or my specialty.
Tim Ferriss: What worked for you, in the early days, when you were just getting started?
Steve Jurvetson: First, it was a stroke of great luck, which is the dot com boom, as we now call it, was just starting to happen. And I was ready for that and open minded enough. So, I didn’t have the scar tissue, which is, by the way, scar tissue for traditional investors was, if you invested in anything, it was like entertainment or media or shrink wrap software, as they called it, which is low priced software for consumers. That would be the consumer software segment. That was just a horrible place, games, history of business. It still is a horrible segment. It is to do non internet consumer price point stuff.
It’s a death zone. So, they thought the internet was that. They didn’t realize it’s an entirely different business model. What we now know around cloud computing, around subscription services, around viral marketing, it’s potential, none of this was known, at the beginning. And if you put it into a prior bucket, it would be those are bad sectors. So, unbelievably, one of the biggest investment opportunities probably the venture industry has ever seen was largely avoided by most venture capital firms.
And when I started in 1995, we did about a third of all internet investing industry wide. The entire venture industry. And that quickly changed in ’96 and ’97. And when Netscape had its IPO, boom, everything changed because, now, there was an example of a winner. This pattern will come again in space investing and everything. As soon as you have a single winner, then, the sheep phenomenon and the herd mentality kicks in. So, you have scores of people investing in a sector, after it’s had its first win. So, to your question, being under the tutelage of Tim Draper to say actually, let’s try to think big.
I credit him for being my mentor into the industry to say not let’s think about it the way bankers do. Let’s not be fearful. Let’s ask the entrepreneur how they’re underestimating their market size. To think how much bigger might this opportunity be than even the people pitching it are imagining. And that’s a thought experiment I often like to go through. And there will be times when, occasional, not often, where I’ll be like, wow, you are so underselling your opportunities.
Normally, an entrepreneur is trying to sell, to the maximum extent possible, to predict the largest possible addressable market to think well, Phase 1 of my business, I do this. And Phase 2, I take over the world in some way. And then, to actually try to push them further, and then, want to invest in them, is an interesting adjunct because then, you’re on the same page. So, I credit Tim Draper. I credit the internet. And then, most importantly, is there was a simple rule I started implementing, and I don’t remember when it started. It just seemed like the natural thing to do around early stage investing.
So, when I thought about this, I was like, okay, most of the things fail. If they win, they’ve got to be huge. Okay. I checked. They should change the world. They should be disruptive. Those are words people use. Well, how would I know if something really is big and disruptive? Well, every entrepreneur claims it. It could be doing a payment processing thing for back in whatever payroll system. It’s like we’re going to change the world of payroll. Okay. What really is going to make an enormous opportunity is it seemed to me that A) they’re describing an enormous market.
But B) here’s the killer, no one else has done it before. And so, the simple rule I’ve used throughout my entire career investing is I want to invest in things that are unlike anything I’ve seen before. And there are all kinds of [inaudible] that come out of that. The first is, yeah, you’re investing in some unusual things like D Wave back in 2002. There were no other quantum computer startups, zero, on the planet earth. There was not a single company claiming to build quantum computers, big or small. Actually, for five years afterwards as well. So, that one is the most extreme. Maybe for good reasons, no one was doing it back then.
When Hotmail first came, there was nothing like it that we’d seen. When I first invested in Skype, there wasn’t anything quite like that. The way that it did peer to peer voice over IP. And, similarly, with Tesla and electric vehicles. And I can get into why that one maybe is the most corner case of wait, there are a lot of electric car startups. Why is that one special? We can talk about it. But, certainly, Space X would qualify as well. And it’s the unique ideas, at the time, in the start up domain. And but the benefit from my career was it has me perpetually, searching for the next great technology wave.
So, just when the dot com boom was getting to its fevered pitch, I wasn’t smart enough.
I was not smart enough to predict a crash, and I know that I wasn’t because I was contributing in writings and other things, at that time, saying oh, it’s just the boom is just starting. It’s going to go up, up, up, up, right. I believe that because I just wanted to that it’s going to keep going and we wouldn’t have a correction. But, on the other hand, I was not finding anything unique. I saw four business plans for selling pantyhose on the web. Like well, we’re going to do [inaudible]. Like three others like really? Four business plans to sell pantyhose or just balls.com? I’m like –
Tim Ferriss: What does just balls do?
Steve Jurvetson: Just Balls, ventured backed, just sells balls. The name was awesome. We got justballs.com. What do you sell? Balls. You want a bat? No. You want a glove? No. We got balls. Balls of all kinds, small balls, big balls, golf balls, tennis balls.
Tim Ferriss: Wait a second. Were you a founder?
Steve Jurvetson: No.
Tim Ferriss: Okay, just making sure.
Steve Jurvetson: But this shows you how absurd it got to say take the economy and the internet changes everything. We’re going to divide up the economy in weird ways it hasn’t been divided up before and make that a business. So, that’s when I knew this is crazy, and I started investing in nano technology
Total left field shift. And there’s a reason I picked that particular sector, but the important point is I didn’t keep investing in the internet companies long past their prime, not because I was smart on when the correction would come, but it was because they weren’t unique anymore. It’s like every viral marketing idea, at the time, that I could find had come. Now, to my – so, I avoided a lot of pain. If you add up every internet – remember, we did so many of them? If you add up every internet company we invested in that lost money, add them all up, it was less than single deals lost from other firms.
Like buy.com lost more money than everything we’ve ever done combined because we didn’t load up the boat, sort of drink our own Kool Aid too deep in any one of them. And every one of them was unique. So, there wasn’t like this sector risk. So, you get diversification for free. By definition, you’re diversified in your portfolio. And it has me, throughout my career, always on the look out to learn something new knowing that I’m going to have to hop to a new sector. Not saying I’m going to spend my whole life as a semiconductor investor or as a consumer software investor because that is so limiting. That might have a good 10 year run.
But if you’re not continually learning something new at the edges, pivoting from the edges of what you already know to something slightly different, you’re going to become obsolete.
Tim Ferriss: Why did you choose nano technology?
Steve Jurvetson: That was a bit of a mistake. But it was a mistake in retrospect. But the only thing I felt I differentially knew better than others, it was harkening back to – which, fortunately, wasn’t that many years prior that I had been studying some really hard technologies like molecular modeling and chip design. I did some chip design at Hewlett Packard. So, I had enough, as I looked at the venture landscape, differential knowledge there to say well, there’s something I could harken back to that’s not the internet because the internet, anyone could do, at this point. And the angel investors are flooding in.
And every banker or consultant is flooding in. It’s like the landscape is littered with capital and people investing in that sector. Well, there’s nothing going on in nano tech. I had been exploring at the Forsythe Institute and a number of other sort of think tank like conferences that the radical potential this had to revolutionize a bunch of things. And the one part that I think was indicative of what’s to come later in my career, it was not really , in any way, an industry.
It isn’t a sector. It doesn’t describe a company. There’s no such thing as a nano tech company, unless you’re building tools to service tth industry in a weird way, manufacturing equipment maybe, but not in the attractive sectors. It more was a set of science and technology capabilities that would stretch across many industries. So, even today, there will be companies that we’ll meet with and things that were unique from that era will play out like the value of simulation on any molecular system. Like how good is your simulation on any physical thing you’re building, in general. These questions are process questions.
Like how do you do innovation? How do you do entrepreneurship? That carries through. But that platform technology, which let me just tell you what I mean by this. Nano tech was like a platform applied in [inaudible] new ways of doing material science, if you will. Then, there’s this whole field of synthetic biology. If you can manipulate DNA with CRISPR or other technologies, what are all of the things you can do with that capability?
And it’s very broad. It’s not just health and food. And then, more recently, deep learning, neural networks, what we might describe as narrow AI. That whole field is widely applicable. I think every company will use it eventually. So, again, we can come to that later. But that’s like a platform that’s not – sure, today, there are some “machine learning” companies. All they do is stuff related to machine learning. But much more interesting is all of the industries that will be changed by the use of machine learning, the vertical industries. And so, to put a cap on it, nano tech, if you look back at it today, no, there isn’t any nano tech industry.
It would be like saying it’s the thermo dynamics industry. Well, shit, there isn’t one, but there sort of is. Thermo dynamics as a concept, there was a time when, actually, companies named themselves Thermo Lectron and Thermetics. There are all of these ones that it’s just now subsumed into the fabric of science and engineering. So, as a geek, I’ve always been fascinated. Are there seed changes in, basically, how we do science and engineering? Maybe that’s the simplest way of saying it.
And I think, today, deep learning is the best example of that. It’s a fundamentally different way of doing engineering.
Tim Ferriss: Say that one more time, the last part.
Steve Jurvetson: So, I think deep learning or let me just call it machine learning, broadly, because there are a bunch of sub branches of this. It’s everything from generative design and sort of the auto desk, CAD [inaudible]. It’s studying [inaudible] the way Steve Wolfram does. It’s genetic program –
Tim Ferriss: What are [Inaudible]?
Steve Jurvetson: These are simple, little mathematical construct that just says, if you’re going to draw – oh, my God. You’re probably going to want to edit it out of the final thing because it may not relate to anything other than it created this book, a new kind of science, and really a series of epiphanies from Wolfram and others that the world is really interesting when you look at iterative algorithms applied millions and billions of times. So, [inaudible] is just imagine you started with a random dot or two.
Tim Ferriss: Automata like automaton but with –
Steve Jurvetson: Yeah. And it sort of unveils. So, you have this little, simple, almost like a turning machine that says I’m just going to go left to right and look at the dots above me. And if the dot above me – I’ll look at the three dots above me.
One directly above me, left, and to the right. And based on all possibilities of those three dots, which is two to the third power possibilities, I’ll have either a dot or not a dot here. And so, you would think that such a simple rule that just says look at the three dots, and there are literally only sixteen possible conditions that I could be seeing up there. I’ll have some other – I’ll do something. And, in most cases, it’s very boring. It’s just like the whole thing is black, or it’s got a nice pattern of triangles. But in a few case, like Rule 31, it unpacks into this incredible complexity that is not repeating.
And there’s no way to jump to let’s say the 40th or the 50th or the 100th layer of this unfolding. You have to run the experiment. And the reason I find this so philosophically interesting is this is the same thing in evolution. It’s the same thing in neural networks. It’s the same thing in all of these new engineering modalities where you can’t mathematically get a short cut to the answer. You actually have to just run this little algorithm over and over and over again.
So, you can’t, for example, reverse evolve. You can’t figure out where did we come from in any direct way. It’s sort of lost. You can run the tape forward, but you can’t run it backwards. You can’t do mathematical short cut across it. And so, an example of why this is a thought experiment is important is, whenever you’re developing these neural networks, whenever you’re training these little AIs, and I think this is the path to AI, in general, so it’s important, this is how it works. You can’t understand the thing you’ve made, nor can you predict, as you train them further and further, what you’re going to get.
There’s a bit of discovery, emergence, if you will. It’s kind of like raising a teenager or parenting more than it is programming. You can learn about the process of creation like I know how to make a teenager, but I can’t tell you exactly how it all works. And I certainly can’t go in there after I’m done and tweak a few neurons to make them smarter or French speaking or whatever. It’s like that’s a really weird artifact that works really powerfully. But it’s not purposeful design. It doesn’t do what I tell it to do exactly. It can learn to do what I train it to do, but with some edge cases.
It’s a little out of control. And that’s what I think the AIs of the future will look like. So, I can come back to it if you want to talk about AI and deep learning. But I just – you asked about [inaudible], and the process learning – the question you started with was engineering, right?
Tim Ferriss: Yeah.
Steve Jurvetson: So, the thing that I wanted to say is I think deep learning/machine intelligence is the biggest advance in how we can do engineering. So, specifically, engineering since the scientific method itself. So, way back when, engineering may have been random like I think astrology is true or I think this is true. And then, you have the scientific method. You release the method of compounding knowledge over time. This is a different way of, in a sense, growing solutions to problems instead of purposely designing them. You can build things that exceed human understanding. We’re doing this all over the place in molecular engineering, in software design, in a variety of fields.
We have sort of reached the limit, in many cases, of what a human, any human or even group of humans, can put their heads together and design. And now, we can push way past that and build things beyond our own understanding, which is pretty powerful.
Tim Ferriss: Yeah. Could you define – just revisit, you might have already done it indirectly, but the deep learning and neural networks? I guess I have sort of an approximate equal sign here. I’m not sure if they are the same.
Steve Jurvetson: Yeah. They’re synonymous. In the ‘80s, they were called neural networks and deep learning. There is a reason the word deep came in. Well, first, you want a new name. when something kind of came and went and is passé a couple of decades ago, because I studied neural networks back in the ‘80s, you have to give it a new moniker. But there is a reason. Deep in the sense of more layers. So, what do they have in common? And, in fact, neural networks, I think, could be a more generic term for all of this. It’s inspired by the brain. It’s a way of simulating a brain like subset. So, now the whole brain.
But imagine you were to take a little, tiny chunk of your brain, a cortical column or some area and say what’s really going on. Well, you have cells that connect to a bunch of others. And our brain is hugely a fan out of a thousand or so to ten thousand connections from each one. So, a huge fan out. Each cell connects to a bunch of others. And when one fires, it sort of goes down the dendrite, and the little synapse fires, and it triggers another one.
We all have some vague sense of neurons are in our brain, and they’re wired together, and they fire together. So, if you want to simulate one of those in a very simplistic way, in a way that you imagine the programmers back in the ‘80s, and they had pretty not very powerful computers. Well, how can you make a computer like brain? Well, we don’t need all of that complexity. We don’t need all of the details of ion channels and synapses and all of the neuro transmitter chemicals that are an artifact of our biology. What really is the essence of what’s going on here? And the essence is something activates.
It fires. It’s connected in a network to some others. And if there’s enough inputs that are firing beyond a threshold, then, downstream neuron will fire, too. So, the simple idea is, to recap, neurons fire. They’re wired to other ones. You sum up all of your inputs. Everything is connected on the input, there’s like thousands of inputs. And if it crosses some threshold, then, you fire. That’s it. and then, you just layer on tons of these. And so, the deep learning is having more and more of these layers. Instead of one or two or three layers, having scores of these layers.
And a variety of other algorithmic advances. But really, the biggest breakthrough has been that we have a lot of data today that we didn’t have back in the ‘80s from the internet, from mechanical turk, you name it, all kinds of data sets to train on. If you wanted pictures of cats with the label that’s a cat, that’s a dog, that’s obvious today. We take it for granted. Of course, you want a million of those, do you want a billion? How many pictures of cats do you want? In the ‘80s, good luck. You could spend your whole career trying to get a good data set to train digital networks with. Plus, we didn’t have digital cameras.
It’s crazy, if you think of how little data we had in the ‘80s. Okay. So, data is the first. The other is GPUs from Nvidia. They started about 10 years ago as a side project in scientific computing realizing –
Tim Ferriss: GPUs?
Steve Jurvetson: Graphic processing units. So, any gamer would be like I want the latest to play my video games to do all of these polygon renderings offloaded from your main computing chip, the Intel chip, usually, off on the side what used to be a peripheral processor or co-processor, an afterthought, if you will, that only gamers cared about. If you were a business computing user, in the old days, in the ‘90s, you didn’t care about your GPU.
The only thing you cared about was your CPU, the thing that computes your Excel spreadsheet or whatever, your database. But the GPU people were pushing a whole different kind of computational math forward, which was a lot of math. A lot of polygons. The more polygons, the more sort of resolution you have in your game. And so, in a very interesting way, with a different objective function, not do a program that a human wrote faster and faster, but take the same damn simple math of, basically, it turned out to be what’s called matrix multiply and add. Multiply a whole bunch of numbers together and add them up.
Multiply, add them up. It’s like that core mathematical operation, the more you could do, the better your graphics were. And so, they had an economic incentive to really push the envelope where, if you asked let’s say, in the ‘80s or ‘90s, what else could that be used for, the answer was nothing. That just does graphics. It’s like totally optimized for rendering graphics. But somewhere along the way, people realized, wait a second, there are other areas in the scientific computing world, and by this, I mean, let’s say modeling the weather, modeling nuclear explosions occur in government labs where they’re like we do a lot of that matrix multiplying and add, too.
Can we try to see if we could use it? And so, it was like the skunk works project. Management had no resources against this. I knew, actually, one of the first four customers working in this RND area of all things to model how neurons fire scientifically.
Tim Ferriss: To model?
Steve Jurvetson: To model how a neuron actually – the actual biology of a neuron down to as much detail as possible. A company called Evolved Machines. And they were using GPUs. And I remember years ago saying you just bought, for $2,000.00, at the local Frye’s Electronics Store, you just bought more power than any super computer of just two years ago for $2,000.00 because of this domain. So, this incredible computer resource was pushed to the limits from gaming. And I think almost poetically, when you think about rendering three dimensional worlds and making them photo realistic, you’re doing something our brain does exquisitely well.
We get an avalanche of information on our retina and our cortex. And we down scale that to image recognition building over there your face, the symmetry or your eyes.
And much like a neural network, when you train them, it recapitulates our biology. It builds edge detector, and then, symmetry detectors, and then, eye/face things because you can probe what’s been built a little bit and get a sense of oh, my God, it just recapitulated the sensory cortex in an artificial system. That’s when the –
Tim Ferriss: Recapitulated meaning effectively –
Steve Jurvetson: Recreated from scratch. It’s an analog because you’re just training it like a baby. It gets born, opens its eyes, starts learning. That’s the same general thing I have with these neural networks. The fact that it has similar layers in its visual system as our babies do, it’s just that’s when people like me are like oh, my God, this is incredible. So, back to the GPU thing, what I think is poetic is that something that, in a sense, is meant to be as realistic as possible to our vision system has the kind of computational systems we need to, in fact, do vision systems in let’s recognize cats on the internet, or let’s recognize cancer in a pathology slide.
Those general constructs occur because our brain has evolved to do data reduction and pattern recognition in the world in a way that is optimal for what we do, so that when we build thee neural networks, what are they really good at?
All of the same stuff. And so, all of the applications today are in speech processing, visual processing, which is the simple stuff, the edge of our cortex, and then, naturally, it’s going to start moving into emotional systems and the frontal lobe and the rest of our cortical systems. And so, that’s why I think it’s the obvious path to AI in the broadest sense.
Tim Ferriss: So many questions. I love that story or that story/explanation for a number of reasons. One is how careful one should be with dismissing certain fields. Or even if they seem trivial or to be a waste of time, like gaming. If you look at the byproduct of the incentives that drove that, and then, the off label uses of GPUs, are GPUs, am I mistaken in thinking that they also have a role in cryptocurrency mining?
Steve Jurvetson: Oh, absolutely. So, that’s a very computationally intense task. And so, it moved definitely from into CPUs to GPUs, but then, it even went further. Then, it went to these field programmable gateways and then, to custom chips designed from scratch. Sort of it quickly went down that path. And deep learning chips will as well. That was one of my investment themes over the last three years is that deep learning is doing the exact same thing to custom chips.
Tim Ferriss: So, you mentioned something much earlier –
Steve Jurvetson: Oh, one last thing on this. Nvidia summarized something amazing, and also Google did a paper. The majority of code at Google now is built by a computer not by a human because that’s one weird way of summarizing this is when you train a neural network, you’re not coding if, then, else. You’re setting up the same thing you set up every time. It’s a very [inaudible] skill set, by the way. And you train it, and the computer is generating its own executable, at the end of the day. The majority of programming is that way now by a factor of 10.
Tim Ferriss: That’s so wild.
Steve Jurvetson: And every product that Google embodies it from search to you name it, it’s like that is the key technological thing stretching across every Google product.
Tim Ferriss: So, you’re so excited by the science, by the engineering. You mentioned product manager a while back. And you did, in fact, do that for a period of time, right?
Steve Jurvetson: Summer jobs, yeah.
Tim Ferriss: What I’ve observed, not always, but very often, at least when I lived in Silicon Valley certainly, a lot of engineers have a severe distain, or at the very least a distaste, for all things – most things marketing related.
Steve Jurvetson: Right. I remember that at HP, yeah.
Tim Ferriss: It’s just a bunch of hand waving.
Steve Jurvetson: Yeah. On so many levels.
Tim Ferriss: So, why did you, with the background you have, set your sights on product managing?
Steve Jurvetson: Yeah. So, I remember exactly how this happened. I was at Hewlett Packard –
Tim Ferriss: Wait, am I getting that right?
Steve Jurvetson: Yeah. Product marketing, product management, different –
Tim Ferriss: Product marketing. That’s actually the word I was looking for, sorry.
Steve Jurvetson: And different firms use the terms differently. But I was open to both. In some cases, it’s more engineering rich. In other cases, it’s what have you. So, when I was at HP, I was doing chip design. And marketing was in a different building, as it often is. And I, basically, was getting frustrated, even though I was not there very long, on what I saw all around me, at least at HP, which was a promote from within culture. Over 20 years, you’ll become an engineering manager. And it’s like most people were lifers, as we call them. And that seemed kind of long. I was like do I really want to dedicate the rest of my life to that career path?
And then, I was like how could I accelerate this? And that’s when the first idea came along. I somewhat got into marketing, and it seemed like the boss has more than just one narrow functional domain. Maybe I should get some experience over there, and then, I’d be more of an engineering manager if I could know just more than my narrow area of engineering. I thought being an engineering manager was the end goal and learning a bit about marketing and product marketing because it tells the mystery. How are all of these decisions that seem to sort of impact our product development cycles and products getting canceled, things succeeding or failing in the market?
That seemed important around what I was doing and not just did I make a breakthrough. So, I guess you could say I wasn’t a scientist in my profession of oh, I’m just doing it to learn the best way to do something. I was engineering through and through, which is I want to have an impact. I don’t want to design a widget that’s going to sit in a room and never get used just because I like to design widgets. It’s like I really would love to have something be meaningful in the world. And so, that’s why I thought about that. And, yes, there was a big distain for marketing amongst the engineers that I worked with.
And I did finally get a chance at – because I wanted to work with Steve Jobs as well, so I got a chance to work at Apple and the software was called Next is when they were moving out of the hardware business into the software only. So, but Next, as it was called. And that wasn’t for me either though. I just didn’t – something just didn’t click about – I think it may have been my short attention span and my interest in diverse things that hunkering down to any one thing and committing to do it for five years seemed anathema to my course.
That’s why I left the PhD program after two quarters. I’m like I’m not going to write a thesis. That’s like spend four years on one little, narrow area of actually neural networks would have been my thesis area, specifically neural networks applied to parallel processing in computers was what I was starting on. I would have been fascinated by that, but it would have been 20 years too early. Anyway, same thing in any operating job. It’s like I would be either job hopping, the way some people do who have this problem I have, or I’d have to be unhappy, I think, in my job because just the pace change and learning would stagnate so quickly.
I would see these patterns over months, not years, that I’m not learning as much anymore. And I’m just executing the same thing over and over again. And so, management consulting was an interesting way to play to that and like all kinds of different client engagements. It just didn’t have the same agency of making it meaningful. In fact, you could point to very vicarious, very diffuse and ambiguous whether you’ve accomplished anything.
And so, that’s why all of the management consulting firms say we’re adding value, always talking about measuring how much value we added.
All of these things are being said because everyone knows, in their hear, I can’t tell them anything. How do I know if it was me or them? It’s usually them. We can’t really sing our own praises that much. So, I love the diversity of management consulting. I didn’t like the life balance, nor the agency. And so, finally, I discovered venture capital and learned what it was about. It was like the perfect combination for me.
Tim Ferriss: Well, your investment, or at least that facet of things you haven’t – the lens of looking for things you haven’t seen before also suits your programming, so to speak.
Steve Jurvetson: Right. And maybe that’s the origin. I hadn’t connected those dots, but it seems obvious now, as I say this to you that that desire to seek something new may have been the driver of that simple rule that I’ve been living my life by, which is invest in something that you haven’t seen before.
Tim Ferriss: So, when you’re looking at companies, and I am going to come back to Steve Jobs, I have some questions about Steve and Elon. I know you’ve spent a good amount of time with both. When you’re looking at these companies that have no product that are in the idea stage, there may be some white papers or publications from think tanks or conference panels that discuss these subjects.
How do you evaluate deals? Or how do you vet deals? Because I’ve seen a lot of people attempt to go as early as you do but have just gotten their faces ripped off routinely. So, there are – and, particularly, if you’re trying to be bold. So, not just invest at the early stage, but also go for things that are however many times out of 10 going to fail. How do you avoid running out of bankroll? I’d love to just hear a little bit about what you look for, in a situation like that, at that embryonic stage. What are the check boxes that help you to risk mitigate, if that’s even a consideration?
Steve Jurvetson: It is.
So, risk mitigate –
Tim Ferriss: Maybe not the right expression.
Steve Jurvetson: So, the last one – but part of the luck I had in starting in the best economic boom for venture you could imagine, the dot com boom, small amounts of capital allowed companies to scale incredibly rapidly. There wasn’t really historical precedents for something that good for venture capital. So, chock part of this up to luck, but the side effect then lasted is that I didn’t have that fearful moment. I didn’t slog through 10 years of just banging my head against the wall of failure, failure, failure, failure. It just was like shooting fish in a barrel to start.
So, that I think helped me A) build enough track record that people would give me a bit more slack to pursue something within my partnership, for example, to pursue ideas. I can’t imagine what life would be like if I was stuck in a partnership that wouldn’t give me credibility or let me run with some ideas. And they certainly would push back, believe me. Space X and a bunch of companies like really, you’re going to invest in rockets? Are you kidding me? So, I’d have to defend some of these, but I didn’t get the no, no, no, you can’t do this.
So, if I hadn’t had that capacity, in other words, to avoid the inner voice of doubt and the overt critic, both internal and external, I don’t think I could have done what I did in the subsequent years.
So, fast forward to midway through my career or into the present day, in other words, the startup phase is a little different than the steady state. So, now that we’re in the steady state, I can realize there will be some failures. That’s fine. And what I then look for is a combination of some personal attributes, market attributes and weirdly of late, sort of process technology attributes. So, I would have, in the past, said technology breakthrough. Of course, there has to be people, huge market, and something disruptive in the technology domain that nano technology or something that we couldn’t have done this five years ago.
Oh, that’s another question I always ask every entrepreneur either explicitly or implicitly, if I know the answer, I don’t need to ask it, which is could you have started his business five years ago. And if the answer is yes, then, I don’t want to invest.
Tim Ferriss: What are other questions you ask?
Steve Jurvetson: Another one I love to ask is so, what does this business look like at 10 years and 20 years out.
And what is mind boggling is, unfortunately, how this weeds out the charlatans and the arbitrage seeking opportunists like nothing else. They’re just like deer in the headlights. They never thought 10 or 20 years out. they don’t have any idea. And it’s not because things change so rapidly that you can’t predict 10 or 20 years out. It’s that they don’t have a mission. They don’t have a purpose for why they’re starting their business. If you ask Elon Musk that, he knows right away. If you ask [inaudible] , he knows right away. If you ask Zuckerberg, he knows right away.
You ask Larry Page and Sergey Brin, they know right away what their business looks like in 10 and 20 years. And they have a mission statement that they hold to their entire life. And it galvanizes the team. It motivates them. That’s why they’re in business. Other people that are I call them arbitrage seekers, when people flock from some industry because there’s gold in the hills, you want to weed that out. This is a great way to weed that way. People don’t tend to have long term visions, if they don’t really have a purpose for what they’re doing.
So, on the people side, I increasingly have become enamored with purpose driven businesses, as I was mentioning, or mission driven businesses where making money is not the prime objective.
It’s the byproduct of the way they intend to change the world to usher in the transition to sustainable transport and clean energy, to colonize Mars as a couple of easily understood examples. Those are both unique. There aren’t any other start ups at the time proposing to colonize Mars, nor is it something that you get done in a short period of time. It’s like the star on the horizon that galvanizes so much action. Do you want me to loop back to the overall categories, the process stuff, and the other elements?
Tim Ferriss: I would love to hear about some of the attributes, yeah.
Steve Jurvetson: Sure. So, on the market sides, I think a lot of venture investors, in the early stage, would have the following common answer to your question. I invest in good people pursuing big ideas in enormous markets. But sometimes, they actually won’t execute on that because enormous markets usually means that it’s something really radical that’s changing. There’s a lot of unpredictability. So, if you’re investing in ride sharing, as you did, before it was obviously a good idea, it was not obviously a good idea.
And mostly, people probably thought it was a really bad idea.
Tim Ferriss: Well, there was an email that Naval Ravikant put up not too long ago, which was the email that was sent out through Angel Lists, which was ignored by something like 297 people out of 300.
Steve Jurvetson: Exactly.
Tim Ferriss: It was not clearly a great idea to everyone.
Steve Jurvetson: I would say, when I first invested in Hotmail, I felt this. I felt it when we first invested in Skype.
Tim Ferriss: Side note really quickly just because I’m cheating a little bit here. I didn’t know this. Where did the name come from, Hotmail?
Steve Jurvetson: It was spelled with a capital HTML, so it was oh, we’re going to do web based email over HTML. It was that dorky. And that was it. And even more interesting, because they were offering free email, they put a lot of effort into the free aspect of this.
So, they located in Freemont, California on Liberty Avenue. They launched on the Fourth of July, which is a national holiday, so they got no news pick up. So, it’s all free, baby. So, anyway, those companies were widely regarded as bad ideas. [Inaudible] of Hotmail famously was turned down by 21 venture capitalists before he found us. And I would say, without a doubt because I’ve met a number of these venture people at the time the Series A was happening for eBay and Google, the vast majority of venture capitalists would not invest in the Series A.
In fact, after the Series A of Google, the two primary investors demanded to get their money back. They wanted to be redeemed, at cost because of a little spat they were having with the founders not getting a new CEO. Not a well known fact. Or one of the major venture investors in Apple sold their entire stake pre IPO. He’s still bragging about being an investor in Apple, of course, but people lose faith in the greatest companies they ever invested in.
Tim Ferriss: And I know we’re bouncing around a lot, but that is what I like to do.
So, I was doing a bit of homework, and you were very helpful in sending me links to a few things. One was an interview with Jason Calacanis.
Steve Jurvetson: Oh, yeah. I love that guy.
Tim Ferriss: And you had created a very nifty index of subjects on your Flicker account. And one of the bullets was why I never sell shares of our companies. And biggest misses also. But could you explain what you mean by that?
Steve Jurvetson: Sure.
Tim Ferriss: What is never sell?
Steve Jurvetson: Never. Never sell. It’s a wonderfully liberating stance. And at first, people are like yeah, I can see your face. That doesn’t make sense. Buy low, sell high is kind of our mantra. Yeah, no, I’ve never sold a share. Now, let me add the caveats. When I have control. So, the vast majority of the time, in our business, this would apply, which is we invest in a startup. It either has an IPO or it gets acquired. Those are the two outcomes where it has a “liquidity event”. And IPO, some point after the IPO, years later or at least 180 days later, a venture firm will distribute those shares to its investors.
So, I, as a general partner, would get shares. So, I get shares of Tesla. I get shares of you name it. Now, what I choose to do with that is my own personal decision. And from that point on, I have never sold a share. Now, what I do is give them to charity over time. And some might argue that’s kind of a sales decision, but not entirely, partially because it’s not like I’m trying to time the market. I’m betting on them in perpetuity. And I’ll give you another answer to why I do this in a moment. But let me flush this one out a little bit more.
This has been wonderfully goal aligning with entrepreneurs because, if I’m thinking when is the time to punch out, it’s kind of a corrosive thought process. When they’re thinking, the ones I like, what does the next 20 years look like for this business, how can we make the most out of this next phase of growth because the best companies are like these sort of power laws of compounding potential. Would you want to be punching out? And you wouldn’t of Facebook, at Google 10 years ago. God, that would have been really a bad mistake.
And actually, let me jump to the point No. 2. So, the very first advice I got when I was entering this field was from someone who had spent their entire career at the Rockefeller Group, I forget which, the foundation or something. His name is Peter Crisp, and I remember him vividly because I think my first week on the job, it was our first pitch to people who give us money. And here, I met someone who has just come off a long career, sort of winding down slowly, off a long, illustrious career of investing in some of the best companies you can imagine. And his two comments to me were, wow, first, I’m super envious.
This young group of people. Starting your career right now, it was like you’re going to love this. I wish I was your age doing this again, this whole second wave. So, here I am changing careers, as we mentioned earlier, not sure which career was made for me. And then, to hear something like that. And the second thing is, looking back over his whole career, he wished he had never sold anything. And I had a similar reaction. What do you mean? He goes, well, I tried to time the market. And if I had just held onto my Apple shares, and who cares what would have happened to everything else. The as if held value today, it would have trumped everything else.
I would be a much richer man. I would have avoided all of that anxiety. And that echoed in the back of my mind, to this day. So, in my – and I won’t share the specifics, but in my personal portfolio, there is a [inaudible] . There is a single company that’s worth more than everything else combined because I have never sold a share. And then, if I look at No. 2, I should go back and do the math. No. 2 plus No. 3 probably, if I think about it long tail, exceeds everything else combined. So, it’s like a traditional power log.
And that is pretty amazing. So, I just – when I made this decision, and also, around the same time, to give it all to charity that was another thing. I created a living trust to give everything but a small, fixed dollar amount to the kids. Everything else is going to go to charity. Then, when you have major crashes, it’s not like, I know this is going to sound weird, I don’t stress that I just lost 90 percent of my net worth because that happened once. It’s like oh, the charity just lost 90 percent of its net worth. And so, I was able to ride it through, and I came right back because I didn’t panic and sell when I literally lost 90 percent of my net worth.
Tim Ferriss: I recall seeing, I don’t remember who it was, but one of the – and there aren’t that many, as you know, but A tier venture capital firms looked at their return on something – their return to limited partners of the let’s just call it 10 companies that had reached IPO.
And that they, subsequently, distributed. And they compared that with the amount made by someone who would have invested the amount in the companies at first opportunity at IPO and ridden it out something like five years. And they would have made just as much money in most of the cases.
Steve Jurvetson: Yeah. There was a fund called Technology Crossover Ventures I think formed with that insight in mind that says, if you can pick some winners still private and have a judgment from seeing the track record, the passion of the entrepreneur, over a number of years, and then, load up the boat either just pre IPO or at IPO, you could put a large amount of capital work in that. But the key was it was those prior years of exposure that really gave you confidence.
So, like my years with Elon allowed me to look at him in a very different way than other entrepreneurs. And if you just, literally, had no prior data, and he just walked in off the street, how would you really know?
Tim Ferriss: So, you mentioned Elon. So, you’ve spent time with Jobs, Elon, many other impressive folks. But what are the commonalities you’ve observed, biggest commonalities, biggest differences between those two?
Steve Jurvetson: Sure. Well, let me start with differences because I think it’s tempting to draw an analogy. And I’ve been tempted, trust me. But I think it’s really important to keep in mind, so I’ll start there, there’s pretty big differences. Jobs was a marketing centric individual with very weak engineering chops. Elon is more of a physicist turned engineer/computer scientist, basically, deep engineering chops, thinks of everything from first principles of what can be done from the physics and then, scales up to the product vision.
Jobs, it’s much more of almost Zen Buddhist approach to parsimonious design and the visceral agitation of imperfection in design space.
The famous calligraphy font thing and getting rid of all of the buttons from the phone. There are all of these maniacal missions he had where, at no point, did he clearly lay out here’s the business strategy. You get rid of the buttons, everything moves to the cloud. You have software services there. You can iterate more quickly. This is going to be an awesome business opportunity, if we can get rid of all of the buttons. No, buttons are ugly. Get rid of them. That’s shit. That design is shit, he would say. But he wouldn’t really give this oh, I get it, that’s the master plan. Whereas Elon is like master plan Part 1, master plan Part 2.
He lays it all out, and he’s basically executing according to the master plan. There’s actually a really well thought out series of steps to get from here to colonizing Mars. A series of steps to get rid of the petrochemical economy, which is pretty amazing. And it’s all there for anyone to read. That’s like night and day difference. Now, similarities, simple. When CEO of two companies, I think that’s interesting structurally.
Not too many people have the chutzpah to do that. And I think, by the way, in both cases, it allows you to focus, interestingly, in a way that you couldn’t otherwise.
Tim Ferriss: Oh, I see what you’re saying. I’ve heard that sentence –
Steve Jurvetson: A CEO of two companies.
Tim Ferriss: Each of them independently, CEOs of two companies at a time.
Steve Jurvetson: You have Tesla and SpaceX, you’ve got Pixar and either Next or Apple, depending on timeframe. To be fair, Jobs was really not quite the CEO at Pixar, but he was by title. In any case, what you can do though is avoid meetings. Imagine it’s the company holiday party, and you just don’t want to go. No one is going to double guess – if you’re a normal CEO at a normal company, and you avoid your own holiday party, what better things do you have to do? But this is awesome. You can, basically, avoid time wasting meetings. And you have to delegate more.
And so, in both cases, it is an intriguing thought experiment that being CEO of more than one company has some interesting benefits for both companies.
Tim Ferriss: I never thought of it that way.
Steve Jurvetson: Yeah. The similarity, I think, there is one area in design where the maniacal attention to detail, I described it as this visceral agitation almost painful to Steve Jobs to see things that were not right.
There’s a bit of that in Elon as well. I interviewed him once about design, and it sounded so spookily similar in that regard. But in a completely different wrapper, meaning you wouldn’t really know or see it as a similar vector of – both think it’s just easy. And maybe it’s the sign of brilliance that there are certain parts of this whole space that are intuitive. And they do naturally. And I wish I knew how to A) do it myself, and B) spot it in others. So, everyone also wants to ask how can I raise my kid to be like Elon, or how can I find entrepreneurs that are like him.
And if you think about it, just one element of that and how miraculous it is to be able to go into a number of industries, commercial banking, arguably Pay Pal, the aerospace industry with Space X, the automotive sector, the energy competing with utilities with the solar city idea really left field.
Now, it’s part of Tesla. But when it started, it was really a left field sector. It wasn’t one industry. That was like that’s energy generation. That’s like competing with regulated facilities. Without any prior business experience in those sectors to become the dominant company in all of them, to have failed at none of them, to be the most important company in all of those fields is kind of mind boggling. It is mind boggling. And the thing that I look for in companies that say we’ve got this mission, as I was mentioning, but we’re going to get this through incremental steps and engaging with customers all along the way.
We’re not just going to hunker down for 20 years and then, pop out with colonizing Mars on the other end. To actually paint the picture of how we get from here to there, that’s even more miraculous in some ways. It’s like everyone can have a big dream. Like thousands of people could have the dreams that Elon has. Almost none of them could paint a compelling picture of how to get there.
Tim Ferriss: That’s where the what’s your 10 year vision, what’s your 20 year vision comes into play. So, Elon has this mythical status for so many people. Just this kind of super who has got everything figured out.
I found this article on Business Insider that was talking a little bit about your relationship with him. And there are two things. Actually, two questions I want to ask. So, the first is you called him the most risk immune person I’ve ever met. And then, I have a follow up to that. But what does that – what’s an example of him being risk immune? And is it because he feels differently in the face of the same risk? Or is it because he defines risk differently or something like that?
Steve Jurvetson: Yeah. That’s a great question because I think it’s passed through the filter of the observer. We perceive risk, incredible risk, in some of the things he’s done. I don’t know that we have perfect vision on, and how could we, on really does he perceive the risk the same way we do as external observers. And so, I think part of the answer, and his brother made a somewhat similar statement once, so I feel comfortable at least talking about this, not as if I’m speaking out of school, that here’s one way I could say it externally.
I’ve never seen an entrepreneur go all in for his companies, and I say plural, as Elon. Some entrepreneurs will take risks. They’ll quit a job. They’ll spend their entire life savings on some idea. They’ll do whatever. The personal commitment, personal sacrifice. I’ve never seen anything like Elon. And I think this story came out, I was referring back to December 2008, and the darkest period for Tesla.
Tim Ferriss: Yeah. Musk thought it would take $50 million to get his first trip to Mars, and then, next sentence, he was $200 million in and had “spent all of his money between that and Tesla,” and he went into personal debt by 2008.
Steve Jurvetson: Exactly. So, 2008, for those that might remember, the financial crisis was happening. For context. At that time, Tesla had just gotten rid of a CEO. Elon had not been the CEO up until then. And it was tough. A large investment bank, one of the most prestigious, had just failed to do a fund raise.
This is where you hire them, pay them lots of money, go out and get us the money. You expect it to come in, at the end of this process. They’re like, sorry, we have nothing for you. And the company was rapidly running out of money. In fact, it was heading towards December 2008, and they couldn’t even make payroll. So, Elon wrote a check personally for $3 million, just so they could make the December Christmas time payroll of the employees. But January is going to be just as bad, and there’s no money anywhere. And, by the way, for context, there was no government program. There was no Daimler investment at this point.
It was just a company that had a roadster that was negative gross margin. Meaning every car you sell, you lose more money. It was a surprise discovery how bad the proposition was, which is why the CEO was let go. It was like oh, my God, contrary to our belief, we’re actually losing money on every car. And that’s not easy to fix, by the way. Sell more cars does not solve this problem readily. And you had your largest inside investor, this is a term of art in the venture community. There’s a lot of symbolism when your largest investor is or is not supportive of what you’re doing.
It doesn’t mean they actually have a lever they can pull to kill you, but the symbolism is bad because they’re in the trenches with you. And if they’re refusing to write a check, that’s a really hard fund raising environment. And the largest investor was as hostile as I’ve ever seen an investor. They did not want Elon as CEO. They did not want anything to do with the company. They wanted to pivot to a different business strategy that seemed a little too cozy that it would support one of their limited partners. And it felt really icky. And they were openly hostile.
And he was going through a divorce. And Space X rockets was blowing up, by the way. And he spent every penny he had. So, what does he do? He borrowed $20 million, and he said okay, our lead investor is not here. This large investment bank has failed. I’m going to invest the $40 million that’s needed. He didn’t have $40 million. He said I’m going to invest the $40 million that’s needed. To hell with all of you. Here are the terms. Not to hell with – but I’m doing it. Train is leaving the station. And it flipped the zeitgeist of you all from fear to greed. And this is –
Tim Ferriss: Meaning everyone is thinking what does he see that I don’t see?
Steve Jurvetson: And to be fair, there is a dynamic, which I’m sure you’ve seen, which is you can have a bunch of people around the table like we were, DFJ was very enthusiastic and wanted to invest, but we can’t do the full $40 million, and we need somebody to be a lead investor, and we’ll do our full share. We, actually, did more than our full share. But somebody has got to step in front of this missing nut, when your largest insider won’t – and you don’t have any outside money. Someone has got to step up. So, he stepped up and said I don’t care. I’ll do the whole thing, if need be. Who is with me? And we took as much as we could.
We brought our growth fund in for the first time. And it is an easier decision to say will I write a check let’s say for $2 million, let’s say you’re just one of the random investors there, as part of $40 million, knowing that at least there’s $40 million. At least we’re going to get through this roadster cost problem and be able to turn some cards, if you will. See does the government come through. Does the Daimler relationship actually happen because there are verbal conversations going on? We’ll get resolution at least of those major things.
And so, there will be hope to get to the next phase of actually building the Model S car, if all of that falls in our favor. Let’s be part of it. So, our $2 million check leverages the $40 million check.
I’m just saying $2 million arbitrarily. So, if all you can do is write $2 million checks, you would never just write a $2 million check. That’s a pier. It’s not a bridge to something. And that’s what A) Elon was willing to do in December, all by himself. And then, B) he was willing to do another one all by himself. I have never seen anything like it. So, he, in retrospect, was perfectly right. Everything went exactly according to plan. This is going to change the world. It’s going to be an enormously valuable company. This was an incredibly good investment to make, at the time, in retrospect.
At the time, it seemed like the riskiest thing I’ve ever seen. I’ve never seen an entrepreneur fund their own company, first when no one else would; second, go net negative by $20 million. Unbelievable.
Tim Ferriss: Have you asked him what he was thinking at the time?
Steve Jurvetson: Not directly. I didn’t want to – I liked it. Like this is great. It just felt like the right thing because like I could see the fear going to greed. By the way, in tough times, you sometimes also learn who is going to stand by you and who won’t.
And so, that lead investor, and then, also, maybe I won’t mention the names. There’s at least one board member who was like oh, my gosh, they showed their stripes. And there’s nothing like a crisis to know if you’re in the trench with the right person.
Tim Ferriss: Yeah. Who your fair-weather friends are.
Steve Jurvetson: Exactly.
Tim Ferriss: So, to that point, it’s mentioned in this piece that Elon called you around the darkest times, so during some of these really tough periods. And of course, keeping it whatever private should be private, but what does someone like Elon – you’ve interacted with a number of these people who have incredible capacity to do big things. What does someone like that say to a friend during their dark times? Why do they call friends?
Steve Jurvetson: So, I’m not going to relay any specifics, but I could try to get to the gist of the question. I won’t relay any specifics of the phone call. And, to be fair, I don’t even really remember the specifics because there have been so many calls over so many times. So, with the caveat of –
Tim Ferriss: Because if you look at the list of difficulties he was going through, any one of those would –
Steve Jurvetson: Would be soul crushing.
Tim Ferriss: Soul crushing. It would completely paralyze and send millions of people into a downward spiral.
Steve Jurvetson: So, he has said some things because I don’t want to speak out of school. But there is something I can share that might be helpful. He has spoken himself, and it was like eating glass. That this was a really terrible time. So, he’s made some comments personally, and I’ll just let him speak for what it felt like for him. But I would say that what I’ve observed in that crisis and other crises that we generalize is that he goes into a battle mode of focus that is really remarkable. In this battle mode, it allows him I think to ignore distraction and to have a laser focus on what needs to get done. So, it will sometimes be – I’ll observe it as these sort of thoughtful, deep moments of like wow, you see it on his face.
And you want to give him space to think because I think there’s like, for people, there could be times when you’re generative and thoughtful and brain storming and thinking about all possibilities and the wonder of the world. And there are other times when like you’ve got to solve a problem and focus in.
And in those modes, he can avoid distraction like no one else I’ve seen. So, a lot of the smart CEOs and entrepreneurs I’ve worked with are some of them share attributes that I have in spades, which is I’m interested in many things. I’m easily distracted by something. And sometimes, I’d rather avoid the tough crisis and thinking about it, when there’s something more fun to spend time on. And so, I’m almost the opposite of this, just to give credit to how valuable this is.
When, let’s say, Tesla has faced various manufacturing challenges, these sort of production hell times that he’s described, he physically sets up his office on the production floor in a very visible area with no walls, so everyone can see that he’s there through the weekend. The vice presidents see that, and that ripples out. When he’s calling a supplier, let’s say he was off because of problems, and he’s like I’m here in the factory, where are you. Why aren’t you here solving this for us? It has a lot of impact. That personal attention to, right now, everything else needs to be gone. I have to solve this problem.
I witnessed this, for example, in a more subtle way more recently when I was setting up or trying to set up rather a very interesting phone call between the Mars exploration program for NASA. Craig Vander who is a pioneer in synthetic biology and gene sequencing and gene synthesis.
And I wanted to just get Elon on a half hour call because the sort of idea had occurred amongst us that we could do a much cheaper Mars return mission, in other words, if there’s any life on Mars, either archaic or currently living, the best way to explore it would be not to send it back from Mars, which is very difficult, but send a gene sequencer to Mars, sequence it locally, beam the data back, and create the living organism on earth. That actually is doable.
And I thought Elon should certainly be interested in this because the next phase of Mars exploration, terraforming, finding out what organisms do live on Mars or not, if they mutate on Mars and actually start thriving, send the data back, create a version on earth to study it here, and more rapidly terraform Mars. He’s like that’s great. He said I can’t take that – only a half hour phone call.
One day, that will be important. Right now, I’ve got to get [inaudible] to fly or there won’t be that need for me to do that. So, I’m like I would love this half hour phone call amongst the three of them. He’s like that can wait a few years, and it can. And that remarkable ability to push aside all of these interesting things when there is I’ve got to get XYZ to ship or fix the problem. And so, fixing the gross margin problem back in 2008, getting a CEO, which turned out to be himself, in place, and solving all of the myriad of problems that were in place was battle mode. And he would also lean on confidants and friends.
So, to be fair, there were others like Antonio Gracias and others who really rolled up their sleeves, got on the factory floor –
Tim Ferriss: He’s a close friend.
Steve Jurvetson: Yeah. He’s amazing. So, folks like that really come and prove that they’re some of the most valuable investors out there.
Tim Ferriss: Antonio is happy to fight to support his friends, too.
Steve Jurvetson: Exactly. I’ll just say it. He’s my favorite investor that I ever met in my entire life.
Tim Ferriss: No kidding. We’ll catch up more over a bottle of wine about this.
But Antonio and I were in the Henry Crown Fellowship Program together at the Aspen Institute. So, we’ve had a chance to spend a lot of time together. Great guy, absolutely great guy. So, two things come to mind. The first is, and I’m sure I’m going to butcher this, but it’s a quote attributed to Steve Jobs. I feel like there are a lot of misattributed quotes. I’m pretty sure this is accurate. I don’t think it’s an Abe Lincoln situation on the internet. But that innovation is saying no to a thousand things. That the –
Steve Jurvetson: I haven’t heard that.
Tim Ferriss: In any case, the other was –
Steve Jurvetson: He’s also, by the way – Jobs was very proud of, when asked what his greatest contribution to the world, his greatest invention, his greatest thing, on his death bed, it was Apple, the organization. And it was really the process learning coming back to something I was starting to talk about earlier. He was focused on the physical space design, keeping the engineers and the marketing people, thinking about where the bathrooms are at Pixar, so you have to walk by certain areas to get to them. He was maniacal about architecting the way people communicate, kicking people out of meetings, if they’re too big.
So, he had an intuitive sense about team size long before I did.
Tim Ferriss: If the people are over a certain weight class?
Steve Jurvetson: No, no, no.
Tim Ferriss: No, I’m kidding.
Steve Jurvetson: You don’t want more than seven people on anything productive. No development team. Actually, five is the ideal number. Five plus or minus two. Boards of directors, development teams, creative groups. That’s one of the secret advantages of small companies is they have less people. And they get shit done. When it’s a big company that has hundreds of people and [inaudible] layers of management, they’ve lost the small team dynamic.
Tim Ferriss: So, I always like to ask about, and I asked about it with Elon, some of the tougher times or challenges because it’s easy, I think, and I explore this with lots of – everybody who is on the show, I try to. I ask them about how they try to deal with overwhelm, or if they feel scattered, what do they do. And we talked a little bit about Elon. I’d love to ask you because you recently had an experience that a lot of people have, in the sense that I and many others get their turn as kind of the punching bag. If you’re public facing, you’re going to run into things.
And you had an experience recently that I’d love for you to describe, if you’re open to it. And then, I have some follow up questions just about how you then reacted to it. Self talk and things like that. So, maybe, if I could just leave it open.
Steve Jurvetson: Yeah. Maybe it’s an elephant in the room. But in the last couple of months, I have faced the most surreal experience of my career, which is 23 years of venture capital and many before that, all positive press experiences. And then, I faced a bizarre almost autocatalytic, self-generating theme that I hosted a sex party with my fiancé in Silicon Valley. And, at first, I laughed. I thought this was hilarious. An ex-geek growing up my whole life with glasses and braces and what have, the notion – I mean, my first date was in college. And I really thought that was hilarious at first. And then, it got a little more serious. And I’m like wait, this is ridiculous.
And the thing that’s even more – it derived from a book that came out in February where there’s no such claim that we hosted a sex party, but it’s in a chapter about sex parties that other people had. And we just happened to be the only party that anyone mentioned by name. And then, if I try to put a simplistic spin on this or try to make sense of it, it looks like people just didn’t read the chapter very carefully, and they made blog posts or other very sort of nonprofessional postings online that oh, my gosh, the sex party was at Steve’s house. And I’m like what? Not only did the book not say that, it wasn’t true.
And by the way, there are 150 people that attended this thing that know it’s not true. And 10 of them go publicly on – which is kind of a risky thing to do and saying I was at this party, and there was no sex.
Tim Ferriss: Including Elon.
Steve Jurvetson: And Musk was like this is irresponsible journalism or something to that effect. And he condemned the writer. And it’s kind of bizarre because I know this author. I’ve been on her Bloomberg television program many times. She knows my email. She knows my cell phone. She never called me for a fact check, which I didn’t realized in book publishing today, in what’s ostensibly a nonfiction category that the publishers do no fact checking.
That’s just a fact now. It’s transformed from decades ago. And they leave it up to the writer. And the writer just didn’t even try to see if it was true. And more disturbingly would retweet, even though she never said we had a sex party, she would retweet other people who did. So, some other publication in Europe would say the orgy. So, it starts to grow. The orgy at our house. And she retweets it. And I’m like, really? You know this isn’t true, and I know she knows it isn’t true. But she keeps retweeting it because it sells more books. And I know executives, for example, who have been pressured by their PR people to say positive things about the book because of her ongoing role as a Bloomberg reporter.
She had this weird conflict of interest when you want to sell books, and salacious stories sell, to propagate something that’s not true, even if you didn’t say it yourself. And then, turn around and use your leverage and your bully pulpit on Twitter and elsewhere to gain support for your book because you know people want to continue working with you.
And you’re going to be – you’re the journalist of record in the tech industry at one of the biggest news organizations. It’s kind of unfair. So, it feels really horrible.
Tim Ferriss: Yeah. I was going to ask you, how did it feel, and what was your self talk, maybe in the short term. And then, I ask a lot of people about self talk, which I’m fascinated by. So, the day of, let’s just say, when it ceases to be funny, and then, maybe, I don’t know, I’m making this up in terms of timeline, but a few days later, when you’ve had a chance to maybe gather your thoughts a bit.
Steve Jurvetson: Yeah. So, despite the initial burst, almost like a defensive a-ha this is funny, and then, when I really allowed it to sink in, it probably took some number of hours. I’m like wait a minute, for example, there’s 150 – probably more, in total, but 150 that really knew there was nothing there, and they were there the whole time. They had to explain to their spouses and others like no, I really wasn’t at a sex party. It’s really embarrassing. Those poor people totally innocent. Anyway, and, again, not to condemn a sex party. I’ve never been invited to one. I’ve never held one.
I don’t want to say it’s a terrible thing, but let’s just say I haven’t been to one, I don’t want to be accused of one.
Tim Ferriss: Just to inject some levity real quickly, so I just moved to San Francisco, this was a long time ago, and one of my neighbors said, “Welcome to the neighborhood. You should come over Saturday. We’re having a party.” And I was like, “Sure, no problem.” So, I ended up having a late dinner. And I was like is it too late? No, it’s not too late. Come on over. So, I walk in, and I’m like what is happening here. People in various states of undress and just in time to realize oh, my God, I’m actually at a sex party. There was food served. But I’m like fully clothed with a beanie and a hoodie on. And then, they go everybody sit down.
We’re going to do a round of introductions. And so, I sit down, and I’m like how do I get out of this because there are like 40 or 50 people there. And I did manage to scurry out and then say to my neighbor, I won’t name by name, but I was just like, please, in the future let me know. Give me a heads up. And I have nothing against it, but it’s like let me know what’s going on. In any case, it’s like you’re in the Bay Area, so it’s like –
Steve Jurvetson: I’m sure these things happen, I just literally have never been invited to one. It’s not my thing. So, I don’t want to sound too preachy, but it’s just not my thing. And it does feel weird to have a room full of tech executives and some of our closest business colleagues, scores of them aligned in this indirect way. So, the way I felt though is I felt really betrayed. And it wasn’t just the single journalist that I’ve highlighted like wow, what happened to professional journalistic ethics. Like just fact checking and caring about the truth.
That’s one branch of disappointment. The other was a little more invisible. I’ll keep this anonymous. But there were a number of people I noticed who would immediately lend support to this idea online. Like either simple things like retweeting something without checking with me. People who ostensibly know me. That was really disappointing. So, I felt betrayed by luckily only a handful. A remarkably small number of people who just – and, frankly, they were some of my least well known contacts, so these aren’t close personal friends.
They’re like let’s say other venture capitalists, just as a category. On the other side, I was blown away by the outpouring of support by people who do know me. So, a couple of co-workers, of ex-employees that I used to work with came out with blog posts. And in every case, it was after they published that I even knew they were putting something together coming in my defense. And like female entrepreneurs of all types were like no, it was anything but this happened at this event.
And I’ll be eternally grateful for when times are really tough, you find out a bit more about people’s character, and you find out who is really someone who knows you because someone who knows me knows this is not true. And what’s weird is that I thought it would be obvious to a larger set, but at least the ones that really know me, they don’t even need to ask about it. Oh, my God, dude, what’s going on? This is crazy.
Tim Ferriss: What prevented you – you had the outpouring of support. You also had a few people show their true colors. Some people, when they get hit with something like that, anything – I mean, I’ve had periods where it’s like I remember this kind of hit piece came out on me.
And I’m not saying these are the same thing, but a hit piece came out on me, and it came out on my birthday, at one point, where I have this annual gathering of my closest friends. And it was through a credible, a very well-known publication that had not only – they had contacted me for fact checking via phone. I had corrected a bunch of misquotes, and then, they ran it as is without making any of the changes. And it really bummed me out. I was considering not doing any interviews ever in the future. Maybe I’ll have to make a number of changes to my life, so that I’m not exposed.
And I think that there are certain ways you can mitigate like always doing fact checking, email responses, as opposed to –
Steve Jurvetson: Right. Because then, they can’t deny you did it.
Tim Ferriss: You always direct it to email. There are a number of different ways that you can risk mitigate there. But was there anything that you said to yourself or that other people said to you that was particularly helpful, at the time?
Steve Jurvetson: Let me think about that for a second. Well, the thing that jumps to mind is how supportive my fiancé, Genevieve, was throughout this. She’s a fighter. And she was at my side throughout. In some ways, it was incredible. And I’m incredibly thankful for her support throughout this. At the beginning of what you were saying, the part that was going through my mind, as you were asking the questions, is that one of the toughest things, and it relates to advice other people gave me, was the advice to not say anything. The advice to be just mum. I got advice from people who focus on PR.
I got advice from people who have been through similar situations or worse. Have been accused of crazy things or crimes, falsely accused of crimes, which, luckily, I’ve never been accused of. And in every single case, with zero crack of there’s another side to this point of view, it’s like you say nothing. You do not point out the obvious flaws in these false accusations.
And the research supporting this is disturbing but true that anything you say, even definitively proving your innocence, will only worsen people’s perception of you at large. Just the mere recanting or resurfacing of that topic to then say it has been decidedly proven false will make people think worse of you on average. Now, from the media perspective. So, in private conversations, that is not the case. And I’ve asked psychologists about this. They’re like no, all of the studies, real clinical/science driven studies show that you do not want to say anything, even to prove your own innocence.
So, that’s horrible. It’s like that’s where you’re torn up with all of the virtual conversations you’d like to have with the people who have done you wrong, with the media. It’s because you know you can set the record straight. It’s like I wrote pages of stuff that I never used. Let’s just set the record straight. And my mind played, for months, it would play through here’s what I would say that would just either A) clear it all up, or B) get back at the person who I know is being dishonest to prove they’re being dishonest.
Say like fess up. How about you won this one? So, that is the most difficult. I really had a hard time with that because, in every other aspect of my life, I don’t have to do that. You can speak openly about like I disagree with you. Well, that didn’t really happen. Or that’s a science based fact or something. As an ex-scientist, I hate that.
Tim Ferriss: And so, it seems like this – you were able to withstand the flack very well. If you think back on it could be at any point in your life, but has there ever been a particularly difficult period for you that you’ve –
Steve Jurvetson: No.
Tim Ferriss: No?
Steve Jurvetson: I mean, my whole high school. But that was a long, retroactive series of pain of just feeling insecure and like I was a late bloomer. I can tell you about tough times, but there wasn’t like a shock to the system. I mean, I was deeply hurt when my dad died. That was tough. But it was something that’s life.
It was a natural cause.
Tim Ferriss: That qualifies, too.
Steve Jurvetson: But it was tough, yeah. Remorse and – so, yeah, I’ve gone through some through things, but nothing that was quite like this, which is wow, that really – someone did me wrong.
Tim Ferriss: Yeah, for sure.
Steve Jurvetson: I’ve been betrayed as opposed to life has its cycles, and I can feel sad about the passing of a dear loved one. But it’s a different category, I think.
Tim Ferriss: Yeah. Totally different categories. But I’m interested still in the coping mechanisms or the thinking that goes with this. So, when your dad died, and I’m sorry for your loss, it’s hard for me to imagine, but what was most helpful during the period of grieving or recovering from that?
Steve Jurvetson: It wasn’t – I didn’t have a play book of what to do. And what seemed most natural, and it may have been a habit of mine, was to focus on my mom and helping her who survived him, who was there at his side when he passed of a heart attack.
It’s just one of those things that we’re like why are you trying to revive him, you’re trying to call 9-1-1. My heart went out so much to her and how her situation was worse than mine, in a way, that that consumed almost all of my thoughts for some period of time dealing with I’m the only child in that family, dealing with what needs to be dealt with. I went into sort of almost non emotional operations mode. And it may have been sometime late that night or the next day that I finally allowed myself to cry and really face what I had lost.
Part of what gave me incredible solace is perhaps some wisdom I could pass on to others who worry about parents who go. And I know Tim Urban and others have written some wonderful pieces about thinking about your parents, when you’re our parents’ generation, like how many days to you have left with them.
Tim Ferriss: Yeah. The Tail End. Everybody should read it. And it was recommended to me, just as a quick side note, by Matt Mullenweg, a mutual friend, wonderful person who also lost his father not too long ago. And he recommended it to me before it happened.
Steve Jurvetson: Exactly. So, maybe the thing that I took solace in, and I’ll share it for others, is it’s not what you do in the weeks before someone passes that really defines your relationship. It’s what you’ve done over your life. And so, I had been going to the Ted conference. I brought him with me. It was one of the greatest joys of his life for years prior. The fact that we had all of those weeks together, sort of these one on one times, of intellectual pursuits. And a way almost to welcome him into my world, like take dad to work day, in a sense, in this sort of virtual world of ideas and science, technology.
When he went through a pancreatic surgery procedure, and just around Thanksgiving, and he came out of it. And I was told by the nurse who first saw him, when he came out of it was that – because there was a chance he wouldn’t make it even through the procedure. He said, “Oh, I get to go to Ted again.” It was like oh, my God.
Tim Ferriss: That’s amazing.
Steve Jurvetson: So, hearing that, and then, he had complications a few weeks later that he passed from. But just knowing how much that meant to him and how much time I did get to spend with him purposely was it really took the edge off.
If we were estranged, if I was at odds with him, then, I’d really, I think, be torn up with guilt of having not come to closure. And we had nothing. He’s my hero. I’ve only had positive thoughts about him throughout my life, so that made it easier, ironically, to lose the guy that I had the best relationship with.
Tim Ferriss: Yeah. This is, as you said, part of the cycle. I’m certainly not looking forward to it. People ask me what do you fear or what are you afraid of. And there are certainly things. Not as many as one might expect. I mean, I don’t want to be eaten by sharks or anything. But I don’t spend a lot of time dwelling on the fear of that happening.
Steve Jurvetson: Statistically unlikely.
Tim Ferriss: But watching my parents get older and, ultimately, pass away is something that I think qualifies definitely as something that occupies my mind. And I owe Matt a huge debt of gratitude because he led me to The Tail End. I read The Tail End, and that led me a number of years ago to start taking extended trips with my parents twice a year.
So, at six month intervals, we have not just a trip, which is usually let’s just call it two to three weeks where I usually take them somewhere they haven’t been, but also, the entire period in between during which we can look forward to the trip and plan the trip and talk about the trip. And that anticipation, I feel like, is sort of 70 or 80 percent of the enjoyment of it. So, I owe Matt a huge thank you. And he recommended a book to me I haven’t yet read, but I’m hoping to soon, which I believe is on grief and grieving. And he’s been on the podcast.
People look up his last name and grief and grieving, I’m sure the correct title, if that isn’t it, will pop up. But he recommended that everyone read it, even before passing of loves ones. So, we talked about Matt Mullenweg. I pinged him to ask him what subjects or questions might be interesting to explore. And one of them was parenting. So, it’s a good segue. How do you think about parenting or maybe doing it differently is too awkward a question to answer?
But what are some of the things that you think are important in parenting?
Steve Jurvetson: Well, we don’t really get manuals on how to do it. People, young parents, first time parents are just sort of thrust into it. And you find your own way. The only thing I did to prepare for being a parent was to read Scientists in the Crib by Alison Gopnik. It’s not a parenting book. It’s, basically, about the neuroscience of infants through 2 and 3 years old that made it fascinating to study, literally, this incredible creature when they were pre-verbal. It sort of created a bond that some dads lack, I think, when they don’t have that physical connection in nursing or what have you that a mom might have.
And yet, to marvel at this creation that is in front of you. Things like how they pick up language, how the [inaudible] system develops. I’m going down a strange rat hole here, but it gave me strange experiments to run like pushing the bassinet on the first day of life under a light overhead that was an L shape, and the baby’s eyes would open immediately every time it went under there because you could actually see it through the closed eye.
And any edge detection just fires up the brain. So, it’s like if you have visitors, watch this, pop the eyes open. And then, during [inaudible] development, meaning learning language, practicing B and P sounds because it’s like sort of – we take it for granted, but we learn how to speak by watching others like what are you doing with your lips to make that sound. So, it made young childhood development easy. Then, I got into my groove, which is like my power ally, which is playing with kids, getting down at their level, whether it’s Legos or blocks or whatever and just exploration and fun.
So, what I loved about being a parent, in the early years, was an excuse to rediscover [inaudible] or just Legos, in general, and then, [inaudible], which got so much better. The toys have gotten so much better with drones and everything. So, when the kids are older, basically, playing with kids, to me, is super invigorating. And metaphorically, I think a lot of engineers, scientists, and people close to that field like even venture capitalists would do well to try to be creative like a child.
To engage like a child does with the world in that childlike wonder.
Tim Ferriss: yeah. Not to interrupt, but this brings to mind, and just for long time listeners, the reason that I’m not going to ask a lot of my rapid fire questions that I normally do is because Steve, you were kind enough to answer a good number of them in my last book, Tribe of Mentors. But in that, I asked you what you would put on a billboard, and you said celebrate the childlike mind.
Steve Jurvetson: Yeah.
Tim Ferriss: I mean, I didn’t want to interrupt the discussion on parenting, but –
Steve Jurvetson: Right. It’s almost like a mantra that came out of parenting, which is I could see how – and this is something, by the way, that harkens back, indirectly, to this book, Scientists in the Crib, that babies are like scientists. They form conjectures and hypotheses. They test the world. They’re putting things in their mouth. They’re playing with everything. Sometimes, it frustrates the parent. But when you see them as scientists doing experiments and learning how the world works from a sort of boot up phase, it’s metaphorical for what we lose often times after many years of traditional education.
They kind of beat the creativity out of you. And I think the best engineers and the best scientists have that kind of childlike mind.
You can see it in the writings of Feinman and even Einstein and Newton and others. Newton, I think, once famously said, “I felt like nothing but a child playing on the seashore.” That there’s something deeply resonant about seeing the connectivity in things as a child would and avoiding the strictures and mental ruts that academic disciplines foster and job tracks – think about discipline, track, those are both two things I don’t like. I’d rather have less discipline and less tracks. I’d rather be exploratory and creative. And so, I found children to be a wonderful opportunity. And it’s such a win/win.
You’re connecting with them. You’re mindful. You’re present. And that later rolls into reading with them. I spent a lot of time, and try to, whenever I’m with them, do what they like to do. Engage with them in the kinds of toys and things that they like, and then, push that a little further with all kinds of, how should I put it, tech infused adjuncts to what they might normally be playing with.
Tim Ferriss: We probably don’t have time to go into it right now, in this conversation, but where can people learn about your rockets, your rocket building?
Steve Jurvetson: So, I did a short Ted talk on the Joys of Rocketry, I think it was called the Joys of Rocketry. So, ever since my son turned 3, we started launching model rockets. In the story, there was I just went to a local toy store back when they had them, a physical place, and saw these rocket kits ready to fly. And I’m like, wow, I sort of remember rockets when I was little. I wasn’t that into them. I built a couple. And so, we did this. And to make a long story short, I found a mentor that could teach me like you could get really bigger engines and bigger rockets to the present day. I’ve probably launched thousands of rockets.
I 3D print these designs. My son and I have been working on this. We go out to the Black Rock Desert every year and launch really big things going well past super sonic speeds, routinely. Launching large rockets, rockets he could fit inside as a hobby.
That’s probably where I first met Planet Labs was out in the desert launching rockets, as an aside. So, occasionally, good business comes out of it, too. But most of all, it’s this incredible hobby of making science real. Like when something fails to launch or explodes on the pad or comes back in because the parachute didn’t deploy properly, it is just viscerally exciting. I can’t really put my finger on why it’s not universally exciting. To me, it just feels like something everyone should do a little bit of.
Tim Ferriss: So, talking about making science real, there were a few tidbits that I pulled from one of your indices on various talks. And they were just seemed like fantastic, attention grabbing headlines, at the very least. Not intended to be that, but I’d be interested in hearing the answer or just a little bit of elaboration on this. One was drones and how to eliminate the TSA. So, what’s the shortish, it doesn’t have to be super short, but explanation of what that means?
Steve Jurvetson: Sure. And so, the drones thing is peripheral. But how to eliminate the TSA is an epiphany I had back I think it was around 2005 or maybe earlier, maybe 2003. Post 9/11, TSA is in full effect doing all kinds of crazy things. I think they just implemented the shoe thing for the first time. And I’m at this sort of brain storming effort with them where they gave us the challenge how can we rapidly erratically streamline airport security operations to get on the plane sooner. And this was, at the time, looking at 18 years. I don’t know why 18 years. Maybe it was 2002, and this would be 2020. Maybe it was 2002.
And so, I came to that. I think I was the only tech guy there. And I’m thinking 18 years, that’s a long time to predict things. We’d invested, by the way, in some airport security technology stuff, but I didn’t really talk about any of that. I was like 18 years, that’s going to be perhaps 18 doublings of Moore’s Law, which would be 256,000 X compute power.
What might someone do then that they couldn’t do now? Well, autonomous flight. But it was long before autonomous driving or autonomous flight or drones was a thing. Those words didn’t exist, at least not in the vernacular of products. And I said there’s no question that we could have autonomous flight by then, 18 years in the future, by the year 2020, autonomous planes because already can today, by the way. Air Bus and Boeing, every one of those planes can land better than the pilot could and take off. everything but taxiing is easy compared to autonomous driving. In any case, no one else was on that page.
And I said do you realize what would happen if there’s no cockpit? You can make that a really nice first class lounge. The plane can’t be used as a weapon. So, why have any security gateway? So, what you could do instead is go in with some biometrics where you know who is on the plane. Have video surveillance on the plane as the tradeoff. And bring whatever weapon you want on the plane. This would be a really bad place to go kill 200 people because you’re going to get caught. If you’re a terrorist cell, you’re going to get caught. If you can’t use it as a terrorist weapon, then, why have the TSA at all?
And then, there was the wait, will it really work. And it will if you have autonomous flight, and we should be doing it today with today’s technology, no doubt about it. And you could telematically operate at each airport for the taxi part, if that’s really so hard. But I don’t think that’s that hard. And then, you get to go a step further and say what about bombs, maybe the plane falls out of the sky. Your luggage could fly separately in an autonomous thing from the plane itself. You’d have a smaller luggage only plane for the actual cargo part. You could have smaller planes.
The whole design space starts to change, in terms of what the optimal design is, if you’re not amortizing a pilot anymore in terms of that operational cost. And you could have multiple flights where there was a single one before, now there’s even less people per plane and more flexibility in your roots. All of this unpacks. And I asked them have you even calculated the economic impact of the shoe policy. And they didn’t know what I meant. I was like you could just take how much time did that just add to the cue of the average traveler times the average salary of the average American and just the economic dead weight loss.
And part of what I tried to show them is that the immune response of a system is often worse and what kills you not the pathogen.
So, it’s often our own immune system that kills us, literally, as the method of death. And I said how long until someone puts a battery on fire? Are you going to keep the laptops and cell phones off of the plane? Do you realize the economic impact of that? And they didn’t want to hear it. And I’m glad that hasn’t happened quite yet. But I’m like that’s what the terrorist cell should be doing to cause the most harm. Have one yahoo make a half assed attempt to light a battery on fire on a plane, and now, look what it would do.
Tim Ferriss: I was in a flight from I want to say it was – I mean, I was on a far flung place, but I think it was Uzbekistan to Istanbul or Istanbul to London. It was one of the two, and we actually had to surrender all of our laptops. And it created the amount of confusion and congestion and craziness that that created was just unbelievable.
Steve Jurvetson: Yeah.
Tim Ferriss: So, the end of the TSA.
Steve Jurvetson: That’s right. Wouldn’t that be wonderful?
Tim Ferriss: How do you budget, as a technology investor, for regulatory or political opposition from incumbents?
And you could look at many different examples of this, whether it’s lobbyists or extremely powerful unions of various types that would be strongly, strongly, strongly incentivized to not allow something like the TSA to go.
Steve Jurvetson: Yeah. No, with pilot unions. Some people would point out the usual well, you’ve got a bit of an issue here. So, in the past, in the ‘90s especially, when the internet was like you could just do internet for a while, and that was fine, we had the mantra to never invest in a regulated sector. And still, to this day, I try not to invest in anything that requires any law to get passed in order to be in business. And the one exception is we went all in on autonomous driving when the product is currently illegal, but we know it’s going to become legal. Fully Level 5 autonomous driving.
With that exception, recently, and the old school, we’d not only try to avoid regulatory environments, we try to avoid if you had to deal with, in any way, as a customer, partner, with utilities or the government or in any of that sector.
But I think, frankly, that left a lot of large sectors just – a lot of entrepreneurs were avoiding them like the plague. So, when Elon opened our eyes and says you can actually take on what might be perceived to be the most non market, if you will, or non-market factors, not like the best product doesn’t necessarily win in the ultra-industrial complex. If you could take that on head on and just win with a better product. And similarly, going up against the regulated utilities with Solar City, so to distribute a solar solution. And yes, they’re fighting with every dirty trick you can imagine. They’re trying every angle.
But, sometimes, there’s just such a compelling advantage because there’s been no new interest for 25 years. They haven’t faced a competitive threat in their institutional lifetime, they really don’t know how to behave in response. So, you have, on one hand, yes, they’ll try to do dastardly things. And I don’t know what to say other than you just kind of hope that enough of normal democracy will flourish that you can overcome that and not have critical wounds.
We’ll see. But on the other side, you don’t usually – when I was in software investing, as a primary focus, you don’t usually find opportunities to make 100 fold or 1,000 fold cost advantage in a product. But you do, in some of these areas, because they literally have faced no competitive threat for so long, they don’t even know what it’s like to compete. Take like the aerospace industry. There’s a number of Chinese ministers who, early on, when Space X gave the pricing for the Falcon 9, they said those prices are not real. We could not compete at those price points, even if we had all western technology.
It’s game over. And other US competitors said we, basically, have to shut down our product lines. Imagine if some competitive Oracle or Microsoft said we’re going to come out with something. And you’re like yeah, you’re right, we better stop selling Windows. Or we’re just going to not do databases anymore because that’s better. No company responds with we’re shutting down our entire product line. And we were the monopolist prior. We were the thing.
And the only caveat is they say that we’re shutting down our product lines. But government, you’ve got to have another company. So, give us $4 billion, we’ll build a better one. We can do it. We can built it. Get us $4 billion. We forgot to innovate for 25 years, but now, give us a pile of money, and we’ll start. It’s wild. I’ve never seen anything like it.
Tim Ferriss: So, one thing that we chatted a little bit about before recording that I wanted to ask you about is printed organs and synthetic meat.
Steve Jurvetson: Hopefully not in the same dish.
Tim Ferriss: Hopefully not in the same dish, although you never know. It could be the whole nose to tail. But, in this case, you would have to, I suppose, imagine the exterior would be a figment of your imagination in the case of synthetic meat. But can you – where are things, currently, with synthetic meat, and where will they be in the relatively near term? And why is it important, for that matter?
Steve Jurvetson: I think that’s a great question. [Inaudible]. I think it’s one of the major tech themes or factors that will affect a lot of people’s lives over the next 10 to 20 years.
And not everyone is fully aware of it yet. And it’s an inevitability. So, back when we were talking about these inevitable futures like all cars will be electric, all vehicles will be autonomous. This is one of those. We will not slaughter animals to get meat. And the question is is that 50 years out? Is that 500 years out? But just like we won’t burn oil and gas 500 years out, there’s no way we would do that 500 years out, especially not in small, internal combustion engines that we won’t slaughter a cow to get a steak. And so, the insight occurs when you realize, first, it’s a much cheaper and efficient way to grow the product you need without the whole cow.
The hide. You don’t need the methane production. You don’t need all of the inefficiency that was an artifact of biological evolution. You don’t need the land use, the water use, the energy use. You can cut all of that somewhere between 10 and 100 X, all of those factors, which, by the way, for the listeners that don’t know this, about one-third of all useable land on earth goes to meat production. So, this is the grain that gets fed to cows and pigs and chickens.
And the land that those animals live on. So, one-third of all useable land. It’s astounding. It’s one of the biggest water problems, the biggest methane gas, which is one of the most serious greenhouse gas problems. It’s sort of on par with the whole petrochemical economy. Or on the other hand, if you can say I will get rid of oil and gas forever, or I’ll get rid of meat product, you’d be better getting rid of meat production, in the short term, in terms of green house gases and the environment. So, pretty big deal. So, why is this possible? There are two major branches of companies that are trying to solve this.
One branch is to replace meat with something that’s not meat. And I applaud those efforts. It’s a little bit more of an engineering challenge to get it past the consumer. And each product has its own engineer. Each and every product is challenging. You make the duck taste like duck, make the chicken taste like chicken. And have it not just be like sausages and hot dogs but actually fillet, if you want to take on the whole corner of the market. So, that will make a meaningful impact and be important. It’s just going to be slow moving because of how hard it is to do each product and to make it anything passable is challenging.
Tim Ferriss: Extremely hard. I’ve tried a lot of those products.
Steve Jurvetson: People have been trying every which way to do a veggie burger. There are big breakthroughs recently by using heme and plant based heme.
Tim Ferriss: Just for those of you who are impossible, that means you get a veggie burger that bleeds, basically.
Steve Jurvetson: Exactly. They found a root of soy plant that has a molecular cage that holds an iron atom in the center that’s called a porphyrin that’s the same molecule kind of structures that we have in hemoglobin that makes your blood red, that makes it turn color when it gets out of your body, that makes your steak turn red, that makes it taste the way it does, that makes it barbeque the way it does, the way it browns. All of those things you put in a plant. You can also put it, by the way, you can make chicken a red meat. It’s kind of fun. But, anyway, that’s the plant based approach. A lot of engineering, a lot of effort, a lot of money per product.
The other [inaudible] we invested in called Memphis Meats and others like that says let’s just make steak. Let’s make chicken. Let’s make any of these products in like not just a substitute, make the exact same thing, but don’t grow it in a cow. So, it’s more of changing the manufacturing method, quite simply. Do you have the cow making the steak, or do you have it in a lab?
How do you make it in the lab? Well, the team came from cardiology and other medical backgrounds. They have people that have done work in stem cell biology, and people that have worked in the whole synthetic biology area. And it’s pretty straight forward to grow cells. You take stem cells. You can induce them to be [inaudible] or induce them to be immortal, basically, and you can just grow an infinite number of these cells that could become anything. They could become skeletal muscle. They could become nerves. They could become skin.
And the way you differentiate them into skeletal muscle, which is like our muscles in our arms, is you put them on a scaffold that causes them to differentiate into that kind of thing. A scaffold that is an edible gelatin like thing. Kind of it’s basically some other food product. Like we have collagen and other stuff. You have this scaffold of things, this [inaudible]. The cells differentiate, and they merge together into these long fibers just like our muscle cells. So, what were formerly discrete, standalone cells form into one long, multinucleated cell. It twitches. It does everything like a normal muscle.
It is a muscle cell of that species where I’ve tasted the duck most recently.
So, it’s duck muscle. And over time, you can add the irregularities of sinew and all of this. But right now, it’s just like a perfect cut of duck muscle. The mouth feel, everything. It’s just the same thing.
Tim Ferriss: Everything is a filet mignon.
Steve Jurvetson: Exactly. And, by the way, in the future, you can make it healthier. You can make it all omega 3 rich oils. You could tune things. But let’s just start with the simple don’t confuse the market with – it’s not turducken. It’s turkey or it’s duck. It’s not a blend. But you imagine blending is like a simple thing. There’s no reason you couldn’t do infinite blending like blending a wine to make it just the right mouth feel, just the right whatever. So, but in the near term, let’s not jump ahead of ourselves. It’s just a substitute. And you can do this in small like a Chinese shipping container kind of thing.
So, you could put this near the point of consumption. You could have this in urban areas, so you’re not shipping meat all around the country. You’re growing the steak to order. The end cost point should be much, much lower. To me, this had one of those sort of lightning bolt moments of this is the inevitable future. There’s no technical risk that says this couldn’t happen.
There isn’t like we have to invent something that hasn’t been – there’s a lot of system engineering to optimize it, the feed stocks, whatever. It’s building the right reactor size. It’s going to take some engineering, but it’s not going to take breakthrough science. It’s the same epiphany that when I first rode in an electric car, when I first had an autonomous ride early on with the Google ones, the old Prius that they had automated, it’s like this is the future. You could just see it like a clarion bell ringing in your head. And then, a few implications started to hit like wow, this will transform the world in a lot of ways.
The amount of land and resources and real estate plays that relate to meat production today. Not to mention mad cow disease, influenza, H1N1, all of these other things that those collateral damages of the food industry. We haven’t gotten to that. You can see how we’ll get from here to there, the buyers, the largest buyers of meat would absolutely like to diversify their supply chain, so they’re not vulnerable to influenza or mad cow or any other disruption of the supply chain. You can see how they’re going to want to feather that in.
By the way, Tyson and Cargill, two of the largest meat companies in America invested in this company as well in the Series A with us.
And but then, I realized something about myself. I realized, for the first time, something where my future self-will condemn my present self as immoral. So, I know that 50 years from now, once I’m eating the bacon and steak that has not killed an animal in its production, will I be able to visit a slaughter house for the first time? I won’t do that today. I like eating meat so much that I refuse to go visit a slaughter house. In fact, of the USDA meat inspectors, 99 percent of them become vegetarian. They don’t start that way. If you see how it’s made, you wouldn’t eat it. And yeah, I won’t do that.
And when I say moral, I think humanities circle of empathy expands over time. First, it was family unit. Then, the tribe, the nation state, then, maybe global citizens. Now, I think the interspecies, if you will, empathy is inevitable trajectory where I would welcome that where it would just be more thoughtful about other sentient organisms and their wellbeing that we just look right past today.
It’s kind of like being a slave owner in America back in the 1700’s. The economy depends on it. I don’t want to ask questions about how those slave ships – I’m sure slave owners didn’t visit slave ships, and the few that did were like oh, my God, we’ve got to change this. You just don’t want to look. And once you have the economic alternative that doesn’t have any compromises, it’s not like oh, it’s not really bacon, or it’s not really steak, it’s the same thing just no animal died, then, you’ll have the moral shift I think profoundly.
Tim Ferriss: What is the current state? What products do they have that –
Steve Jurvetson: They’re still in development because of the cost side at scale. So, this company – so, when I mentioned the challenge of the plant based substitutes is engineering something that people won’t mistake and that tastes as good. That’s the engineering challenge. Here, the whole thing is just cost because you can make something that’s indistinguishable. It just costs too much right now. And there’s three vectors of making it cheaper. Two are total give mes, and the one is engineering.
The give mes are just making a bigger plant. So, say you brew beer, if you just have a 1 liter facility on your desk top at home, and you amortize the cost of your home to make 1 liter of beer at a time, it’s going to be an expensive liter of beer, even if the formula is the same as a huge production plant.
Tim Ferriss: For sure.
Steve Jurvetson: So, scale. The second is cheaper feed stocks. Just feed it something other than the very expensive serum they’re using now in RND purposes to minimize variables. They’re using pharmaceutical grade inputs, so to feed the cells, if you will.
Tim Ferriss: What do they feed them? Is it like a glucose mixture with amino acids?
Steve Jurvetson: It’s like a serum, a blood serum. It’s kind of like what you’d find in your blood to make your blood cells live. So, it’s a variety of substances used for research purposes. But there’s no reason it couldn’t be – but the reason it doesn’t exist is there’s no market for food grade plant based feed stocks that cells can grow off of. And now, we have a good reason to do that. And then, the third is just various engineering optimizations on the cells and the mixtures and what combinations of cells. Do you want to try to boost the fat content of each cell or have separate muscle and fat?
Do you want to have it all be like one bite does all, or do you want to have two different types?
Tim Ferriss: Well, a few thoughts occurred to me, as you were describing this. The first is would this company ever utilize the technology to produce human tissue for regenerative medicine or other purposes? And then, I thought to myself, wow, you could also become a moral cannibal, if you wanted. You could produce, not that you would want to produce human burgers and eat them, but you could, ostensibly, do that. But that was just more of a thought. I was like wow, that’s –
Steve Jurvetson: Well, you could also – a small donor to revive and restore, which is trying to bring back the mammoth and these species. So, you could go back to have the mammoth.
Tim Ferriss: That’s true.
Steve Jurvetson: Without growing the mammoth. It would probably be gamey.
Tim Ferriss: Yeah. The [inaudible] burger. But is that maybe just a distraction? I don’t know the technology well enough to think of it from human medical perspective.
Steve Jurvetson: No, it is a good question. In fact, the first sort of clean meat or alternative meat company that I came across was using, ironically, the reverse sequence, which is it spun out of a company that was doing organs. They printed bladders. There’s a kid I met who is 18 years old. He’s lived with a grown bladder for many years now. And but that was more like a 3D printer. So, when you’re growing a specific organ that needs to be functional, it’s super important to get a lot of the details right. A chunk of skeletal muscle, if you just take it from the center piece versus the end with sinew. There’s variation if you want to make it function like a muscle. And the connection to your sinews and what have you –
Tim Ferriss: If you’re making ground beef from scratch.
Steve Jurvetson: Right. But if you’re getting just a chunk of meat out of the middle, it’s just a chunk of meat. So, you have much bigger challenges with the printed organs that lent itself naturally to a 3D printer kind of approach. And it works wonderfully for some organs. They’ve been growing kidneys and some of the connective tissue stuff around reconstructive surgery for the face and what have you.
But it’s slow. And it’s also a great example of personalized one to one marketing like you want to grow cells that are compatible with your body, so they would source your stem cells to grow your organ for you. And it’s kind of a different approach, in a number of ways, intuitively from what you want to mass produce for consumption where you could just have who cares what the cow – it could all be the same cow clone that you’re growing the beef from. Whereas every human implant wants to be immune compatible with what you’ve got. So, the spin out didn’t make as much sense to me to say let’s try to produce metric tons of meat using that 3D printer.
In any sense of a 3D printer, I’m sure they’re going to figure out some way to scale that up. But it just felt like, to me, there was a definite technology risk there to just – I couldn’t see the hand waving or anything that says why is that going to get 1,000 times better. It could, but I don’t see why it has to. It might not. Whereas this other thing, growing cells in a vat inherently scales. It’s like just have a bigger vat. It’s like it’s 3D to start with. It’s not a 2D layering. There’s something about the manufacturing method that is born out in things like brewing beer and a variety of fermentation tasks where you kind of understand how to generate metric tons of stuff with a fermentation process.
Tim Ferriss: For people listening, like myself, who are not particularly, I’m being generous, not technically trained, I’m certainly not an engineer by any stretch, who want to make themselves more scientifically literate, are there any books or resources or approaches that you would recommend?
Steve Jurvetson: Yeah. There are two things that jump to mind. One is a general purpose overview of what’s important, almost like a survey level, where if you’re just a business executive, and you want to make sure you’re not blindsided by some development that may be relevant but not be a practitioner, and then, there could be a question of is there something that say you’re a former autonomous vehicle driver, and now, you’re looking for the next thing. What might you want to study to engage in the economy as a practitioner? And there’s some areas that are more I think easily approached than others.
So, first, on the overall survey, I think there are some writers who do a good job bringing you, with a sort of overview mentality to like what’s really going on in the world.
People like Kevin Kelly and maybe Matt Ridley and maybe – and a few others like this going back with [inaudible]. There’s been a variety. But I might highlight, let’s say, Kevin Kelly because the single book that’s had the most influence on me my entire life is one of his earlier ones called Out of Control. And really, it started my life long fascination of the biological metaphors in technology. Everything from all of that stuff we were talking about earlier about [inaudible] and iterative algorithms and evolution is itself an iterative algorithm. The power of evolution, the power of genetic engineering, all of this stuff.
So, he was ahead of his time. He wrote this book in the last century. And it recently got translated to Mandarin. And it’s just in the current day, it’s probably one of the most popular books in China today, even though he wrote it decades ago because it’s actually very relevant today. So, that would be a good starting point, I think. It segues into the technology that either as a practitioner or just you can read about this, if you just direct yourself.
These are simple Google searches, or I don’t know if there’s a particular book I’d point out. Just to learn about deep learning. Learning about neural networks. The reason I say that is I’ve never seen a greater demand for a technology and a scarcity of supply. Like these salaries being afforded to engineers in this area are out of control. A half million dollars for beginners.
Tim Ferriss: Who are some of the more credible thinkers or practitioners who talk publicly about deep learning?
Steve Jurvetson: Let me think. I’m trying to think if there’s a good overview. The places – well, I know that Coursera and some of these places are trying – and Sebastian [inaudible] are trying to do deep learning courses and such. And I haven’t taken those. I don’t know how good they are.
Tim Ferriss: I would imagine even some of the very technical people have given non-technical talks, whether it’s at Google or elsewhere. I would imagine some of the thinkers that might be in their day to day work way too technical or specialized have probably given –
Steve Jurvetson: This is a tough one. Maybe for your show notes, I can try to come up with something. So, part of the challenge I had is because I started a PhD in this, I didn’t seek the generic books. And I’ve been reading ones that, in the back of my mind, was that too technical. But I bet you I can dig some up. And it may sound self-serving, but I’ve tried to give some of those talks, and when I go to conferences, a number of times, there’s a real dearth of other people doing that same summarization. But I would say that the group out of Canada, so everything from Hinton to Joshua Benjo to Andrew Ng, coming back to the US, in his case, they are both leading edge of RND and such.
And they give really good talks. It’s just not all of them. Some of them are deeply technical. Some of them are overviews. So, I’ll try to find, for you, some examples of talks they gave that are for the average person.
Tim Ferriss: Perfect. So, that’s what we’ll do then.
Steve Jurvetson: Another thing I wanted to say about if someone actually wants to get into it, it’s actually remarkably easy to learn. When I said it’s weird labor market, arbitrage is, I don’t think it takes more than six to eight months to become a real domain expert in this.
And you don’t have to be spectacularly good at computer science before. The background is just so different from normal computer science that, arguably, a new entrant has a great opportunity to just learn how these things are trained. And forget about normal computer science.
Tim Ferriss: And I can say a few things, in response to that. The first is to recommend people check out, so we talked about Tim Urban a little earlier and The Tail End and so on. So, I had Tim Urban on this podcast, and I asked him how he got up to speed on topics. And he went through his exact process.
Steve Jurvetson: He just talks to Elon.
Tim Ferriss: Yeah.
Steve Jurvetson: Elon lays it out to him.
Tim Ferriss: He just calls Elon. So, for those people interested, if they just search Tim Ferriss Show Tim Urban, that will pop right up. And he spends about 20 minutes talking about exactly this, getting up to speed, which would be, I think, helpful for a lot of folks.
And when we chat, after this show, we’ll text or email. And then, in the show notes at Tim.blog/podcast, you can just find this, and we’ll have some additional resources for people who want to, including myself, dig into this and learn more. Have you ever given a – this will be maybe the last question or second to last question. Have you ever given a commencement speech?
Steve Jurvetson: Funny you should ask. Once for my high school, and it was the most terrifying thing I’ve ever done. I love public speaking. I did debate back in high school. And when I’m speaking to an audience that’s somewhat similar to the audiences I’ve spoken to before, check. If it’s on subject that I’ve spoken on before, check. If it’s my [inaudible], I don’t mind that. Oh, my God, trying to be relevant to a bunch of 18-year-olds, wow, that was tough. It was back in Dallas. But I did that a few years back.
Tim Ferriss: What did you talk about? And maybe, if it’s broad, what did people respond most strongly to of what you told them?
Steve Jurvetson: Oh, I can actually give you show notes. I managed to keep a copy, and someone even translated it in Spanish.
Tim Ferriss: Oh, amazing. Great.
Steve Jurvetson: So, I’m trying to remember what it was. Well, here was the advice I got that really helped was think about when you were their age. And the more time I spent thinking about what life was like for me as a senior, because I went to that same school, it all sort of clicked into place. The what do I want to do with my life, what’s going on in the world, and sort of weaving what I was learning from venture capital and all of the amazing entrepreneurs that I was seeing to convey to them you are entering the most exciting period in human history.
And I shared a little bit about things we spoke about on this podcast around things going on in synthetic biology, things going on in AI, and what have you. Each of these areas is so rich with opportunity. And I gave them some general advice about just thinking about your career as a pursuit of passion. Thinking about what you’re uniquely good at that no one else in your random walk through life may have done. And to keep that in mind as you hopefully infuse with a bit of technical open mindedness and creativity and childlike mind in exploration of what you want to do that it’s just like there’s no better time to be entering the world and trying to make a difference.
I tried to encourage them all to think entrepreneurially, to think about being change agents for the world, that everything that history books will be written about is some new entrant entering a field they didn’t know much about prior. And then, encouraging them that this is what increasingly defines the world we live in.
Tim Ferriss: One question that somebody posed to me, when I was considering the question or considering unique strengths, I was like I don’t know if I have any unique strengths. I do a lot of things kind of well, but I’m not sure. Maybe that’s it. Maybe it’s the pattern I’m imagining across those. And the question that they asked me was what do you find easy that a lot of your friends find hard. And I was like huh. And that actually ended up being a very helpful question for somewhat indirectly landing on the strengths because I had a lot of trouble with that. So, maybe folks will find that helpful.
Steve Jurvetson: Yeah. Because everyone does have some element to that question.
And they also have something they’ve done that, back to that early question, when I was entering venture capital, how am I different from every other venture capitalist who is trying to do this job. There’s something about your personal background. It could be a language skill. It could be wow, you had to take care of an aging grandmother in your youth, and so you have the sympathy and empathy for what the aged are going through that others lack. That actually could be super hero strength, if you want to be an entrepreneur for this aging demographic of baby boomers. Not everyone, in fact, very few entrepreneurs think about the aged, for example.
Tim Ferriss: And your unique strength can also be an unusual combination of two strengths, right? I’ve heard Mark Andreesson talk about layering public speaking on top of anything else and separating yourself. Warren Buffet would say something very similar. Scott Adams of Dilbert fame has talked about this. Let’s say you have an unusual combination. So, maybe you have double the degree, and then, you have an MBA. And then, you know how to debate. You don’t have to be the best in the world at any of those things.
Steve Jurvetson: There’s a lot of wisdom there because it’s that pairing.
That’s I think why most scientific breakthroughs are interdisciplinary. They’re someone outside of the field of chemistry working with someone maybe in the field to come with a breakthrough, not someone at the core of, again, an academic discipline. And this is why universities are such areas of innovation is because they have all of the disciplines in one physical campus. But if you just had a chemistry department or just a chemistry college, it wouldn’t make world breaking changes. People who figured out the structure of DNA were like an ornithologist and a physicist, not chemists. [Inaudible].
Well, actually Rosalyn Parks needs to get credit. Let’s give a shout out to her. So, she’s the traditionalist in that regard. But more and more people think about Elon not domain expert entering a new domain. It’s the cross pollination by bringing let’s say software design modalities to the aerospace industry.
Tim Ferriss: Or calligraphy into personal computers.
Steve Jurvetson: Exactly. And so, that pairing I think harkens back to one other thought that might bring this whole thing full circle, which is every great idea is a re-combination of prior ideas. This is a really powerful and simple idea that was popularized in three different books at the same time, which I think is meta ironic that their argument, at the same time, is every good idea happens around the same time.
And the reason that’s interesting is you can think in history, Edison and Tesla and Mark [inaudible], it’s like the time was right given the breakthroughs that had just happened in electricity and magnetism to think about AC induction motors and radio and everything else that got invented by all of those same people are all within months of each other. Today, at large, we have many more ideas. We have the internet allowing us to cross pollinate ideas like never before. These two things that are unique that you pollinate together, the calligraphy and the computer design for Jobs or what have you, the number of possible pairings is growing combinatorial.
And I think that’s why we have accelerating change in technology. That’s why Moore’s Law exists over such a long timeframe. It’s not because of the semiconductor industry. It’s because the number of idea pairings is growing as to the end factor, it’s called Reed’s Law, with the number of ideas on the planet. And once you break down the barriers between formally disputed academic disciplines and strip all of that vernacular away, there are independent ways of communicating with each other that are so isolating. And you see the common patterns. It’s like wait a second, that’s just like an information theory I saw there on the microbial design fronts.
And that same problem – all of these rich array of new ideas is a sort of meta reason why you can’t really quantify how strong it has to be. We’ll probably see more innovation than ever before. And it’s not just because we go we’ll see more innovation than ever before. It’s because of this combinatorial explosion of idea pairings is happening globally. And oh, by the way, it’s about to explode when the next 4 billon people come online, and we go from 2 to 6 billion people online because of satellite broadband that Space X and others are developing. And that’s all coming in the next five years.
Like holy shit, we’re going to have just an explosion of idea possibilities and innovation across the planet.
Tim Ferriss: Exciting time to be alive.
Steve Jurvetson: Exactly.
Tim Ferriss: Especially when you have quantum computers accessing potentially parallel universes.
Steve Jurvetson: That’s right.
Tim Ferriss: Where does it end? It doesn’t. Well, Steve, thank you so much for taking the time. This was really fun. And as meandering as the path I forged, hopefully, you had fun as well. And to be continued. Hopefully, we have many more conversations. And I have so many more questions for you.
Steve Jurvetson: Looking forward to it.
Tim Ferriss: So, for another time. But where can people find you online to say hello, see what you’re up to?
Steve Jurvetson: Sure. So, on Facebook, I’m just user name Jurvetson. On Flicker, user name Jurvetson. That’s the ones that – most of my old writings are like the old stuff going back to 2004. It’s mostly on Flicker. And then, my social network addiction du jour is Facebook.
Tim Ferriss: And what is next for you?
Steve Jurvetson: What’s next? I’m going to start a new venture fund at some point this year. I haven’t picked the name yet, but I’m bouncing some ideas around to focus entirely on purpose driven businesses with really long timeframes where we never sell a share, at least I don’t. And we’ll be investing in the kinds of things we talked about today. Companies that hopefully history books will be written about. Companies whose founders have a purpose greater than their own life on this planet and a purpose greater than certainly making a quick buck. And there are more opportunities and more industry sectors than I’ve ever seen.
Like in the ‘90s, it was like software, semiconductors, and life sciences. That was it. I never imagined I would invest –
Tim Ferriss: And justballs.com.
Steve Jurvetson: Yeah. Man, it really went horribly wrong for a while. Just balls and [inaudible] being the pinnacle or the nadir of intellectual curiosity. But now, it’s just a flourishing coral reef of innovation everywhere. And it’s incredibly interesting time to be investing in startups.
Tim Ferriss: Can’t wait to see what you do next.
Steve Jurvetson: Thank you.
Tim Ferriss: And to everybody listening, there will be plenty of links in the show notes, including things we promised, resources to deep learning and much more. And you can check that out at Tim.blog/podcast. And, as always, thank you for listening.
Posted on: June 26, 2018.
Please check out Tribe of Mentors, my newest book, which shares short, tactical life advice from 100+ world-class performers. Many of the world's most famous entrepreneurs, athletes, investors, poker players, and artists are part of the book. The tips and strategies in Tribe of Mentors have already changed my life, and I hope the same for you. Click here for a sample chapter and full details. Roughly 90% of the guests have never appeared on my podcast.
Who was interviewed? Here's a very partial list: tech icons (founders of Facebook, Twitter, LinkedIn, Craigslist, Pinterest, Spotify, Salesforce, Dropbox, and more), Jimmy Fallon, Arianna Huffington, Brandon Stanton (Humans of New York), Lord Rabbi Jonathan Sacks, Ayaan Hirsi Ali, Ben Stiller, Maurice Ashley (first African-American Grandmaster of chess), Brené Brown (researcher and bestselling author), Rick Rubin (legendary music producer), Temple Grandin (animal behavior expert and autism activist), Franklin Leonard (The Black List), Dara Torres (12-time Olympic medalist in swimming), David Lynch (director), Kelly Slater (surfing legend), Bozoma Saint John (Beats/Apple/Uber), Lewis Cantley (famed cancer researcher), Maria Sharapova, Chris Anderson (curator of TED), Terry Crews, Greg Norman (golf icon), Vitalik Buterin (creator of Ethereum), and nearly 100 more. Check it all out by clicking here.