20VC: Steve Jurvetson on 20 Years of Friendship with Elon Musk, How To Analyse Market Timing, Why Venture Does Not Scale & Why He Has Never Sold A Share in Any Company He Holds

Steve Jurvetson is the Co-Founder @ Future Ventures who announced their debut and flagship $200M Fund in 2019. Steve's incredible portfolio includes the likes of SpaceX, Tesla, Planet, Memphis Meats, Hotmail, and the deep learning companies Mythic and Nervana. Steve also sits on the board of both SpaceX and Tesla. Prior to founding Future, Steve was the co-founder of renowned valley firm Draper Fisher Jurvetson where he led investments in 5 companies that went public in successful IPOs and several others that became billion-dollar acquisitions. In Today’s Episode You Will Learn: 1.) How Steve made his way into the world of startups and Silicon Valley and how that led to his creation of “The Lean Startup Movement”? 2.) How does Steve think about and assess market timing? How does Steve assess technical risk? Given the long term horizons of such deep tech projects, does Steve think we need to change the 10 + 2-year fund life structure? How would Steve like to see funds structured? 3.) Given the sheer size of outcomes if these plays work, how does Steve assess his own price sensitivity? How does Steve approach the challenge there is a lack of downstream investors for such deep tech projects? How does Steve try and catch an industry on the cusp of a transition? 4.) How does Steve assess his own relationship to money? How has it changed over the years? Why does Steve fundamentally believe that venture partnerships do not scale? Where do venture partnerships breakdown? How can one introduce cognitive diversity into a firm? 5.) Having worked with Elon Musk across both SpaceX and Tesla, what does Steve believe makes Elon one of the most gifted entrepreneurs of our time? What is Steve's most memorable moment from his many years of friendship with Elon? What have been his biggest takeaways from SpaceX and Tesla? Items Mentioned In Today’s Show: Steve’s Fave Book: Out Of Control: The New Biology of Machines, Social Systems, and the Economic World Steve's Most Recent Investment: Prellis Biologic As always you can follow Harry and The Twenty Minute VC on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  We are back for another week in the world of the 20 minute VC and I always love to see you behind the scenes and you can suggest both future guests and questions for the show on Instagram at H Stebbings 1996 with two Bs. But to the episode today and I'm thrilled to welcome a Peloton lover who's probably in the same league of love in terms of Peloton as me, which really is quite saying something. And so with that, I'm thrilled to welcome Steve Jurvetson, Managing Director and Founder at Future Ventures, who announced their debut and flagship $200 million fund in 2019. Steve's incredible portfolio includes the likes of SpaceX, Tesla, Planet, Memphis Meats, Hotmail and the deep learning companies Mythic and Nirvana. Steve also sits on the board of both SpaceX and Tesla and prior to founding Future, Steve was the co-founder of renowned Silicon Valley firm Draper Fisher Jurvetson,

• 0:44Harry Stebbings?

  where he led investments in five companies that went public, in successful IPOs and several others that became billion dollar acquisitions. But before we move into the show today, digital hit a new gear in 2020 and companies need the tools that will allow them to flourish in our ever-changing world. That's where Amplitude comes in. Amplitude helps the top product and growth teams at companies like PayPal, Instacart, Peloton and Atlassian, build product experiences that convert and retain customers. With their product intelligence platform, you and your team will better understand user behaviour, ship great product experiences faster and retain more customers. And they've become the gold standard in analytics for teams asking what is happening in their digital products?

• 1:23Harry Stebbings?

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• 2:02Harry Stebbings?

  And they have the best advisors in the US and they know this because they diligence them through over 120 different attributes per advisor, meaning the process is Is both seamless and free and don't take my word for it. They've helped founders and early employees from companies like Stripe, Facebook and Plaid, and partners at VC firms like Coaster and General Catalyst. Go to harnesswealth.com forward slash the twenty minute VC to sign up. Plus twenty minute VC listeners can receive a hundred dollars off their first year fees when they sign up for an advisor on the harness platform by entering the twenty minute VC all in letters and then zero eight at the end. That's the twenty minute VC all in letters, zero eight. And finally, I have to take a moment to mention HelloSign, a great example of a company that found incredible success in building a product focused on user experience.

• 2:46Harry Stebbings?

  HelloSign is the effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements. And they raised a total of sixteen million dollars in funding and recently got acquired by Dropbox for an impressive two hundred and thirty million dollars. Check out hellosign.com forward slash two zero VC to join the thousands of companies and founders who value fast, secure and simple e-signatures. That is quite enough from me, though. So now I'm very excited to hand over to Steve Jurvetson, founder at Future Ventures.

• 3:21Speaker 01

  You have now arrived at your destination.

• 3:24Harry Stebbings?

  Steve, it is such a joy to have you on the show today. I've wanted to do this one for a long time, so thank you so much for joining me today.

• 3:30Speaker 02

  Well, thank you. Thanks for having me.

• 3:31Harry Stebbings?

  Not at all, but I do want to kick off with a little bit on you. So tell me, for those that maybe have been living under a rock, how did you make your way into the world of startups and venture and come to be really one of the most prominent and forward thinking investors in the valley today?

• 3:43Speaker 02

  Oh, gosh, it makes me blush to hear you say that. But my short story is I'm a geek at heart. Way back when I studied electrical engineering, computer design, I even started a PhD in that field, worked in chip design, software, companies like Apple and Next and HP. And about twenty five years ago, I sent a resume in cold over the transom, as they say, to Tim Draper, who was running a small, early stage venture firm called Draper Associates. It had twenty six million dollars under management at the time. And it led to an interview, it led to being hired, one of those rare events where there was no prior connection or any sort that I had to the venture world. And I joined what was called Draper Associates. The venture industry. Per year has grown 25x since then, so 25x in 25 years. It was a very different world today, of course, but it was boutique, pre-internet era.

• 4:27Speaker 02

  So personally, I guess I got through a bit of a random walk of technology, business, technology, engineering, and I really found my dream job. I didn't know about it prior, and as I've been doing this now for 25 years, I couldn't imagine doing anything else. It's such a great place to learn about the future and to learn about the frontiers of technology.

• 4:44Harry Stebbings?

  I mean, it absolutely is, and I totally agree with you there. This is off schedule, but I'm too intrigued to ask. Given the 25 years in the business, I haven't experienced a macro downturn, a boom or a bust, so to speak. You have done multiple times. How did it affect your thinking and investment mindset, seeing the booms and bust? And what would you advise me being a newbie to it, so to speak?

• 5:03Speaker 02

  Yeah, it's a wonderful hardening of the soul and of the spirit in a variety of ways that were not something I would have predicted. For example, I lost about 90% of my net worth in the dot com crash. And I just wrote it down. I didn't sell. I didn't think about the timing of selling. And the thing that allowed me to go through that is I had just come off the dot com boom. And so I made what was easy money, if you will, as an investor in that sector. It was like shooting fish in a barrel, frankly, in the late 90s, or at least mid to late 90s. So I had pledged, and my wife had pledged to give everything away to charity. And so when we rode that roller coaster down, it didn't feel like our own personal net worth was evaporating. It was the future charitable donations we'd be making. So to make a long story short, I weathered through that, held on.

• 5:47Speaker 02

  The public stocks, at least that I held at that point, came back and I took a different view of venture in general, sort of the long-term view. Not the, oh my gosh, there's so much stress and anxiety about thinking about the timing of exits. And I sort of shifted coming out of that crash to not worrying about exits at all. In fact, I've never sold a single share of anything I've invested in as a venture capitalist. But that was around that time period that that perspective sunk in. The other thing maybe more tactical is I saw how venture funds would go through their own individual and then collective process of acknowledgement of a downturn and the lagging effects that occur and the long wave cycles that occur in venture where the commitment of capital is over many, many years and the feedback loops are very long. And so you get these long wave.

• 6:30Speaker 02

  Oscillations and boom and bust in early stage and in late stage. And it was very similar, in fact, like the DRAM capacity building and chip industry, which also has long feedback cycles. And I sort of realized, oh, wow, okay, we're going to have a period for at least a year or so where no one really recognizes that a major downturn has occurred. Financings will still occur as business as usual. And then there'll be a collective shift to tending to our own portfolio internally. In other words, oh, boy, we better reserve the cash we have to keep the companies we have in our existing portfolio alive. And everyone collectively does that. And then no longer invests in each other's opportunities for following rounds. And the whole industry goes through a self-amplifying spiral of inward focus and retraction from the forward-looking stance. So to make a long story short, I saw these time lags. I expect that we'll see that again, where things will feel just like you see in the public markets

• 7:15Speaker 02

  this time, as if nothing's happening. And then slowly but surely, over the next year, this will unravel and you'll have a period of scarcity. That being said, I've also seen what I read about and analytically could tell you that many good companies are founded during a recession, during a down market. I could say that, but I actually felt it and witnessed it firsthand. For example, two thirds of the Dow Jones Industrial Average companies were founded during a recession, right? Or major recession or depression. It's just a better time to start a business. It's a better time for the culture of the firm that you're building in a startup. It's a healthier environment when capital is scarce and you iterate with customers, not chasing the next financing round. So basically, there's no better time than a down market to look for new entrants and new opportunities, yet the whole industry is going to pull back at exactly that moment.

• 7:58Harry Stebbings?

  And anything is fascinating. You give me quite a few things to unpack there that is off schedule, but I'm just too intrigued not to ask. You said about never having sold a share in your company, and I love that long-term hold perspective. I guess my question is, with the proliferation of secondaries that we've seen over the last few years, I always say like, hey, take a certain amount of money off the table that covers your back in certain ways and then ride the upside. How do you think about that? And how would you advise managers who are thinking about navigating secondary opportunities, given your perspective?

• 8:24Speaker 02

  That's a really good point. I'm speaking for myself as a venture capitalist that holds a portfolio of stocks. As a entrepreneur who's heavily invested in one company, your advice is spot on. You can do a better job as a manager if you're not operating from a place of fear. And if you can take 10% or so off the table. And sort of cover your nest egg, if you will, or your ability to live in Silicon Valley, if that's where you're based, for example, and not fear for family or what have you. People are more creative, frankly, when they're not fearful and removing the element of that is important. By the way, if you think about some of the structures in a lot of venture term sheets, things like back in the 90s, we often did participating preferred. It's a technique of trying to align the risk tolerance of investors with startup companies. An investor should be more risk seeking than the entrepreneur.

• 9:07Speaker 02

  In other words, I can withstand the complete loss of an investment more easily than they can withstand the complete loss of their baby, right, their startup that they devoted so many years of hard work into. And so you'll find these terms that sort of rebalance that equation more towards the way the venture capitalist wants it, which is go for it, roll the dice. Here's a thought experiment I sometimes use when I was teaching the Hot Milk Case at Stanford, which is imagine you presented to any entrepreneur in any business. And imagine, by the way, they're the typical entrepreneur, let's say, an immigrant or someone who doesn't have a reservoir of prior wealth. And the vast majority of their personal net worth is tied up in their startup and in the paper value of their company. And you say, hey, I'm going to offer you a bet. Imagine, as a thought experiment, you can flip a coin. Heads, your company goes up in value 10x. Tails, it goes to zero. Do they flip?

• 9:50Speaker 02

  It's an interesting question based on where they start and inevitably they stop flipping, right? Once they're at a billion dollars, it is a bit of an unusual entrepreneur who says, I have a billion to zero, I don't need 10 billion, I really don't. Whereas at a portfolio level, given the percentage ownership, most venture firms would say, keep flipping, that is a good financial bet to make. You should always flip that coin one more time. And if you think about that framework or rubric, that's often what's going on and an underlying tension sometimes between certainty, risk taking, M and A offers that come in early for a company's life. And investors may be like, ah, don't take it, build the business. And sometimes it's so tempting to take the security. And so back to your point, a secondary or some form of partial founder liquidity can help relieve that and get people on the same page and say, let's, let's go for the dream.

• 10:34Speaker 02

  Let's go for the big opportunity and not worry that if you stumble, it's going to be ruinous.

• 10:38Harry Stebbings?

  I'm too interested in not to ask, you said they were out flipping the coin. If you were to flip the coin with Elon, he would flip the coin every day of the week, as I'm sure you know and would agree with. In terms of like assessing founder psychology, how do you think? Think about determining in the very early days when we bank these projects, whether a founder is a flip the coin versus a take money off the table and sell for the first offer that comes through. How do you determine that true ambition in the early days?

• 11:03Speaker 02

  I will answer that question, but I first want to commend you that that is exactly the right mental leap to make, which is that is why this whole thesis is why venture firms say we want to invest in visionary founders. We want to invest in missionaries, not mercenaries, the way John Doerr or somebody famously said. Why we want to invest in people that have hallucinogenic optimism, as I described Sevier, the founder of Hotmail. You want someone who's so deeply tied to their mission that they don't think about sort of the common logic of what's the best financial decision in the moment. And so that's why we look for that personality type in founders because it correlates to this exact thing, all they'll keep flipping. So how do we look for it? I like to ask every entrepreneur, somewhere towards the end of the first pitch meeting, what does the company look like in 20 years? And I got to tell you, I get responses all over the map.

• 11:46Speaker 02

  The worst is they look at me with incredulous eyes or even laugh at the question. That's the worst. Next. You know, like that's not a company you want to invest in because they don't have any image of what they're going to be in 20 years. They'll flip the company and be on their third startup by then. So the sort of arbitrage seeking opportunists get weeded out easily by that one. The true company founders that we want to bet on have the most rich answer to that question. More rich than anything they pitched. It's almost as if it's a relief someone finally got them to talk about what really matters, right? It'd be as if you could ask Elon in the early days of Tesla, what does the company look like in 20 years? And he tells you how every vehicle will be electric, every vehicle, not just cars, but boats and buses and trains. And it's an inevitability and that is the founding vision of the company, right?

• 12:30Speaker 02

  Or colonizing Mars for SpaceX, right? It's arguably a tough thing to pitch when you haven't yet built a rocket. And yet that's really where his mind is at from the beginning, right? It's all about the Mars program. So the folks who are out to make a difference in the world that we want to invest in, the people for about whom one day history books would be written, have a rich answer to that question.

• 12:50Harry Stebbings?

  And I love that question. I guess my question to you on that one is often with these often more technical projects as they always tend to be, and with the very long time horizons and huge societal impacts that come. With them, the question that I'm always fearful of is market timing with such long projects. How do you assess and view market timing risk inherent within making the investment?

• 13:09Speaker 02

  So that in a way is the focus of what I try to do. In other words, if I was to say, what is the skill set that I'm trying to hone? What is it that I do as an early stage venture capitalist? It's trying to figure out market timing. So backing up for a moment, I believe at an absolutist level or an objective level, market risk is the worst kind of risk. Meaning if you don't know if a customer is going to like the product intuitively or logically or provably, you don't want to invest in that. So this is why we avoid gaming. Turns out gameplay is super important. Doesn't matter how good you've sketched out, you know, what the game's going to look like. And to actually build it, devote most of the cost of development and have final gameplay to play, but you actually know if it's a hit. So these are the hits driven businesses, as they're famously called in venture. Most of entertainment and what have you would fit this.

• 13:52Speaker 02

  Like I could never do Hollywood or even pretend to be a film producer or label for that reason. Now, market timing, on the other hand, is an art. And I'll give you a simple examples could be, okay, back to the electric vehicle example. It is inevitable that all vehicles be electric. If you look far enough in the future, no one will debate this point. And I've done this with oil industry executives and others. You're like, oh, you know, they can get really bogged down in the weeds of what's happening today, next year, the next five years. You ask them to look out 50 years, they'll still be in denial because they don't really believe things can change that fast and maybe they're right. But if you look at 500 years, there's no fricking way we're going to be drilling oil out of the ground and burning it in engines that are less than 20% efficient. It's just, it's absurdity. Similarly, for satellite agriculture versus slaughtering animals for meat. Same thing for autonomous driving versus human drivers of vehicles.

• 14:37Speaker 02

  Just look at 500 years and you know that's the endpoint. Now, it is of course very debatable how you get from here to there, the market timing. And this is where you can totally miss out, right? You could have made the same maybe observation about electric vehicles in the 1980s and you would have been wrong by a few decades for a variety of reasons as to whether the time is right. Okay, so it is inevitable. There is a market for electric vehicles. I guess maybe to be fair, that wasn't obvious in the 80s. The moment you sat in a roadster or any Tesla product, you have this experience good. You can tell from the first moment, oh, this is the inevitable future. Same for the autonomous driving stack. When I first experienced that with Google, when that was the Waymo division is like an epiphany. Okay, so when you have these epiphanies, you then have to scratch your head about the timing. And to do our job well as an early-stage venture firm

• 15:22Speaker 02

  and as an investor, I have to catch an industry on the cusp of a transition. So if it's still got a lot of technology risk and no one understands how the technology works or whether it will work, that's a little early. So I was early with, let's say, quantum computing 17 years ago when I first joined the board of D-Wave. Fast forward 15 years and maybe the time would have been a little better. I think I was also early in aesthetic biology, but I was probably just right on electric vehicles, probably just right on space with both SpaceX and Planet Labs and small sats in general, and with what I called cellular agriculture, again, like growing meat in a vat instead of killing an animal. And so I see my job is not picking so much the best company of an industry, because frankly, I'm trying to invest in things that don't even have an industry yet in the startup domain, but try to pick the right industry sector that it will go through a disruptive change, right?

• 16:07Speaker 02

  So like agriculture, aerospace, automotive, and figure out the timing. The timing would be, okay, when will technology risk get resolved? When will the sort of customer experience good, let's say for Tesla, be such that the banker types and the later-stage investors can actually see that it works and not have to do it on a leap of faith? Another example could be like nuclear fusion. For 24 years now, actually 25 years, I've been waiting on the sidelines to invest in nuclear fusion because it was a science project. I mean, it's just capital-intensive science project, but no matter how you look at it. And we finally found one out of MIT that turned it into a pure engineering exercise. They can make a magnet of a certain strength, boom, they will have a nuclear fusion reactor, and no one in the industry disagrees with that. So to make a long story short, that's what I try to do. Resolve market timing by getting in just before

• 16:50Speaker 02

  it's obvious, because if it's obvious, it's too late, and yet do it in a way that within two or three years, the later-stage investors will start to agree with me where they would disagree prior. And so when I used to do venture debates, I would actually debate these five-year horizons all the time with the Churchill Club locally. And it was amazing how almost all venture capitalists disagreed with me when I first invested. So like Tesla, I remember famously Peter Thiel was saying it's a bankrupt idea, the battery technology will never scale, batteries will never improve, UVs will never work. And I was like, wow, that was just before the Model S. I mean, literally a week before the Model S shipped.

• 17:22Harry Stebbings?

  I absolutely love that. I guess the point that the market timing is so dangerous because of is essentially companies run out of money before the market adoption, the market risk, whatever is resolved. That is largely down to downstream investors being willing to continuously fund the company to market adoption or to market readiness. A question that I have with a lot of your companies, and this may come from a place of naivety from me, is like a concern around the lack of downstream investors. If you want to do an enterprise data company, wow, we both know there's many multi-billion dollar funds that want to do that. Is it a concern for you in terms of the lack of downstream investors that will engage with a nuclear fusion project, that will engage with a synthetic meat creation project? How do you think about that lack of downstream investors?

• 18:02Speaker 02

  No, it's exactly right. And it relates to timing. It's that intuitive sense of can I sell this to them when it comes time for the series B or whatever the next round is to our investment? And that sometimes that's related to getting the timing just right, like in the case of SpaceX, they actually had a rocket finally succeed after we invested. And that changed everything in their relationship and mess and contracts that they had. Other times, it's a sales effort on my part, which is there are a group of following investors. Even though there's a dearth of them, I completely agree with the premise of the question that like the venture industry has an abundance of herd mentality investors in what I call the crack of dot com investing, consumer internet, enterprise software, where everyone has the same strategy. And they don't seem to scratch their heads that they all have the same strategy, but somehow think they're just going to out execute everyone else, right?

• 18:47Speaker 02

  Either through their personal networks or what have you. And it's just bizarre. And there's a real supply and demand imbalance in all the other meaningful companies that are now changing every other part of the economy. Which by the way, let me just mention one thing that I've seen over 25 years. When I started in venture capital, there were like three sectors. There was software, semiconductors and life sciences. And that was it. You could wander off and invest in automotive. A hundred percent of those investments went belly up. You can invest in restaurants or whatever, you know, like you didn't make money of anything else. That's all there was. Today, almost every industry is becoming an information business, a software infused reengineering of the physical product into a services and software layer. So I think aerospace, automotive, agriculture is examples, like construction and what have you. It's just going to ripple through every part of the economy. It's like this incredible array of opportunities and anyone who's in the

• 19:31Speaker 02

  Venture business saying, I'm a domain expert. I'm only investing in X as an industry sector. I think that's a very fragile and brittle strategy over the time span of decades. That might work if you pick the right sector and you have a good run, like the semiconductor investors of the eighties did. But eventually semiconductor investing got out of favor. Enterprise software went out of favor for quite a while. If that's all you know and that's all you're ever going to know, you're going to have dry periods. It's not a great strategy as an individual venture capitalist. And some firms make up for it by having diversity within the firm. But as an individual, I think it'd be better if you were in fact, continuing to surf the frontiers of new areas and learning new sectors that are adjacent to your prior areas of expertise. So this follow on investor thing is one where I cultivate these contacts. I try to find them, but sometimes they're corporate investors.

• 20:15Speaker 02

  Sometimes you won't find the traditional folks that will do these things in the early days. So we've had a lot of corporate follow on investment. But when it goes well, it goes remarkably well. Just one example, SpaceX and space in general. So we invested in two, exactly two space companies, Planet and SpaceX. They raised 1.1 billion dollars in 2015, and that alone was double all venture capital in the space sector combined forever, meaning prior, all prior years combined times two. Just those two companies. And it's just grown like crazy since then. There have now been over 360 venture firms that have invested in space. They have invested in 200 nearly identical small sat launch companies, for example. It's the herd mentality. It's like, wow. I've actually never seen anything like it, as I have in the space sector,

• 20:58Speaker 02

  of just like everyone seemed to want to have an investment in that area. And like, it didn't seem to matter that there were 200 others just like them. But I digress. So the main point is it can go very well when you get the timing right, because you get good entry economics. And then there's a sea of capital, usually when there's some visible success. So just like Netscape was for the internet, SpaceX was for space, Tesla was for electric vehicles and autonomy. You have a whole raft of fast follower startups and investors jumping in moments later. And so what we need to do is have moved on to the next sector by then.

• 21:27Harry Stebbings?

  You said about kind of when it goes well, it goes really well. And bluntly, when you look at the returns and the profiles of SpaceX and Tesla, to name two obviously very prominent ones. Their returns that are completely, I mean, they make kind of multiples for your track would probably look pretty ridiculous to be quite My question to you is, given just how large this can be, it's not a capped 5 billion unbundling of Google Drive application. This is like fundamental society changing transitions and the exits are so big. Does entry price really matter? Like if you paid 100 or 200, kinda who cares if it's going to be a $50 billion company changing the way we eat meat? How important is price to you, I guess?

• 22:05Speaker 02

  Something emotionally in me says it matters, but I think that's only because I can't help myself. There's no logical reason why entry price should matter as much as it does, but I do find that I'm inherently just, I just can't help myself. It'd be kinda like, I can't play chess poorly than my best ability. I'm not particularly good at chess, but you know, pick any game. But your question is actually right analytically, which is if you look at the power laws of portfolio returns in an early-stage venture fund, both within the fund and across multiple funds, it is unbelievably consistent from across firms. So you could aggregate all early-stage venture, you could do all early-stage venture within a given firm like DFJ or Future Ventures, or within any given fund. And in all of these scales of analysis, there's like one company that matters that equals the returns of

• 22:47Speaker 02

  every other company combined. The number two on the list oftentimes is the same. In other words, it equals everything below it combined, sometimes even number three. And if you plot that on a piece of paper, you're like, wow, what do you make of this, right? So that's one thing that you start to realize that if you made a routine error of entering 2X too high, but you picked the right companies, then that 2X too high doesn't matter, right? The entry price is irrelevant. What's much more important is betting on remarkable people and picking the right industry sector, right? Finding that thing that's on that market, timing transition that I mentioned. And you're also right, that you have to be playing a game where you're looking at monumental change, right? You can't be looking at pluggers that are just trying to make some middleware more efficient, or make ad matching a little better for Google, or what 90% of startups frankly are doing in the enterprise

• 23:31Speaker 02

  software space. It's just, ask yourself, 30 years from now, who cares? Right? Will a history book ever be written about this company? If not, it's not in the game that we're talking about. The ones I'm talking about, like SpaceX achieves its mission, humanity becomes a multi-planetary species. This will go down in the greatest hits of evolution like the opposable thumb and like the neocortex. Like, this is like literally on that shortlist of accomplishments of humanity. Or if we get off oil and gas forever and save Earth from suffocating from emissions, right? And not to mention hundreds of millions of people every single year from particulate emissions alone. In China alone, that's like hundreds of millions of people, their health is being ruined in a way that they'll take away that play out, but it's just astounding the health impacts

• 24:14Speaker 02

  of oil burning cars. We just took for granted that we had to do that. Or if we get off slaughter, right? The some I've said, I think it was the guy who wrote Sapiens.

• 24:21Harry Stebbings?

  A Evolved Horarch.

• 24:22Speaker 02

  Yeah, exactly. Who's like, you know, the way in which we slaughter animals will one day look back as one of the most horrific things of humanity. It's kind of mind blowing. It's almost something you can't turn an eye to. You can't go visit a slaughterhouse. And I'm a big meat eater or have been. I'm trying to reduce my meat consumption, but I'm not speaking like a personal zealot. It's just obvious. Once you get to the other side and see the inevitable future, that you're not going to have to raise animals in horrible conditions and then kill them for your food. That you realize that's going to be one of the most important changes for sentient life forms on earth and the well being of more than just humanity. So, uh, yeah, uh, let me not get on my soapbox too much, but to say that that's what gets you out of bed in the morning. It's like, it's not to make money. It's not to make the world a little bit better in some incremental way. That's

• 25:04Speaker 02

  like a whatever. It's to shift the playing field, to make a difference in energy, in food, in the built environment, in transportation and the social fabric of reality.

• 25:15Harry Stebbings?

  Steve, can I bring it back to a more venture fund level, which is actually really kind of boring and arcane in many respects, but it's, I agree with that excitement around the societal transition and real, as you said, that kind of making human species multi planetary, you know, compared to the most things we invest in is fundamentally different. My question to you is, fund structures are the same. They're 10 years and they're two years on top. I love asking that off of this because it normally leads to a rant, but like, how do you think about current fund structures being what they are? And with the investments that you make and maybe the investments that society needs, do we need to change fund structures?

• 25:48Speaker 02

  Yeah, I think so, especially for the kind of investing that we're talking about here again. And I don't want to be, by the way, sound too disparaging for the mainstream venture markets. Like, my point is just, it's being well served by the mainstream venture market, which is 10 year funds focusing on short wins than the internet and what have you. And two to three year pops, like really making the IRR happen when you get lucky. That's fine. And God bless them. But for what we're talking about today, you're exactly right. In fact, I've been on a variety of companies' boards for between 15 and 20 years when they're successful. In fact, when Neo Fatah's went public, they had over 3,000 employees and I'd been there longer than any of them. Which is a whole nother story. But yeah, so we took that into account when we were forming Future Ventures. We made it a 15-year fund instead of 10 years. We debated making it an evergreen fund, which is a structure that Sutter Hill in the

• 26:33Speaker 02

  early days and some others have pursued. But it has some complexities and you have to explain its LPs in a way that doesn't really fit all their models as easily as a normal fund structure. So we went for 15. We just figured, hey, we'll just do that because we know that that's what we're focused on. We know that our LPs are going to buy into that. And I can also point out that every venture fund I've ever been involved with back at my former employer went out to a full 15 to 17 years and one's still going at 17 years. It's like, none of them were done at 10. And in fact, at the 10-year mark, was some of the greatest gains. If you look at, okay, at the 10-year mark, where was Tesla? Where was SpaceX? And there were many, many billions of dollars, hundreds of billions of dollars of value creation still to come. God, I just realized that. There's hundreds of billions of dollars of value creation still to come at the 10-year

• 27:18Speaker 02

  mark, just for those two companies.

• 27:20Harry Stebbings?

  I mean, that is astounding. I do want to ask again, what do you think about kind of building the portfolio within that fund? Given the projects that you invest in, I guess, and maybe I'm wrong here, but A, given the, not outlandishness, but given how societally important they are and how big a project they are just to take on, they're harder to do than a lot of software. Blunt, do you expect loss ratios to be higher? And how do you think about the right levels of diversification within the portfolio, given the profiles that you invest in?

• 27:45Speaker 02

  That's a good point. You know, it's strange. I would have thought that the loss ratio should be a lot higher, that there's just, whenever you go earlier, whenever you have tech risk compounding on top of all the other usual risks, you know, team and market and what have you. But it hasn't played out that way at large. So if I think about synthetic biology, wow, there were a lot of flameouts. We didn't tend to have that many. In fact, in the whole clean tech category, which was a huge investment thesis of mine for probably a good six, seven years, it didn't really end up being a big smoking hole. And the same thing is actually, I think I know the answer's starting to come to me. Why has it worked out this way? A cleaner example I can tell you is from the internet. So in the 90s, starting in 95, we were doing 80% internet investing at DFJ. So it was almost everything. We were known as the internet firm. And in fact, strangely, in 95 to 96, we did a third of all internet investments for the

• 28:30Speaker 02

  entire venture industry, not in dollar amounts. Would just sheer number of deals. So we literally were a third of the market. And so you might think when the dot com crash came that we'd have this massive wipeout in our portfolio. But if you aggregate all of our losses from every loser that we did in the internet, it was much less than SoftBank lost than a single investment with Buy.com. I remember like, wow. And so the takeaway was, we were still pretty well diversified. We had a lot of smaller bets, not these concentrated ones. And now that my purview is much broader, the diversification is broader than every force. If you look at our existing portfolio companies, it's underground tunnel digging with Boring Company. It's psychedelic science to help with mental illness. Like, wow, those are completely different. It's synthetic meat, growing cows without the animal. It's analog chips to do neural networks.

• 29:13Speaker 02

  It's companies building lymph nodes synthetically, you know, 3D printing organs. It's SpaceX with rockets. It's obviously very different. I don't think there's systemic risk across that portfolio. And there's sort of a stage element, which we're finding that there's companies that are doing quite well, but are still, as you said, neglected by mainstream venture capitalists where we can invest at relatively reasonable valuations, even though they're farther along. It might be a series B or it might be what have you, but they haven't broken out yet. They're still in product development. They're still building their first product success. And so it's not always like this mental model of a seed check, which is probably 80% of what I've done. A seed check when there's two or three people, no product, no prototype, just an idea and a dream. That's what I typically focused on. But we're finding, can actually find some projects that are farther along, like the Boring Company or some of the other ones I just mentioned.

• 29:57Harry Stebbings?

  Yeah, no, absolutely. Can I ask, you mentioned the passion that you have, given the societal impact that so many of these companies have. And you said, you know, it's not about the money. And it's something that I think on a lot personally now, Stephen. I hope it's not too personal to ask. But it's like, I actually was thinking about it about a year ago and I thought, what makes me happiest? And the truth is spinning on the Peloton and going for brunch with my mother and my brother. And I thought, well, that costs about 30 bucks to have brunch and, you know, buying the Peloton, fine, but you know, not a huge, huge amount of money. And it kind of questioned my relationship with money, actually. And I don't really know where I've landed and I still ruminate on it a lot. I'm interested to hear your thoughts, given the many years you've spent in venture. How do you think about your relationship with money now?

• 30:36Speaker 02

  Yeah, I think my relationship with money changed when I had kids. And I reflected on my own upbringing. I was not wealthy growing up. My parents were both immigrants from Estonia and came to the US without much in their back pocket, at least enough to live, but not really any wealth. And yet I grew up and I had the privilege of going to a private school and to a really awesome university where I got to see all different types of backgrounds in terms of wealth. And I didn't know of any role models, and I still don't, where kids came into wealth and then had the fire in the belly to make a difference and had happiness and meaningful lives. It's like, very rare. I mean, I can sort of think of one person, more or less, I think, in my entire life history, where if they knew they had money from their parents, they ended up having a happy life. Let's just put it like that, as a filter. And so I thought, I don't want to wish that on my kids.

• 31:20Speaker 02

  And I had to think about a will. I was forced to have a will and a living trust for the first time. And the force to meaning is responsibility of a parent, you got to think about, what about babies if you die, right? And then it sort of was obvious to me, I want to give it all away. I'm not going to give them some arbitrary number of amount of money that will grow based on how I do in my job. It's like, no, let's start from first principles. What does it cost to go to college and just live but not be rich? And just leave them that fixed dollar amount and then everything else will go to charity. And then as wealth has accumulated now, it's like 99% of everything I own is pledged to charity in my will. And I'm going to give away as I'm living, of course, but at least if I get hit by a bus, it will be as I intended, which is to charity. Now, I think that is important on many different levels for society and as an individual.

• 32:03Speaker 02

  And I think it leads us to be better stewards of our capital and of sort of the future and what matters. I think it lends to happiness. As I mentioned, you can go through the vicissitudes of market crashes and not have it affect your psyche quite the same way. And you don't have to make sales decisions. By the way, when I said I never sell, I donate it to charity. So where do these shares end up? Over time, they're all going to charity. I don't actually sell them for cash. I don't have to worry about market timing in quite the same way. And that's remarkably liberating. It allows me to be a long-term bet with a company, to look an entrepreneur in the eye and say, I'm in this in the long, maybe even longer than you, in most cases. And it helps me make the right decisions on what matters and the long-term repeated game dynamic of business that like, it's not about short-term opportunism and cheating someone out of something.

• 32:46Speaker 02

  Cheating, I mean, not literally, but proverbially, it's not like a zero sum game kind of thing. And I also find that I I'm attracted to the kinds of entrepreneurs who think the same way. A number of the companies like Planet has philanthropy baked in from the beginning. They were almost a benefit really close in their formation. And I find that the entrepreneurs that I'm most attracted to are those ones who want to change the world for the better. The money they make is a byproduct of that. And I think they like working with investors who think the same way. It certainly leads to less friction in conversations when short term can trade off versus long term. Which, by the way, I think in general in a startup, having a vision, a mission, a purpose that's understood by every employee is super valuable and value creating from startup to public company and beyond.

• 33:28Speaker 02

  Because everyone in the company understands how to prioritize, even as the organization scales. So when you're in a 10 person company, you can get everyone coordinated through brute force. When you're a thousand person company, if you don't have a mission, people will debate endlessly. Should I do something that maximizes this quarter's profit or this year's profit or this decade's profit? And if instead you know your goal is colonizing Mars, you inherently get people on the longer term perspective and pulling their oars in the same direction around timeframes. Because inevitably, you can mortgage your future for some short term opportunism. And this is the tumult you see in so many big companies who really don't have a vision or a purpose or mission. They're just quote maximizing shareholder value. That's like the worst goal for a company. That's like almost paradoxically guaranteed to minimize shareholder value in technology, the business for sure.

• 34:10Speaker 02

  And so I think that personal view towards money is echoed in some of the best entrepreneurs. And it comes back to your question, how do you find the entrepreneur to keep flipping the coin? And by the way, there's never perfect information on the coin. You may believe it's a 50 50 and a 10 X return, but you don't really know. And that's even more complex, right? So where do you find the people that aren't frozen in fear in that game? And instead are like, I'm here for a different reason. Let's go change the world.

• 34:34Harry Stebbings?

  I mean, speaking of those people that you're most attracted to work with and the people that most want to change the world. There is one relationship that you have that I do have to dive into before we move into quick fire. And it is the relationship with Elon. As we spoke about earlier, from SpaceX to Tesla, it's one that's really been such a long term relationship for you. And when you think about Elon himself as an entrepreneur, I'm so interested. I've obviously read all the biographies and all the books on Elon. From your perspective, having seen the insider, what makes Elon so incredibly special as an entrepreneur, do you think?

• 35:00Speaker 02

  It's a tough question. His mom gets asked this a lot. He's asked this a lot. So let me first amplify and agree with the question, which is, I think he's perhaps the greatest gift of the American dream, living right now. You know, by the way, immigrant to America, specifically dreamed the American dream and built incredible companies in multiple industries that haven't faced new entrants for decades and have become some of the most important drivers of change. Let's just be modest at this point, just say drivers of change in a bunch of unrelated industries. So it does beg the question, what is it? So first, he would say, well, I think about problems from a first principles perspective with a physics training. And some of my best entrepreneurs, by the way, do have that perspective. I would also put Planet Lab CEO in the same bucket.

• 35:43Speaker 02

  Where if you're trained deeply in physics, you do think about a first principles approach, not where we are, but what should be possible. So again, this couples beautifully with his vision or the vision, his framework, shall we say, looking at 500 years and then chaining back to the present. Elon does this inherently better than anyone I know, and there's parts of it that are just magical to me, and I don't know how he does it. So for example, okay, we need to build a rocket to get to Mars. Oh shoot, we need to make these rockets come back from Mars. We don't have fossil fuels on Mars, right? They don't have dinosaurs or whale, so we gotta shift to methane. And oh, by the way, a whole rocket gets better when we do this, even for Earth applications. I could go on and on about these interesting things that were motivated by something big and audacious that none of his competitors had as a motivation, that got him to overcome the inertia and the activation energy

• 36:29Speaker 02

  of doing something bold, like making the rocket booster reusable, right? Every SpaceX competitor was like, uh, that's hard. It probably won't work. Why would we bother? And you kind of need to if you're gonna have thousands of ships to Mars and want to bring the cost down 100x. You can't do business as usual. So having something that's driving you, that's different from your incumbents, and being able to convey that vision clearly, openly, right? It's not like a sheltered vision. He publishes and states openly for the world to hear, here's what we're doing. Here's our master plan. And despite having it be public, no one else executes because they just think it's such a bold, I mean, a variety of reasons, but I digress. Let me come back to him. So the thing I'd say that he's done across all the companies I've seen is he takes us software engineers. So I mentioned physics, that's like in a sense first principles like,

• 37:10Speaker 02

  okay, the rocket shouldn't cost as much as it does. There are no patents at SpaceX. You just bend metal and make this incredible product. But you have this systems engineering and you have this software layer where all the value resides. Same with Tesla. The value resides in the systems engineering and the software, not a given patent, not a given core piece of low level technology. And you motivate people like crazy because they want to see this vision succeed. Now, that's sort of on the engineering side, him as a product architect, him as a visionary of how an industry would shift. But he's also in a sense got a design, a sense of beauty, a sense of what's right in product. And this is something I also saw in Steve Jobs. And in both cases, I would describe it as a visceral, I mean, just a deep visceral agitation from what is a visual noise of imperfection. So if something's wrong, like Jobs would just be like, oh, this is shit.

• 37:55Speaker 02

  This is crap. I'm going to have a hard time articulating exactly why it was crap. Musk does a much better job. But there's something that triggers almost like a low level pattern recognition cortex circuit that says, this is just wrong. This can be better. And I think Musk does it at many different layers of abstraction. Like lately, he's been saying quite a bit about the best part is no part. The best product is a simpler product. It's somewhat of an echo of getting rid of the buttons on the phone for Jobs or making the keyboard simple for the Mac and not all these ridiculous function keys. There's something about a drive to simplicity that is inherently compatible with the shift to code from a physical thing. The physical thing becomes a vessel for code, right? A car is an AI on wheels. The rocket is an autonomous vehicle.

• 38:37Speaker 02

  That's where the value is. It's not another metal. It's not really what drives it over the long run. 20 years from now, it's all going to be about the software layer. And minimizing the physical thing is what gets you there. So that's all sort of on the like the mental capacities. I guess I'd also say, just to add a third different bucket, is he has an incredible ability to focus on what's important, yet tightly coupled to the future vision. So it may seem like he's all over the place because he's got multiple companies, but that makes you focus. You can't get distracted with things that aren't the mission critical thing for the company at the time. And let me just leave it as a generic at this point to say, this has been one of the areas I've been most impressed by is unlike myself, Who's in sort of a learning stance and interested in so many things. And that's why I think I'm better suited to be a venture capitalist and an operating manager.

• 39:19Speaker 02

  I can see what I would not do well is this, no, we have to make X, Y, Z work. We have to get, let's say Falcon Heavy to fly before we move to how do we terraform Mars. You know, like, we're just not gonna put energy and engineering resources into something that's too far ahead of where we are today. If we can't get the current thing working, so.

• 39:35Harry Stebbings?

  It's interesting, the multi-company structure almost reminds me of what many people say to me about having kids and how it changes your operations and the way that it just forces such discipline of how you spend your time. Because you have this alternate time puller away that you have to be so efficient and ruthless in what you do to drive the same output.

• 39:52Speaker 02

  Exactly. I think that is a good analogy. And also, by the way, Jobs and Musk both were CEOs of multiple companies. And it allows you to avoid time wasting meetings that you'd just rather not go to. So imagine as a thought experiment, you're the CEO of one company and you have a holiday party. It's not like you just skip it. That would be weird. But if you're a CEO of two companies, you can easily skip what would be a time wasting holiday party. Because you know, you got better things to do. And people always, they don't have to double guess that you didn't prioritize the holiday party. It's like, oh, probably something more important to do at the other company.

• 40:22Harry Stebbings?

  Steve, I do, I do want to ask one more thing before the quick fire. And it's, you know, so many incredible moments in that relationship. When you think about maybe just the most memorable, it doesn't have to be the favorite or the best, but just the most memorable to you. What would you say the most memorable is that you'll tell grandchildren about?

• 40:39Speaker 02

  You know, it's funny, if you use the word incredible, might be like saying, what's the most incredible moment you have with your brother? Or it was your mom, whoever it is that you said that you liked to spend time with. And there are many of them, right? It's a lifetime of them. So I've known Elon for 24 years. Now, if you said, what's the most memorable? Yeah, there's a few. So, you know, it does. So again, this isn't the best, but it's certainly memorable. We're in Texas, we're watching this test vehicle, the F9RR launch. This was before any company had shown that you could in fact return a booster back. And just the audaciousness of this engineering task is monumental. It's like you're talking about transonic and supersonic speeds and things that are the height of a three-story building coming back at you under thrust and then landing vertically near where you wanted to land. It's never been done before. It's perceived as insane by every industry observer.

• 41:22Speaker 02

  And every competitor is like, good luck with that, you know, you keep going because that will never work. And here we are in Texas, watching one of the interim test vehicles take off for the first time using some new technologies. And it starts to arc over achingly. And I've launched a lot of rockets myself, by the way, I'm a sure rockets. And so I've seen a lot of them go wrong. And I can tell them, oh my gosh, this is not good. And it detonates because when something goes out of launch parameters too far, like it's starting to launch horizontally, you blow it up. So it won't be a threat outside of a certain circle or radius. So you have this enormous kaboom. Just, you know, not that far off the ground and when close to fully fueled because it hasn't burned off much of the fuel yet. So it's the biggest fireball I've ever seen. And that's memorable. I've been joking about that we're heading out to see the big kaboom. I don't know why. For the one and only time I joked about that, that it actually happened.

• 42:08Speaker 02

  But then it got better on several levels. So there are little grass fires burning, debris is falling out of the sky. There's pressure vessels everywhere. And I'm like, and I collect space artifacts, by the way. And so I turned to Elon, I go, you know, can we head out there and like, check it out? And he's like, yeah, we should do that. And so we drive out there and it turns out you're not supposed to be doing this. Uh, and we got sort of chastised for this later, but we got to do this incredible thing that we may never get to do again, which is walk amongst the rubble as it's still smoking. And it was astounding. So not only did I get to collect some space artifacts, which is lovely, but I got to see sort of the mind churning. It's like, okay, what went wrong? What can we learn from this? And, and someone else on the board made a comment quoting, I forget who it was, Edison or Ford or some, some inventor of the past.

• 42:49Speaker 02

  Some quote that said something like, if you're not failing, you're not learning, or you can't learn if you don't fail, or something like that. And Elon's reply was, well, considering the alternatives, I'd rather learn from success. And so I've actually put that quote on a placard and next to the remnants I have here in the office of the rocket pieceage and wreckage. And it reminds you, A, that failure is visible and visceral in the rocketry, that rockets are hard, as Elon says, that this engineering effort is so incredible on so many levels. And people put their heart and soul into this. And sometimes you have a failure to launch. Sometimes things explode on the pad. And it makes the metaphors manifest. It's incredible to me how he pushes through adversity, has no lapse whatsoever in the conviction that this will work in the face of catastrophic failures.

• 43:32Speaker 02

  And ultimately is vindicated. It is the hero's journey writ large. And he's done it in all of his companies.

• 43:37Harry Stebbings?

  I mean, I absolutely love that story and I'm sure that's a moment you're glad where you broke the rules to go into that access point. I do want to move that into my favorites, Steve, which is the quickfire answer. I say a short statement and then you give me your immediate thoughts. So you ready to dive in about sixty seconds per one?

• 43:51Speaker 02

  Okay, we'll see.

• 43:54Harry Stebbings?

  No pressure. What's your favorite book and why? What's the book we should be reading?

• 43:57Speaker 02

  Well, let's see. The most influential on me was Out of Control by Kevin Kelly. It's a ninety-five book, recently translated into Mandarin, wildly popular today in China. So I think it was ahead of its time, but it helped set my fascination with iterative algorithms, biology, the information systems biology, what we can learn. Kevin Kelly's an amazing writer. I like all of his books, but this one is my favorite. It's about biological metaphors, information technology. By the way, I should just mention that if someone wants to read just a few chapters, almost as influential is Ray Kurzweil's Age of Spiritual Machines. But again, only the first few chapters when he sets up this framework of the, you know, hundred year version of Moore's Law. I show that slide in every talk I give, regardless of subject matter, because I think it's the most important thing ever graphed. It's the most important thing in technology business and it gives you a sense of where the future will lie.

• 44:40Speaker 02

  I'd say only the first few chapters because the rest of his book, he uses it to predict the future. He might be right, he might be wrong. I think it's better. It's as an analytical tool for each of us to use to think about where the world is heading, given the compounding of Moore's Law.

• 44:50Harry Stebbings?

  Steve, any book where you recommend just the first few chapters, I'm instantly attracted to. So I think that's a great entry point. Tell me, most memorable board member you've sat on a board with and what made them so memorable?

• 45:00Speaker 02

  There have been so many. There's a lot of characters. On the positive vector, I'd say Antonio Gracias of Valor. Certainly the most value-added board member I've sat with. And it's incredible to me how someone who comes from a domain and a background of more operating investment management, meaning investing in industrial companies. He started in the Midwest and eventually moved more into technology with Tesla and others. This ability to roll up one sleeve as a board member and be helpful in the company in its greatest moments, whatever it might be, bringing gross margins up for a product line, helping the sales channel, whatever it might be. I've witnessed how different it is from the way I operate at a board level and domain of ideas and networks.

• 45:39Speaker 02

  And I'm deeply respectful of it. Stepping back, I would say, I think there's a huge array of different models for success in venture. And a lot of us think that whatever we happen to be is the one and only model that makes sense. And actually, there's enormous cognitive diversity, enormously different frameworks that work. And I think very different venture funds that need to be wrapped around these kinds of personality differences. But there isn't one size fits all. And that was very interesting and informative to me.

• 46:03Harry Stebbings?

  What would you most like to change about the world of venture today?

• 46:05Speaker 02

  You know, if I could wish for something that I think may be impossible, I wish it could scale where the groups that do it well could do it 10x or 100x as much as they do. Because I think there are many more ideas that aren't getting funding and won't get funding than the industry can serve. And unfortunately, when you just double or triple or 10x the size of any given fund, it changes what they do. I don't think venture firms scale at all at headcount. One of the biggest things I've learned in the last 25 years is that team size is essential. Between two and five partners, max. If you get to seven, you're at your limit. If you had more than seven partners, IRRs and returns will plummet. And this is part of the process learning I've gone through over the last 25 years. Team size is super important, both development teams within companies and on boards. So that's why venture doesn't scale, in my opinion.

• 46:48Speaker 02

  So I think there are groups that can automate the provision of capital. There's a company called Capital that's doing this in the debt side for companies that are more predictable, like enterprise software, consumer internet companies, where you would lend instead of using venture to grow these businesses in what might be thought of as venture rounds, but move it to the debt side. But overall, as I look at venture, too much of it feels like a lottery. This power law that I mentioned, where it's one winner take all in any given sector. And so it kind of circles back to, I wish more venture firms that are doing true venture capital would do true venture capital, invest in risky, change-the-world companies that will make the world incredibly better if they succeed. And then if they do succeed, be highly philanthropic in their own personal life. I think that coupling is super important, and I wish that was the norm.

• 47:33Harry Stebbings?

  It's not on the quick finance, but I'm too interested to ask it. You mentioned that the partnership dynamics. How do you nurture that intellectual honesty and cognitive diversity at a partnership level?

• 47:42Speaker 02

  Well, cognitive diversity is something I think you have to hire for. There's a natural human tendency, given the implicit biases that we carry. And anyone who doesn't know what that means intuitively, like immediately, I guess implicit biases, I strongly encourage you to take the implicit bias test at Harvard. It's very eye-opening. So we're all biased, we all have a deeply seeded homophily bias. We want to hire people that look like ourselves. So people with high energy, hire high-energy people. Optimists, hire optimists. Outgoing people, hire outgoing people. I mean, you know, extroverts. It's kind of spooky. And so you have to force yourself to think about cognitive diversity. For example, of all the people I've hired into the venture industry over the last 15 years... Years and there's been a lot of them about eighty five percent have been women. The other was people of color and all the people that I promoted on a venture track have been women.

• 48:23Speaker 02

  So that alone gender diversity is a good proxy cognitive diversity, but there are many others. And things like don't recruit from your alma mater is a simple one. Most venture firms look at like where they went to school. It's all the same school like that because it's the easiest path on recruiting. You hire people that you either personally knew or what the same kind of classes you went to. So you know how to judge their past experience. Ridiculous way to get diversity. But once you have a team, I think the most important thing is to obviously have voting policies where everyone's equal. And that wisdom of crowds effect can be tapped. You could kill a wisdom of crowds, meaning how can a team outperform the collection of individual talents? How can I, and I know that I can be a much better investor with partners than on my own? I would be a crappy angel investor compared to the job I can do with frankly junior people who I'm training and mentoring.

• 49:08Speaker 02

  Questioning everything that I'm doing. That could be a digression in its own right, but those people need to be thinking differently. If they're just like, uh huh, uh huh, whatever you say is right. You're not going to learn from them and you're not going to be better as a dyad and as a triad and as a small group. The book Wisdom of Crowds explores this. In fact, I've copied this chapter, there's like a twenty pages in the middle of Wisdom of Crowds. That describes this cognitive diversity factor and how cognitive diversity is more important than ability in the field of venture capital and ambiguous decision making, which is really important to think about. More important than expertise. And this has been shown time to time again, the diversity bonus of book out of Santa Fe Institute. And others who tell the story in the more updated form. I strongly believe this, I've given these twenty pages to everyone we've ever hired at the FJ and at Future Ventures. And every time we're recruiting, I remind people of this. So you have to focus on it.

• 49:51Speaker 02

  You have to overcome your implicit biases by cognitively overcoming them. Just like you may want to steal, you may want to do a violent act, but you can easily overcome that proclivity. We can layer on culture and a more enlightened mind despite primitive impulses that reside within us. The heart of darkness, if you will, the same has to be done for implicit bias. And it's actually pretty easy. It is just A admit it's there and will never go away and be put policies and procedures in place to overcome it.

• 50:19Harry Stebbings?

  Absolutely. And when you say about hiring from your alma mater, that explains why no venture fund would hire me because I didn't have an alma mater. But

• 50:27Speaker 02

  There you go. It makes it tough.

• 50:28Harry Stebbings?

  There we go. I had to start my own firm to get a job.

• 50:32Speaker 02

  Exactly, and that's the best thing you could have done.

• 50:34Harry Stebbings?

  It is, that is true. I do want to finish this, Steve, probably the most exciting, which is, what's the most recent publicly announced investment for you? And why did you get so excited to say yes?

• 50:43Speaker 02

  Prellis Biologic, P R E L L I S, run by this wonderful founder, Melanie Mathieu. And it just so happens, a friend of mine had joined in as a vice president, but we're really obviously betting on her. And they print 3D organs, which is a category I've been watching in terms of market timing for years now. You know, over a decade, I've been watching companies that can 3D print organs for organ transplant. But what they realize is, A, they've built something that scales better than anything else out there. And B, that there's a really simple, tiny organ you can print, which is the lymph node, specifically right now to build antibody therapies for coronavirus and COVID-19. So the best way to amplify your B-cell and T-cell response to have a recreation, literally recreation of the human lymph node. So you basically externalize your entire immune system onto a P2 dish. You've got hundreds, thousands of these things running in parallel.

• 51:29Speaker 02

  You can do it without requiring serum from humans. You just take the virus, you present it to these synthetic immune system nodes, which are human organs outside the human, and have a much more rapid, you know, 30 days to antibody therapy, a much more rapid process innovation cycle than others. But of course, that's just obviously timely for today. An interesting bet, as Bill Gates would put it, the best bet we've got against coronavirus, given how it's mutating and given how long it takes to develop a vaccine. That is just a stepping stone, we believe, to the whole field of organ transplants and organ enhancements over time. So they, you know, they print optically, they do so provably, they've done it for Zika virus, this lymph node thing. And in theory, you could print all kinds of interesting scaffolds in organs. So that's the most recent one.

• 52:08Harry Stebbings?

  Steve, as I said at the beginning, I wanted to do this one for a very long time. I can't thank you enough for coming on today, and this has been so much fun.

• 52:14Speaker 02

  Thank you. Looking forward to hearing it.

• 52:18Harry Stebbings?

  I mean, such a fantastic guest to have on the show, as you can tell from the slightly elongated episode. And if you'd like to see more from Steve, you can find him on Twitter at FutureJerverson. Likewise, it'd be great to welcome you behind the scenes here. You can do so on Instagram at Hstabbings1996 with two Bs. I'd love to see you there. But before we leave you today, digital hit a new gear in 2020, and companies need the tools that will allow them to flourish in our ever-changing world. Where Amplitude comes in. Amplitude helps the top product and growth teams at companies like PayPal, Instacart, Peloton and Atlassian build product experiences that convert and retain customers. With their product intelligence platform, you and your team will better understand user behaviour, ship great product experiences faster and retain more customers.

• 53:00Harry Stebbings?

  And they've become the gold standard in analytics for teams asking what is happening in their digital products, why users are converting and what to build next. See for yourself how companies like Twitter, DoorDash and Cisco build for growth using Amplitude and visit amplitude.com/20vc and check this out. Discounted scholarship plans are available for qualifying startups. That's amplitude.com/20vc. And speaking of incredible products there, Harness is a truly modern digital wealth platform that leverages technology and best-in-class advisory firms to give you access to the best experienced human advice to maximise your finances. Harness helps tech employees and investors find the best solutions for their finances from navigating stock sales to receiving partnership K1s.

• 53:44Harry Stebbings?

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• 54:28Harry Stebbings?

  HelloSign is the effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements. And they raised a total of $16 million in funding and recently got acquired by Dropbox for an impressive $230 million. Check out hellosign.com/20vc to join the thousands of companies and founders who value fast, secure and simple e-signatures.

• 54:52Speaker 01

  As always, I so appreciate all your support and I can't wait to bring you a brilliant episode this Friday with Joe, founder and CEO at Loom.