Steve Jurvetson: Interview on 'Building a VC Fund to Change the World' (VC Lab)

With our next VC Lab Cohort starting shortly (applications are due November 7th), we are sharing new highlights from our recent online event with Steve Jurvetson, Co-Founder of Future Ventures.

Watch the interview with Steve Jurvetson, Co-Founder of Future Ventures, who has been supporting transformative businesses for over 25 years as an early investor with the likes of SpaceX, Tesla, Planet, and UPSIDE Foods; and as a Presidential Ambassador for Global Entrepreneurship (appointed by President Barack Obama): 

On Why VC

I realised that you cannot get this parade of ideas anywhere else in the economy.

Growing up in Dallas Texas, I did not know what a Venture Capitalist was. Funnily enough, I’ve found an audio recording from my junior year of high school where a career counsellor concluded that I should be a VC. 

Early on in my career, I worked at Apple, NeXT and HP where I did some chip design. I got into business school after 3.5 years at Bain and Co. and at this time I decided to pursue my dream job, focusing on technology and the frontiers of the unknown. The job description of a VC, where the smartest people in the world and the future Steve Jobs will come and present their true ideas about the future with openness really resonated with me.

On Landing a VC Job

I did not have any connections in the industry and nobody with a career path dissimilar to mine cared to interview me. Chris Alden, the co-founder of Red Herring Magazine who had the job of interviewing VCs and finding out how they differ from one another so he gave me a lot of perspectives. My strategy was to target people with my background to leverage what I call ‘homophily bias’, which is the tendency to hire people with similar backgrounds to yourself. I interviewed with over 15 different funds, a total of 60 times and got hired by Tim Draper 

On Future Ventures

As a first-time fund, we were able to raise $200m, focusing on deep/hard-tech thanks to our track record. We decided to make it a 15-year fund. We did not want to have to liquidate our assets as we are in it for the long run. We also didn’t want to create friction with our LPs, so we set our management fees for a period of 10 years. Most of our LP base are tech entrepreneurs, venture capitalists and equivalent investors like hedge fund investors which is great. 

On the State of VC

Now, with companies like SpaceX, not only are we changing our world, but we are changing other worlds too.

Being in VC for over 25 years I’ve grown to enjoy it much more over time. The domain over which VC applies is so much broader than when I started. In 1995 it was pigeonholed to semiconductors, computing, datacom, life sciences and a radical group of software only investors, of which Hummer Winblad was the first. Today, in the information age, a VC can invest in industries such as automobile, aerospace, agriculture and construction, all of which are becoming software-centric and ripe for disruption. 

On Process Learning

It is quite hard to pinpoint which factors are relevant when measuring performance. Most of the time VCs focus on their tactic du jour e.g. stage, sector of focus, geography and the profile of the entrepreneur they target. Most of the time VCs only gather feedback from those axes. 

Using ‘process learning’, we could have measured the number of people in those teams, the decision-makers and the IC voting policy. These are rather difficult to measure over time as they are constantly changing. To correlate with success, you have to measure it and if you don’t measure it, like us, you might miss it for decades. So the team size in a fund is also an important factor.

Thinking about how you do things, rather than what you are doing allows you to create a methodology that works across all domains. Your method can scale and evolve over decades. If you are learning in that domain, your tactics and focus can change. In my case, it was going from the internet to nanotech, cleantech, synthetic biology, food and space.

On Biases and Pattern Recognition

Usually, you need to think outside the box to change the world. If everyone you know or the majority of the partners think a new investment is a good idea, it probably isn’t.

Looking back, almost every great idea was regarded as dumb by most VCs.

It’s really important to have a partner which can balance out your biases, pattern recognition and challenge your line of thinking. This is why debating is really important. 

Another part is having some humility and recognising luck plays a role. If your stance is that you got lucky, it eliminates the “I know it all” attitude and allows you to make better decisions going forward. In an ever-changing industry, thinking that you’ve ‘learnt it all’ is a death trap in the long run. 

Lastly, having a child-like mind is vital. I saw this in Tim Draper, which is the reason why I wanted to join Draper Associated more than any other fund. Openness to new ideas, playfulness and childlike curiosity is deeply inspirational to me. If we can hold onto this as adults we can be better inventors, entrepreneurs and investors. 

Click here to read more about Steves Jurvetson’s thoughts on:

• Fund Size

• Team Size

• The Importance of Debating

• Fund and Partnership Dynamics

• Hiring 

• Thesis and Strategy

• Fund Formation

• Advice and Strategies for New Managers

About the Guest:

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