Aug 3, 2020 · 55m · 20vc
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
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In this episode of The 20 Minute VC, Harry Stebbings interviews veteran investor Steve Jurvetson about his 25-year career backing frontier technology, evaluating market timing, and managing long-term venture funds. Jurvetson shares insights on founder liquidity, deep tech diversification, structural fund design, and his decades-long experience sitting on boards with visionary entrepreneurs like Elon Musk.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 22.8% of the talking time here. How this is scored →
Harry as informed peer 3.8 Guest teaching 4.8 Guest disagreement 0.9 Harry pushing back 1.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 16:42 Contrarian call-out on peer VC skepticism
Steve highlighting how widely other VCs disagreed with his market timing, specifically calling out Peter Thiel's public claim right before the Model S launch that Tesla was a bankrupt idea.
Hardest push from Harry ▶ 17:22 Challenging deep tech follow-on riskHarry directly challenges Steve's deep tech thesis by highlighting the severe dearth of downstream follow-on investors willing to back fusion or synthetic biology compared to enterprise software.
Biggest teaching moment ▶ 6:03 Explaining the multi-year lag of VC downturnsSteve educates Harry on how venture downturns actually unfold, detailing the year-long psychological lag, internal capital reservation spirals, and why recessions create the best startup vintages.
Harry holds his own ▶ 21:27 Mathematical challenge on power laws vs valuationHarry articulates the mathematical logic of early-stage power laws to argue that entry price should logically be irrelevant for generational outliers, forcing Steve to agree with the premise.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Steve Jurvetson's Background in Tech and VC | 3 | 6 | 1 | 1 | Harry asks an off-schedule question about navigating macro downturns as a venture newbie. Steve educates him on losing 90 percent of his net worth during the dot-com crash, the lag effects in venture capital cycles, and why recessions are historically the best time to build startups. | |
| Secondary Shares and Aligning Risk Between Founders and Investors | 5 | 5 | 1 | 2 | Harry offers a perspective on founders taking partial liquidity to cover downside risk before riding upside. Steve agrees with Harry's advice for founders, but reframes the investor dynamic using a coin-flip thought experiment to show how portfolio incentives differ from founder incentives. | |
| Assessing Long-Term Founder Psychology and Ambition | 4 | 4 | 1 | 1 | Harry connects the coin-flip concept directly to Elon Musk's extreme risk appetite and asks how to evaluate founder ambition early on. Steve praises Harry's leap and outlines his signature 20-year vision question used to weed out opportunists from generational builders. | |
| Assessing Market Timing Risk in Frontier Technologies | 3 | 6 | 2 | 1 | Harry asks how Steve navigates market timing risk in long-horizon frontier tech. Steve breaks down how he evaluates inevitable tech transitions in EVs, autonomous driving, and nuclear fusion, noting how contrarian his timing was when peer VCs like Peter Thiel dismissed Tesla. | |
| Downstream Funding Dynamics and Shifting Industry Horizons | 6 | 5 | 1 | 5 | Harry pushes back on Steve's deep tech focus, arguing that a lack of downstream follow-on investors creates existential risk compared to enterprise SaaS. Steve acknowledges the premise, explaining herd mentality in software and how corporate or fast-follower capital surges once initial technical hurdles are proven. | |
| Entry Valuation vs Power Law Returns in Generational Companies | 5 | 5 | 1 | 2 | Harry questions whether entry valuation matters when power-law returns in generational companies dwarf initial price differences. Steve concedes the analytical logic while admitting his emotional resistance, then highlights the massive societal stakes of outlier companies like SpaceX. | |
| Adapting Venture Fund Structures for Deep Tech Horizons | 4 | 4 | 1 | 1 | Harry raises the mismatch between traditional 10-year fund lifespans and deep tech timelines. Steve details why Future Ventures created a 15-year fund structure, noting that massive value creation in Tesla and SpaceX occurred well past year ten. | |
| Deep Tech Loss Ratios and Broad Portfolio Diversification | 4 | 5 | 1 | 1 | Harry asks if high tech risk leads to elevated loss ratios in deep tech portfolios. Steve explains why broad cross-sector diversification (tunnels, quantum computing, synthetic biology) insulates his fund from systemic failures better than software-focused portfolios. | |
| Personal Philosophy on Wealth, Philanthropy, and Founder Alignment | 3 | 4 | 0 | 0 | Harry opens up about his own evolving perspective on money and asks Steve how his relationship with wealth has shifted. Steve shares his pledge to donate 99 percent of his wealth to charity, explaining how long-term holding aligns him with world-changing founders. | |
| Key Attributes of Elon Musk as an Entrepreneur | 3 | 5 | 1 | 1 | Harry asks Steve to break down what makes Elon Musk unique as an entrepreneur based on two decades of close partnership. Steve highlights Musk's first-principles physics approach, software-centric product design, visceral intolerance for imperfection, and multi-company focus discipline. | |
| Memorable Story: Walking the Rubble of a Rocket Failure | 2 | 4 | 0 | 0 | Harry prompts Steve for his most memorable personal anecdote with Elon Musk. Steve recounts walking among the smoking debris of a failed rocket test in Texas and Musk's dry response to a quote about learning from failure. | |
| Quickfire Round: Books, Board Dynamics, Venture Scaling, and Diversity | 4 | 5 | 1 | 2 | Harry runs through a quickfire round covering favorite books, board dynamics, firm scaling limits, and diversity hiring. Steve offers crisp insights on Kurzweil's Moore's Law chart, why VC partnerships break above seven partners, and using explicit policies to combat implicit hiring bias. |
Statements from this episode (35)
Venture Capital Annual Investment Volume Grew 25x Over 25 Years
“The venture industry per year has grown 25 X since then, so 25 X in 25 years.”
Steve Jurvetson Lost 90% of His Net Worth in Dot-Com Crash
“Lost about 90% of my net worth in the dot com crash.”
Jurvetson Has Never Sold a Single Share of Any VC Investment
“In fact, I've never sold a single share of anything I've invested in as a venture capitalist.”
Jurvetson Predicts VC Market Unraveling and Capital Scarcity by 2021
“I expect that we'll see that again, where things will feel just like you see in the public markets this time, as if nothing's happening. And then slowly but surely over the next year, this will all unravel and you'll have a period of scarcity.”
Two-Thirds of Dow Jones Companies Were Founded During Recessions
“For example, two thirds of the Dow Jones Industrial Average companies were founded during a recession, right? Or major recession or depression.”
Capital Scarcity Builds Healthier Startups by Forcing Customer Focus
“It's a healthier environment when capital is scarce and you iterate with customers, not chasing the next financing round.”
Founders Perform Better After Taking 10% Secondary Liquidity
“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, a…”
VC Investors Should Be More Risk-Seeking Than Startup Founders
“An investor should be more risk seeking than the entrepreneur. 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?”
Great Founders Prioritize Mission Over Short-Term Financial Logic
“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 exac…”
Jurvetson Asks Founders for 20-Year Vision to Weed Out Opportunists
“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. The worst is they look at me with incredulous eyes or even laugh at the…”
Jurvetson Evaluates His Market Timing on SpaceX and Planet Labs
“I think I was also early in synthetic biology, but I was probably just right on electric vehicles, probably just right on space with both SpaceX and Planet Labs and smallsats in general. And with what I call seller agriculture again, like growing meat in a bat…”
Jurvetson Avoided Nuclear Fusion for 25 Years Before Investing
“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... And we finally found one at MIT that turned it into a pure engineering exercise.”
Peter Thiel Called Tesla a Bankrupt Idea Before Model S Shipped
“So like Tesla, I remember famously Peter Thiel's are 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…”
VC Industry Suffers From Severe Herd Mentality in Consumer Internet
“The venture industry has an abundance of herd mentality investors in what I call the crack of.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 strat…”
Single-Sector Specialization Is a Fragile Long-Term Strategy for VCs
“Anyone who's in the 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.”
SpaceX and Planet's 2015 Fundraising Doubled All Prior Space VC
“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.”
Over 360 VC Firms Funded 200 Identical Small-Satellite Launch Startups
“There have now been over 360 venture firms that invested in space. They've invested in 200 nearly identical small site launch companies, for example.”
A Fund's Top Company Equals All Other Returns Combined
“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 can aggregate all early stage venture. You can do all the early stage ven…”
Entry Price Is Irrelevant When Backing Power-Law Winners
“If you made a routine error of entering two X too high, but you pick the right companies, then that two X 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 s…”
90% of Enterprise Software Startups Pursue Trivial Improvements
“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 software space.”
Jurvetson Structured Future Ventures as a 15-Year Venture Fund
“We took that into account when we were forming Future Ventures. We made it a fifteen-year fund instead of 10 years.”
Every Venture Fund at DFJ Extended to 15 to 17 Years
“Every venture fund I've ever been involved with back in my former employer went out to a full. 15 to 17 years. And when it's still going at 17 years, it's like none of them were done at 10.”
Most Value in Tesla and SpaceX Was Created After Year 10
“At the 10 year mark was some of the greatest gains. If you look at, okay, at the 10 year mark, where it was Tesla, where it was SpaceX. And there were many, many billions of dollars, hundreds of billions of dollars of value creation still to come.”
DFJ Completed 33% of All 1995–1996 Internet Venture Deals
“Strangely in 95 to 96, we did a third of all internet investments for the entire venture industry. Not in dollar amounts, but just sheer number of deals. So we literally were a third of the market.”
DFJ's Total Dot-Com Losses Were Less Than SoftBank's Buy.com Loss
“If you aggregate all of our losses from every loser that we did in the internet, it was much less than soft bank lost in a single investment with buy.com.”
Seed Checks Account for 80% of Jurvetson's Career Investments
“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've typically focused on.”
Jurvetson Has Pledged 99% of His Personal Wealth to Charity
“And then as wealth has accumulated now, it's like 99% of everything I own is pledged to charity in my will.”
Maximizing Shareholder Value Paradoxically Minimizes It in Tech Companies
“They're just kind of 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.”
In 20 Years Hardware Value Will Reside Entirely in Software
“You know, 20 years from now, it's all going to be about the software layer, and minimizing the physical thing is what gets you there.”
Elon Musk Never Loses Conviction Despite Catastrophic Rocket Failures
“Has no lapse whatsoever in the conviction that this will work in the face of catastrophic failures, and ultimately is vindicated.”
Jurvetson Names Antonio Gracias as Most Value-Add Board Member
“On the positive vector, I'd say Antonio Gracias of Valor. Certainly the most value-added board member I've sat with”
Venture Funds With Over Seven Partners See Returns Plummet
“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,…”
85% of Jurvetson's VC Hires Over 15 Years Were Women
“For example, of all the people I've hired into the venture industry over the last 15 years, and there's been a lot of them, about 85% have been women. The other was people of color, and all the people that I promoted on a venture track have been women.”