Stanford Report, March 22, 2006

Life sciences may be key to high-tech breakthroughs, venture capitalist says

BY ANDREA ORR

Legendary Silicon Valley venture capitalist Steve Jurvetson is best known for his winning investments in young Internet startups like Hotmail, but when he spoke at the Principal Investment Conference at the Graduate School of Business last month, he said he was most excited about biology and the life sciences.

At a time when computer and software engineers have achieved staggering levels of performance and efficiency, Jurvetson said that they will likely have to look to an altogether different model to continue the Moore's Law curve of exponential growth in which computing power continues to double on a regular schedule.

"Even if you're just an IT software person, your big unsolved problems will probably find solutions in life sciences," said Jurvetson, MBA '95, who now serves as managing director of the venture capital firm Draper Fisher Jurvetson.

His prediction came with some compelling evidence. A single drop of water, Jurvetson said, contains more molecules than all the transistors that have ever been built. And if it were possible to burn the human genome onto a CD, it would occupy less space than the Microsoft Office software program.

"Nature keeps poking us in the eye with more efficient ways of doing things," Jurvetson said. "Nature has got wonderful tricks up its sleeve."

Known for his big ideas, his enthusiasm and his fast-talking delivery of complex topics, Jurvetson began his address by warning the audience that in preparing his comments, he had "tried to bite off an impossible amount of material."

Jurvetson, who also holds bachelor's and master's degrees in electrical engineering from Stanford, touched on a host of topics—from the importance of a global perspective in venture investing to the ways that the water in the middle of the ocean is rapidly contributing to knowledge of the human genome, the reasons technological progress continued unabated during the Great Depression, and why even the most optimistic forecasts so often fail to adequately anticipate future growth and innovation.

In short, Jurvetson said he was extremely excited about the future of high-technology investing but warned that the truly world-changing business models are not always easy to spot. Some of the common mistakes that even the most seasoned investors make, he said, are failing to consider the "really funky stuff," failing to take risks and failing to listen to the dissenting voices on a board.

Draper Fisher Jurvetson, for instance, has adopted a policy of allowing "a minority of strong opinions to overrule a majority of weak ones," Jurvetson said. He and other partners abandoned the traditional policy of approval by majority vote after the firm realized some of the best business plans were falling through the cracks. Experience has taught Jurvetson that the most successful high-tech startups rarely receive broad support in the beginning.

"If a company is going to change the world, it is not usually obvious," he explained. "Companies like Hotmail, eBay and Yahoo! were all subject to massive ridicule by investors in their early days."

Along with out-of-the-box thinking, Jurvetson stressed the importance of drudge work: putting in long hours to read stacks of business plans and scouring the world—rather than just Silicon Valley—for the best talent.

But while many economists and even some high-profile Silicon Valley executives have started warning of an inevitable slowdown in technological progress, Jurvetson said his views are more aligned with those of futurist Ray Kurzweil, who has predicted that the next 20 years of technological progress will be equal to that of the past 100 years—a period that thoroughly transformed society through the introduction of paved roads, widespread hospital care and vast increases in education.

Returning to his emphasis on biology, Jurvetson said the pace of discovery in areas like the human genome suggests altogether new computational models that will likely dwarf Moore's Law and spawn an "interdisciplinary renaissance." To give some sense of this pace of innovation, Jurvetson noted that 90 percent of all the genes identified in the world to date had been found in just the past 12 months by a single research team.

"It's a dramatically exciting period we're entering," he said.

Andrea Orr is a freelance writer.