♪ emily: he is the owner of the world's very first model s, and an early backer of elon musk's tesla and spacex. a fast talker with an unconventional investing philosophy, who once shadowed steve jobs. he has amassed one of the biggest private space collections in the world, and spends his days pondering the future of artificial intelligence, genomics, and self-driving cars. joining me today on "studio 1.0," venture capitalist and partner at draper fisher jurvetson, steve jurvetson. steve, thank you so much for being here. it is great to have you. steve: thank you.

emily: i want to start in 1996. steve: oh, dear. emily: when you made an early investment in hotmail. you bet on e-mail before e-mail was anything. what did you see? steve: it is usually a combination of two things. an entrepreneur that gets me really excited, jumping out of my seat. in this case, it was sabeer bhatia and his partner, jack smith. and an idea unlike anything i had seen before. which is, wow, e-mail wherever you go, not tied to a corporate system or university server like before. it was like a lightbulb went off. we invested in what became the first example of viral marketing on the internet. emily: of course, microsoft went on to buy hotmail. dfj made millions of dollars. i want to talk about how you became a guy, who can make these kinds of predictions and big bets. tell me about where you come from. what kind of kid were you? steve: i don't know if i ever grew up. that is the first thing that comes to mind. i was born in arizona, to estonian immigrants, who came here during the early days of the semiconductor industry. i guess i was inspired by my dad growing up. i started programming when the apple ii computer first came out. i think there is something

intoxicating about the ability to program a machine, to code it to do things, and have immediate feedback, unlike other experiments that take time to learn. the learning cycle is so rapid when you program. emily: you graduated from stanford first in your class, -- class. you get a masters in electrical engineering an mba at stanford. , steve: i love to learn, and, that is what i love about being a venture capitalist, i am always learning. at school, i did not want to leave. i enrolled right from my undergraduate to my masters to a phd, which i didn't intend to take. it sort of happened. i eventually had to get a job, so i took off. i guess hoodies and dropping out was not as popular back then. emily: after you got all this schooling, you went on to work at apple. you worked for steve jobs at next, and he tried to recruit you at pixar. what was your relationship with steve like? steve: it was a short period of time, but it was pretty intense. he was someone who really has this incredible, laserlike focus on whoever he is speaking with. it is mesmerizing. the thing i remember most vividly is the walks that we would go on. i had hoisted into an agreement with him that i would study how he does businesses. emily: you are like his protege?

steve: an acolyte. not that i thought i could be like him, but i can understand him. he was a fascinating individual. emily: how did you get that front row seat? steve: i just asked him. he came to my house to speak at -- when i was at stanford business school sat crosslegged , at the fireplace, and talked for, like, three hours. what i remember most vividly, when i was at next, he was obsessed with apple. next has nothing to do with apple, he does not own a share of apple, and he is just distraught. he felt this visceral pain when apple is getting beaten around in the public eye or the press. emily: what kinds of things would he say? steve: he would always come to the same inevitable conclusion that apple should buy next and bring him and the next technology and operating system back in to apple. i would look at him like he was nuts. what ceo of apple would ever bring you back and keep their job? who would do that and think they could survive? of course, that's exactly what happened. he came back, and boom. the ceo that brought him in was gone within months. he was possessed. i think always has been with the

mass market appeal of the products that apple has. everyone knows he has this fascination with design, but what fascinates me is that at no point do i recall him stating a strategy. it was more like, "this is crap" and, "this is beautiful." more specifically, he, and elon musk as well, which i came to learn, have this visceral agitation with imperfection. emily: tell me about your relationship with elon. he literally went into debt for tesla, writing checks to make payroll. and the headlines say that you saved him. steve: he was doing just fine. we first met in 1996, when he first came to california, pitching zip2, his first start up. i heard it, but we did not invest in it. nor paypal. although we were trying to invest in paypal. the relationship has developed into one where i enjoy my life. to be able to learn and see as he develops these companies, which is fascinating. as you mentioned in december of , 2008 he saved tesla single-handedly. he went into personal debt, pledged everything he had, the

collateral of all of his companies to backstop a loan to invest in tesla when no one else would. emily: so when did you come in? steve: the other investors were on the table were like well, i will do my fraction of the total. assuming everyone else is in, i am in. it is a herd mentality. if everyone else is in, i will be in. we invested in a way to get him out of the hole, so that is why we became an investor in spacex and tesla. emily: you guys have such a close relationship. i feel like you have a mind meld with him or something. does he ever say anything to you that you think are absolutely crazy? or are you on the same planet? steve: crazy is as crazy does. emily: tell me about your own interest in space. you launched rockets in your yard, tell me about that. steve: my son has been doing that since the day he turned three. we go out to the black hawk desert, we build these enormous things that will go mach-2, or twice the speed of sound. we have cameras and gps systems. there are really big rockets. rockets people can fit inside. i have also converted the dfj lobby and hallways and my office into a space museum. so it is full of artifacts from the apollo era.

literally a piece of every lunar module that has been on the moon. emily: but you have not been to space yet. steve: no, i have been weightless a couple of times. zero gravity flights. emily: when is your first flight? steve: if it were up to just me, it would probably be in five or six years. but since there are kids and responsibilities, i might wait 10 years. who wants to be in the first airplane flight? you would rather wait for the fourth or fifth. the perception of fear is that it sounds like a dangerous thing. rockets had blown up. this kind of visual failure with everyone. but the goal with spacex is to make it as routine as air flight. so make the rocket reusable so that you don't throw it away after each flight, which dramatically lowers the cost, and when the cost comes down you can fly much more often, gain more experience. emily: a spacex rocket exploded during a launch in late june, and that was a huge blow. have they fixed the problem? steve: they believe they have. with a very high degree of certainty, they have identified what the problem was. it was a complex detail, but it was a single little bolt inside a tank.

emily: so what happened? steve: it failed. but they can push that aside and put in a replacement design that won't have that problem. emily: so will spacex accomplish its goal of getting to mars in the next 15 years? steve: absolutely. the colony might take about 20 years. emily: 20 years to get the colony started? wow. steve: but if you just want to send something to mars and not get it back, they can do it a lot sooner, in a year or two. emily: you have a tesla model s and model x. do you have a preference? steve: i like them both. and not just an s, but the very first s ever made. which is a pretty cool -- emily: you have the very first s ever made. wow. steve: yes. the first production model car. elon got the first production model x. we have number two and number one. emily: how is it performing? steve: great. emily: how many times has it been serviced? steve: not much. here is what i can tell you. i have yet to replace the brakes. this is the earliest car. there is no spark plugs, no muffler, no smog check. none of the usual stuff that i

used to get maintenance on, like tires. that is really the only thing that has needed anything -- emily: so what features are you most excited about? steve: i get very excited about autopilots, and the future of autonomous driving. just like the first electric car, you know that all vehicles will be electric. elon knew that before most of us. anyone who experiences a drive in one of these is like a lightning bolt goes off in your head. same with autonomous driving. so obvious. it is going to be all someone we -- it is going to be awesome when we look back and say why do , we let our teenage kids drive? 10 years from now, i am certain we will look back to the present and think, wow, we thought that was ok? the way it will come to market is as a service. imagine an uber or lyft-like service without a driver. low speed, urban, under 25 miles per hour. vehicles that could almost certainly could not kill someone, even if it tried to jump in front of the vehicle. it is the kind of thing that in the abstract, it is scary, but in the reality it's not scary at all. emily: when will it hit the mainstream? when will i buy a self driving car? steve: you might not buy one. you might be able to ride in one

in vegas in two or three years. emily: uber is making its own self-driving car. are you concerned about competition from a company like uber? steve: no and yes. if you believe, as elon does, that all vehicles will be electric, and all vehicles will be autonomous which is something , i believe -- all car companies have to do it or they will go out of business. it is almost by definition. if you do not do this, you will not be in business. so they should. and you wish them well, and you hope that a whole fleet of different kinds of vehicles will come out, whether it is vans or two-person vehicles, bus like things. no one company can do it all. emily: do you think apple is really working on a self-driving car? steve: yeah, it's hard to -- emily: how optimistic are you about an applecar? steve: by the year 2022. emily: apple's thing is to do what somebody has already done, but do it better. and different. do you think they can do it? steve: sometimes they do, but sometimes they don't. that watch is not really grabbing me, or the newton. they have a few misses. emily: you are not a fan of the apple watch? steve: no. battery life, for me. i have a lot of watches and actually wear them.

and i cannot fathom, in personal use, the charging issue. emily: do you think that tesla should focus more on lower-priced, more mainstream electric cars? i mean, the model 3, which is supposed to cost $35,000, but that is the base price. steve: that is a great question. that is their long-term vision. you either have many, many billions of dollars to put into equipment to mass produce something of that scale, or you do it in iterations. you take the current model s, which is arguably a very expensive vehicle. if you factor in the cost of ownership over five or seven years, fuel or maintenance cost which is so much lower, your total cost is not that different from a high-end ford taurus. if you start with that next vehicle, let's say a $35,000 vehicle, and do the same analysis, it may come out to being like a civic, you know? that to me starts to sound like a more mainstream vehicle. emily: how concerned are you about google's ambitions in ai? ♪

emily: i know that you are super fascinated with machine learning. what is your vision for how a.i. changes our lives, let's say, five years from now? steve: for the next five years, and probably a little bit more than five years -- five-ish years, what we call a.i.'s will be what we call the specialties. things that are creepy or magical, depending on your point of view, in their ability to do something that we thought was somewhat human, like drive a car. let's say, manage our schedule, figure out what we want to do today. it will creep into medical imaging analysis and diagnostics in the field of medicine. there will be all these areas, where recognizing a pattern of human behavior, a pattern of picture, a pattern in the world around us. traffic patterns, for example. they will see things we did not see. once they point it out, we will be like, wow, i can navigate more easily through this traffic, or i can optimize my calendar this way, and i just could not see before. i think that will start to acclimate us to what we call a.i. slowly.

as opposed to out of nowhere, boom, robots take our jobs. emily: how concerned are you about google's ambitions in a.i.? [laughter] steve: how concerned? emily: does it scare you? steve: a little bit, just because there is a bit of a reckless abandon, almost like a techno-utopian flair, with the occasional, when pressed, "of course we will be cautious" -- but almost like this is the inevitable trajectory that technology is our future. we will make good pets for a.i. in the future. life will be good. they will feed us little treats and stuff. there's something else, like a polly-anna-ish, what could possibly go wrong? the a.i. i worry about is those that we may not know exist, that are purely digital, living off of vast information feeds and operating in a way we cannot even fathom. that ideally we may never detect their existence. emily: so how is your interest in a.i. and machine learning, how is it playing out in your investment philosophy?

steve: i think the way we engineer things is changing. from everything we can think of as engineering to things that feel more like growing and iterating a solution very rapidly. emily: what do you mean? steve: imagine, much like a newborn baby that can learn anything, you literally build a brain in a box. it is exposed to photos like google has done and starts to recognize cats on the internet. but that same program could recognize anything on the internet. it could recognize speech, or be used to try to find tumors in mammograms. or other pathology slides or radiology slides. you have these generic learning machines in silicon you can now apply to different things, and you don't know how it is done. just like how we do not know how the brain works. we know how it got there, but we don't know what it is. emily: could these computers one day take over the world? steve: yeah, but why? emily: because they become smarter than us. steve: but to what end? emily: like a lot smarter. steve: that's why we would make good pets.

what they would do is, we would not know that we were pets. one day we would wake up and be like, oh my gosh, i imagined a fusion reactor and i have no idea it is not my idea. imagine a gap between us and our pets, like my cat thinks it is hunting that toy mouse with the catnip. it thinks it is a fierce hunter, but it's in the house. i think it will be similar, we wouldn't even know. i think the mark of the human intelligence and cultural evolution is we would have much less violence overtime. there's a lot of evidence of that. why would a more intelligent being use childish, like kindergarten level -- it's my toy, i want that thing -- as opposed to much more sophisticated manipulation? emily: dfj was an early investor in theranos, now a $10 billion valuation. do you stand behind theranos? ♪

emily: what do you think about this bubble talk right now and valuations? are we at peak unicorn right now? steve: every time you ask a question like that, somewhere a fairy dies. [laughter]

steve: the unicorn fairy. you have to believe in them. emily: this horn or something. steve: i don't know. it is interesting how the private-funding world is reaching valuations we have not seen before. we are all trying to be disciplined, within reason. since we at dfj focus on early-stage investing and growth stage investing that is way before the unicorn phase, we are fine if people want to invest at those kinds of prices. in fact, two companies, i am involved with on the board, just got offers at this new unicorn phase, so new unicorns are being born every week. but it doesn't really mean anything, per se. i think what is interesting is that the ipo window may be shutting. emily: is it closed? steve: it seems that way, certainly for biotech stocks. emily: i have to ask you about theranos. dfj was an early investor in theranos, now at a $10 billion valuation. do you stand behind theranos? would you invest again? steve: we definitely stand behind theranos, in the sense of

we are an investor and want them to succeed. we do not, though, have the answers to the questions that are swirling around right now, which is, can i give you an answer to the questions others are asking? i do not have that. here is what i can tell you. i remember meeting her when she was still a stanford student. emily: elizabeth holmes. steve: yes. elizabeth holmes. the founder. as a teenager, she started the company with great passion. i remember my partner tim saying, in the very first meeting, she is like steve jobs. this is long before she was wearing the black turtlenecks. i did not see what he was referring to. i even wrote it down on a piece of paper to remind myself that he said that. but it was fascinating. she had that mesmerizing zeal to revolutionize. she was not calling it phlebotomy at that time, but the entire field of medicine, there were these special kinds of needles. we were the very first check. we wrote a $500,000 check before anyone else. but she has been somewhat independent, and has been going at it all on her own. so i don't have the answer to your question. emily: you guys have such a tough job, because you want to

invest in breakthrough technology. how do you, at the earliest stages, separate something possible from something impossible? steve: there are people walking in our door every week, every day sometimes -- but certainly a week does not go by that someone has not gotten us excited. we keep hearing about potential steve jobs and elon musk of the next generation, but some of them are dead wrong. you are scratching your head. do i believe them? do i think this can happen? i think the best partnerships are when the venture investor, or whoever is doing the first run of investment, believes as passionately as the entrepreneur. when we first invested in tesla, i was absolutely convinced that all vehicles would be electric. it was not my idea. it was his. but i fully buy it. when i hear him explaining it, he has won me over. same thing for autonomous vehicles, same for a lot of things we have invested in. i have been wrong, and i will be wrong again, but when it is right, it's really remarkable. and we talk about the ones that are right, right? emily: so the world of venture capital has changed a lot in the last years. andreessen horowitz has come on

the scene, and it is like the hot new firm. they've got a lot of people in recruiting, marketing. steve: like an operation. emily: right, right. where do you see dfj's place in the hierarchy today versus 20 years ago when you started? steve: i try not to compete with any of them. in a healthy economy, you are going to have many different firms that do different things, have different strategies. if we are doing our job well, we will not come head-to-head with the same group over and over again, because that might imply we are doing the same thing they are, and why would we do that? i like a different approach, which is looking for industry sectors that are not over-invested. the ones where frankly, no one else is competing for the deal. the vast majority of investments that i have made, there was no competing offer. like no one else. emily: really? the question i was going to ask is, how do you get on the top list for every entrepreneur? steve: in the sectors that have 18 different firms that are well known, pursuing the same sector, it is like a dog fight. when were first investing in space, there was that no one

else that was saying they were investing in space. so what i try to do is be visible and vocal. and then they find us. we don't need the same sort of infrastructure to track down the opportunities to compete with everyone else. in fact, i think a venture firm is ideally a small team of five to seven people, no more. i think in almost every endeavor, whether it is creativity or decision-making in a sea of ambiguity is needed the , moment you go beyond seven, you are less effective. emily: so what is next for steve jurvetson? steve: i think you will find me learning. one of our companies is working on to reengineer pigs. we want to harvest organs for humans by changing the immune system of a pig to be like a human, so we can take their heart, kidney, lung, and solve the transplant problem. i think the field of biology and the field of information technology, we will grow technologies. we will evolve technologies. we will build things that feel like brains, less like computers. that is how we push engineering beyond its current limit, which is, humans will design things they can understand. if you ask the question, one

day, will we have something that is smarter than humans, like dramatically smarter than humans? the answer has to to be yes. it cannot be no. emily: already smarter than me? steve: no, no, no. i mean, literally smarter than humans in every way, like, you have a conversation and gives you better answers than i can. and what have you. that will inevitably happen. if you just give it a billion years of normal evolution. to argue that nothing will ever be better than a human means that the long arc of evolution itself, normal biological evolution suddenly ends right now, like the buck stops here. and that is obviously not the case. we have wicked smart humanoid- like things that we evolve into. that begs the question, now that -- why can't we accelerate the process? now that we understand the process of evolution, what can we do today to rapidly evolve the things that will surpass us? emily: so that is what you will be thinking about. steve: 10 years from now for sure. emily: steve jurvetson of dfj, thank you so much for joining us. it has been great to have you. i will see you on the moon. ♪

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♪ mark: welcome to this edition of "the best of all due respect." it was a setback for hillary clinton. a week from republican leaders into you'd, sometimes the begrudging expression to donald trump, and the two front runners offer a preview for the fall. nicolle: officials in needed today said an act of terrorism was more likely to cause the issue. before many details were known, donald trump jumped out and talked about his social media account and treated, looks like