Oh my! Google Translate cracks me up sometimes. It did a better job with the paragraphs of text:
“What is an area where there has not been a radically new product for decades?” Estonian stock-maker, Steve Jurvetson, introduces one of the ways in which he is looking for an investment area. “I invest in sectors that are not yet popular”
According to Jurvetson, internet usage will triple in the not-too-distant future. Many people in poor countries will get Internet over the next 2-3 years either from SpaceX satellites or from other service providers. It also has a significant impact not only the addition of customers, but also on the global growth in competing ideas and companies.
Time of opportunity
On the other hand, Jurvetson finds it has never been better to start a global business. “Thinking back to 100 years, 1000 years, or even 20 years ago, it was more difficult to start a global business, both in Estonia and in China. Today, this is definitely easier than 30 years ago.
Although it is becoming easier to start businesses with a global reach, the competition will become even more intense, Jurvetson said. There is also a strong network effect in the technology business, or the “winner takes all” dynamics. “There is only one in Google America and one in Alibaba in China. There are not ten significant companies in any category, “said Jurvetson. “Compared to almost every historical industry, there were at least 10 important companies in the automotive industry, steel production, agriculture. Normally there were not only 1-2, as it is in the technology sector, “says Jurvetson.
If there are only a few significant companies in each technology sector, then each competitor will have a significantly lower chance of winning, says Jurvetson. Each good Internet company can have hundreds of competitors globally at the same time. “For example, in the case of international payments where one Estonian company successfully operates, there are many others in the world, and new ones build their own solution on the blockchain. What is the possibility that each of them is a global winner? Extremely small,” Jürvetson found.
To thrive internationally, Jurvetson suggests that entrepreneurs do the same as he is doing as an investor. “I invest in sectors that are not yet popular. Perhaps you should avoid existing business models and local success stories because you are limited to one particular region. Consider China’s popular e-payment solutions or electric scooter services, which started there and are now copied in the US, “said Jürvetson.
We should find places where seed businesses and risk investors are not yet active, he says. “It’s usually at the edges of the popularity. But not in the domain of fantasy, which is completely out of the way. A good example is how 5 or 10 years ago there were many investments in the field of synthetic biology. There, in essence, bacteria and algae were genetically modified to make different products. The application markets were moving from fuels to chemicals to materials and medicines. But, in my opinion, there was a great opportunity in food production. When I did my most recent investment in Memphis Meats (a company that produces real, clean meat from stem cells), there were not many competing investments, it was not yet over-funded. That will come later.”
Look to old industries
Looking ahead, there are many areas in the economy that have not radically changed from IT or machine learning, Jurvetson continued. They include construction, agriculture and, perhaps, banking because of regulatory obstacles. “The filter I’m thinking of is: what is an area where there has not been a radically new product for decades,” said Jurvetson.
“Looking back in time, this applied to the automotive and aerospace industries. For example, Tesla and SpaceX, where I was an early investor. They were not clearly good investments 10 years ago, and many would have considered them a bad idea,” said the investor.
And this is generally the direction where to go, Jurvetson finds: big business which are historically unattractive for new entrants. He suggests starting a new business when it becomes the product can transition to becoming software and services-based. “If you look at the car, the best motor and body design are somewhat important, but in the next 20 years, users will choose based on the better autonomous driving function.” In the future, according to Jurvetson, software and services dominate in value creation.
LIKE TO KNOW
Jurvetson’s reading and learning suggestions:
One course that everyone should take? I think every student should take a class in statistics. If you want to learn a new field, it would be machine learning. Even if you think that the future has gone by and you’re left behind, it’s easy to go back to school in this area; it’s very different from traditional computer programming.
A book that everyone could read? Nasim Nicholas Taleb “Fooled by Randomness” and Kevin Kelly’s “Out of Control” (very influential for me)
WHO IS WHO
Steve Jurvetson’s parents are Estonians and his father descends from the family of President Konstantin Päts. His father-in-law, Voldemar Päts, was a brother of Konstantin Päts. Father Tõnu Jürvetson left Germany in 1944 just before the Russians conquered Estonia; Mother is Tia Tiiu Jurvetson. Jurvetson graduated from Stanford University’s electrical engineering specialty in two and a half years, graduating top of his class.
Jurvetson worked for Hewlett-Packard for two years and then has in marketing at Apple and NeXT, another Steve Jobs computer company. Subsequently, he joined the venture capital company Draper Fisher Jurvetson, founded in 1985 by Tim Draper.
Jurvetson invests in early stage-companies and was an early investor in SpaceX, Tesla, Planet, Memphis Meats, Hotmail, and the machine learning companies Mythic and Nervana (Intel AI).
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