Steve Jurvetson: An Exclusive with DFJ's Managing Director at the speed of thought

In yet another exclusive interview, this week I sit with Steve Jurvetson of DFJ.

There aren't many investors as sharp, quick or multidisciplinary as Steve Jurvetson, managing director of Draper Fisher Jurvetson. His firm is a leading venture capital firm with affiliate offices around the world and one of the most active energy and clean-tech investors. Steve was the founding VC investor in Hotmail, Interwoven and Kana. He also led the firm's investments in Tradex and Cyras (acquired for $8 billion), and in pioneering companies in synthetic biology and molecular electronics. Previously, he was an research and development engineer at Hewlett-Packard, where seven of his communications chip designs were fabricated. His prior technical experience also includes programming, materials science research and computer design at HP, the Center for Materials Research and Mostek.

At Stanford, he finished his bachelor of science, electrical engineering, degree in 2.5 years and graduated No. 1 in his class. He also received master of science, electrical engineering, and master of business, administration, degrees from Stanford, and serves as co-chair of the NanoBusiness Alliance and president of the Western Association of Venture Capitalists.

Creative Disruption - Writing The Code Of Life

Forbes: The late science fiction author Sir Arthur C. Clarke once said, "Any sufficiently advanced technology is indistinguishable from magic." What's some magic you've seen lately?

Jurvetson: Some of the most interesting magic I've seen recently is in the domain of genetic alchemy, where you can change one organism into another by swapping DNA. We are on the cusp of being able to write the code of life as if it were a poem or computer program. That gives us a whole new set of capabilities, in what I would call a second generation of industrial biotech, where we don't just cut and paste from nature but we actually write code from the ground up however we choose.

Five or 10 years ago, folks would have said it's impossible to change one organism into another by swapping out 100% of its DNA, yet this has been demonstrated in the past year by Craig Venter and his team at Synthetic Genomics. This is just a precursor to the next step, which is putting a fully synthetic chromosome into a single-celled organism.

Have you invested in this science? How does it work?
Yes, I sit on the board of Synthetic Genomics, and we have two other investments that are also in this new generation of modifying organisms for building chemicals. They're really focused on designing systems to produce evolved organisms to do useful work. They do this by starting with an organism that naturally makes a small amount of a chemical of interest. Then, they'll analyze its metabolic pathways and cripple the organism along all dimensions exceptfor the one they want to make chemicals.

Therefore, in order to survive and reproduce, the organism is forced to evolve to produce more of the chemical that you desire. Some early work in this space by a company called Genomatica has shown a 20-fold improvement in yield from this directed evolution technique.

What's the business case for developing highly advanced technology to produce what are essentially commodity chemicals?
It is true that some folks are going after commodity chemicals, like fuels, where you're selling into a huge global market with commodity price swings. What they're betting on, though, is price position. Although they won't have international protection for their end product--you can't patent ethanol, for example--they can create protected pathways to make chemicals that are far more cost-effective than any other petroleum-based process.

So whether these new processes are consuming waste feedstocks, or stranded feedstocks that were too expensive to ship around previously, or true free wastes like CO2 from the air--you are unlocking value with this technology.

Another interesting aspect to this directed evolution approach, and what separates it from prior generations of biotech, is that your process can actually get better over time.

In past production systems, organisms would "drift" over time--that is, they mutate away from producing the chemical you want, because it is a profligate waste of their resources and energy. But in directed evolution, you've tightly coupled the reproductive pathway of the organism to the chemical of interest, so as time goes on, even if you're not trying to modify the system in any way, the process itself gets better over time instead of worse!

View my complete interview with Stever Jurvetson at Forbes.com.