She describes herself as a "start-up catalyst." Through EDventure Holdings, Esther Dyson places her bets in emerging markets such as Eastern Europe and, more recently, Africa. In the U.S., she specializes in cutting-edge ideas, specifically information technology, preemptive healthcare, and commercial space travel. "I don't want to be redundant by investing in companies that would happen anyway," she recently told business writer Sharon Kahn. Some of her best-known successes include Flickr and del.icio.us (both sold to Yahoo!) as well as Medstory (sold to Microsoft). She's also involved with Russia’s leading search company, Yandex, and Nomanini, a South African company that makes and distributes terminals that let small businesses accept prepaid vouchers for products such as airtime, electricity, and insurance.
SK: How did you become a venture capitalist?
ED: I ran a technology newsletter, Release 1.0, for 25 years. In the mid 1990s, a friend said, ‘Gee, you keep telling people that they should invest in technology companies in Eastern Europe, where so many changes were going on. How about I give you one million dollars to invest?’ I said, ‘How much did you say?’
Money goes a lot further in Eastern Europe, but I eventually decided to invest in the U.S. as well. At that point I hired someone to run my newsletter because I became fanatic about disclosing where I might have a vested interest. With all kinds of people now blogging, disclosure has become less of an issue, but I still feel it's important.
SK: You now specialize in preventive healthcare and space as well as digital technology. Why those areas?
ED: I love emerging technologies in the same way I love emerging markets. Digital technology allows us to know and track our bodies better, helping us change behavior so we can avoid needing health care in the first place. Through their phone and sensors [that read, record, and transmit body functions], people can collect their own data and collaborate and compete with other people in the same situation. That social interaction provides motivation to eat better, exercise, whatever.
I'm also on the boards of several space companies, which represent, literally, the path to a new frontier. I trained as a backup cosmonaut. It's extremely exciting to be involved in commercial space.
ED: I'm still involved with Eastern Europe and Russia, but I've also invested in several startups in Africa. The cell phone is making a huge difference there in much the same way that the Industrial Revolution changed the Western world. Armed with a cell phone, an individual does not need an employer. When farmers can easily learn the price of crops, for example, their lives dramatically change. The phone lets them advertise their services. It is a piece of capital—not just a personal communications device—that is moving millions and millions of people from the subsistence level because they are empowered.
SK: What attracted you to some of your most recent investments?
ED: I look for entrepreneurs who have a mission—not just people who want to get rich. Ideally, they will come as a team who can support one another and keep each other from getting too crazy. An example is Omada Health. A couple of guys in California started a business to provide online group counseling for people at high risk for developing diabetes. A "facilitator" takes people who meet in groups of 10 through a 16-week course where they learn to live better. I liked not just the technology behind the company [which tracks progress using a cellular-connected scale, among other metrics], but also the plan that called for most of their counselors to be former group members. It's a virtuous cycle, where I am helping people become economically self-sustaining. And these people are going to be passionate about what they do.
SK: In many cases, you take an active board member role once you invest. What do you bring to the table?
ED: I try to do whatever is not being done. I have helped to build a team. I have had to be the grownup in the room and replace the CEO. I've frequently rewritten press releases to provide a PR message. One of my roles is to introduce management to potential customers. For example, Voxiva [a Washington, D.C.-based 2001 startup which delivers health services to clients via cellphone] wanted to enter Russia, so I provided contacts.
SK: Have you ever been tempted to start your own venture?
ED: I think being CEO is overrated. I have a very short attention span. I hired a CEO for EDventure, which lets me do the fun stuff while she takes care of the details.
SK: What types of companies are you looking to invest in over the next few years?
ED: One of the big issues we're facing is too much knowledge. That forces us to make decisions we never had to make before—whether about climate change or health insurance. Because we can figure out the consequences of our actions, it's harder to claim ignorance.
So, in many ways, I'm investing in companies that will respond to this trend—services or devices that will give people self-knowledge and the motivation to change their behavior. And also in what I call human-capital plays—assessment and motivation tools for employers and people looking to manage their own careers, and also in education itself. Overall, educated people are better equipped to make complex decisions...and to be good citizens.
This interview has been condensed and edited.