The boy genius appears out of nowhere and slides into the seat across from me. He speaks softly, is unfailingly polite, but unshakably guarded. He wears a crisply pressed blue shirt, tucked neatly into black slacks. I make lame jokes (mostly because I’m nervous) but the kid barely blinks. I really shouldn’t call him “kid” because he’s only a year younger than I am but he could easily pass for 20, maybe 19.

For a guy who’s made beaucoup bucks by helping to invent PayPal and YouTube, Jawed Karim doesn’t attract much attention and I think he prefers it that way. As the lesser known member of the trio that founded YouTube, Karim keeps a low profile. So low that I jokingly refer to Karim as the Third Tenor, you know, the guy that no one can remember after Luciano Pavarotti and Placido Domingo?

On this day, however, on the grounds of the University of Minnesota, Karim is here to discuss his latest project, Youniversity Ventures. The fledgling venture capital firm will invest $50,000 to $300,000 in Internet software startups founded by college students. University students are a potential goldmine of lucrative ideas and no one knows that better than Karim. After all, he’s a doctoral student at Stanford University, whose alumni include Jerry Yang (Yahoo!) and Larry Page and Sergey Brin (Google).

Karim, a St. Paul native, is spending his summer looking for startups in the Twin Cities. He might find slim pickings; Minnesota is not known to be a hotbed of Internet innovation. So far, Youniversity Ventures has only invested in two startups, both in California: Blubet.com, a social betting website, and Tokbox.com, a free online video conferencing service. So far, Karim and his two partners are only investing their money but may accept capital from other VC firms.

Here are some excerpts from our conversation:

Patent Pending: Why start Youniversity Ventures?

Jawed Karim: After YouTube, I wanted to stay involved in entrepreneurial activities. I’m also interested in specific kinds of innovation. I like technologies that equalize the playing field. YouTube being a great example. In the past, you had these singular, evil, big powerful companies that controlled everything that you saw on TV. And now I am really happy; thanks to user generated content and thanks to creative people out there, the playing field has been leveled so now that the masses are more in control of what gets seen and what doesn’t.

What we decided to do with Youniversity Ventures is that we realized there is a underserved segment for entreprenuers. People may be working on something that is very useful but they may not know how to take and translate that into an acutal business. There are VCs but they serve a segment that is kind of little bit higher up. If you go to a VC, you are expected to have a fully polished business plan.

We want to be involved in a much earlier stage. We act as almost co founder for the first six months. We just enable the team to get off the ground. Whereas you go to the VC, they usually expect to invest several millions of dollars and the VCs have very large funds and it’s not worth their time unless they invest $3 million.

PP: How did you get started as an entrepreneur?

JK: It’s very difficult to get started. The best advice I can give is to learn by example. I was surrounded by other successful entrepreneurs. And I did a lot of reading. Pick a company that you admire and find out everything about it: who’s behind it, how they got started. For me, the companies were FedEx, Best Buy, Oracle, Microsoft, Yahoo, Google. I just knew everything about how they got started. I was just trying to emulate the companies I was interested in.

I was always interested in software. I was interested in creating software that had a positive impact on how people use technology. I knew the founder of MP3 player. I thought it was great because Mp3s just make so much more sense. It did not make sense to me to buy a CD album for $16 with one good song on it. It was a very clear path of progress in terms of how people use the technology. I was very interested in developing something useful to people.

PP: How is the fund going so far?

JK: We are getting a lot of ideas. We work on a very informal basis. We will coach people along if it falls into our area of interest, even though we don’t make an investment. We are working with a lot of companies right now even the ones we are not investing in.

PP: What’s the difference between being an entrepreneur in Silicon Valley versus Minnesota?

JK: Silicon Valley has a lot of noise, a lot of hype. People are very excited about all of the Facebook stuff, Facebook applications. It’s just been a huge hype for the last year when actually…there isn’t really that much value. It’s just a bubble. It’s almost a distraction.

Whereas here, there is certainly less activity. But at the same time, you don’t have these bubbles of nonsense out here. Things here seem a little too formal. I think that it’s inhibiting productivity. People in Silicon Valley will just get together and shoot around some ideas or program something together. Here we have to go to a specific conference to meet people. We have to go to some officially organized event to talk about this stuff. Silicon Valley, you just do it all of the time. Silicon Valley is much informal business environment than here. If [Minnesota] was less informal, it would probably increase surface area between people.

PP: It seems that Minnesota is much more risk adverse than California. Why is that?

JK: It’s a cultural issue. In California, you see everyone taking lots of risk. So comparatively to them, you are not taking that much risk by doing a startup because everyone is doing it. Whereas here, when you do a startup it’s like: ‘Oh my God! Like, I am doing a startup. No one else I know is doing a startup. So I am taking lots of risk’ when actually you are not but it’s compared to everyone else. The local culture might discourage risk.

It’s great to have that center of innovation (medical devices) here. But it’s not a sector where people can easily enter into, which is probably why it keeps away the outsiders and newcomers. The great thing about the Internet and software is that anybody can get into. The costs are very low, and the potential is very huge and the time frame is quicker too.

PP: What will spark innovation in Minnesota?

JK: In Silicon Valley, what really helps is that people are always working together. You see people hanging out all of the time even from competing companies talking about stuff. It’s that interaction that creates the motivation to do something. Here people are more separate. They don’t interact as much. What it will take is much closer collaboration in a much less formal environment. It’s great that we have a venture conference here and they are very useful but in Silicon Valley, people network all of the time, on the street corner, coffee shops, dorm rooms, garages. Conference stuff, that just happens once a year. You go there just to check out a couple a new things.

PP: I hear you are a private person. Will that change with Youniversity Ventures?

JK: It’s not about public versus non public. It’s just the specific thing I am interested in: the intellectual aspect of innovation and entrepreneurship. I am interested in working with people to understand and analyze how to make a business successful.

PP: Will you start another business again?

JK: I think if the right opportunity presents itself, I am definitely going to be an enterpreneur again. I don’t think you can always be an entrepreneur. There are people out there who are always an entrepreneur. I don’t think it makes sense to be a entrepreneur for the sake of being an entrepreneur. I think you have to be an entrepreneur to convert something specific into reality like a concept that you are really passionate about. I think I will be an entrepreneur within the next few years for sure.

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