Venture Unplugged: Tim Draper Part 1

In Part 1: Tim Draper and Mayra Ceja discuss venture capital, bitcoin, space travel and his passion for building and growing entrepreneurs. Tim Draper is the world’s most famous venture capitalist with investments in Tesla, Twitter, Hotmail, Twitch, Skype, Box, Carta, Coinbase and Robinhood. He is listed as one of the top 100 most powerful people in finance by Worth Magazine, #7 on the Forbes Midas List, and #48 most influential Harvard Alum.

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Mayra Ceja
Hi I'm Mayra Ceja, and you're listening to Venture Unplugged, from deep tech crypto to direct to consumer brands and products, each week we dive in deep to the lives and challenges of today's most successful founders and investors. I'm so excited to share with you part one of a two part episode featuring Tim Draper. A renowned global investor with early investments in Tesla, Skype, Hotmail, and SpaceX.

In today's episode, we discuss bitcoin, space travel, and his passion for building and growing entrepreneurs. But before we kick off this podcast, first a word from our sponsors.

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Mayra Ceja
Hi Tim, thank you so much for coming on Venture Unplugged.

Tim Draper
Great. Fun to be here Mayra. I'm looking forward to it.

Mayra Ceja
I'm really thrilled to have you here. I think it's going to be an exciting show. One of the reasons that I've always really admired is just because you're so prolific. You're even too prolific in the sense that, every tech newsletter really quotes you, every bitcoin conference has you on stage. And I'm excited to dive a little bit deeper on this show with a few questions.

Tim Draper
Terrific, yeah. Pretty much everything I do is for the good of the entrepreneur. They're our heroes. They've done extraordinary things to make our lives so much better, and I like to honor them.

Mayra Ceja
I love that. And so, maybe for our audience, we'll provide a little bit of background and then we'll jump in right into the questions. So, you have been a venture capitalist for a very long time. You have been the founder of DFJ, Draper associates, and Draper university. You've also written a book, The Startup Hero. And most recently, you've launched a TV show, Meet the Drapers, which I'd love to hear more about.

Tim Draper
Yeah. Terrific. Yeah, Meet the Drapers is a new show where it's my dad and my daughter and me, and we interview entrepreneurs and investors out there can invest. Or the viewers can invest and worked to that with Republic, who's your sponsor, who allows us the ability to do a big crowdfund. And so people can invest $100 in some entrepreneur they think is doing a great thing. So, we're really having fun with that. The book is pretty much all the knowledge and wisdom I have piled into a couple hundred pages. And Draper Associates is a fund that has helped me stay in the business, support entrepreneurs, do whatever I could to support entrepreneurs and Draper University is a school that's dedicated to encouraging people to become entrepreneurs.

Mayra Ceja
I'd like to start by going a little bit backwards and going into a little bit of your childhood. What were you like as a child?

Tim Draper
I was adventurous. I remember my mom, we'd go to a new location, and my mom would just say, "Why don't you go explore?" I mean, it was her way of getting me out of the house. But for me, it was sort of a good way to look at the world. It's like, when you come to a new location, go explore. And by exploring, I'd end up seeing nature. I'd end up meeting new people. The concept of watching out for strangers was way far from my view. I've talked to strangers all the time. And it gave me a good sense for the world, and I think I encourage people to go out and explore. I think that really helps, particularly when they're young. It really helps people feel more and more independent, and they get a chance to really understand humans and animals and plants and how it all works together.

Mayra Ceja
And what was it like to grow up in such an iconic family? Did you ever wish the spotlight wasn't so much on you? Or did it just come naturally?

Tim Draper
Well, what's interesting is that we were really a great family under the radar. My grandfather led the economic reconstruction of Germany and japan after world war II. He was undersecretary of the army, but undersecretary. So he kind of had a lower profile there. He was also the one who financed the bay bridge, and he was the first venture capitalist in the Silicon Valley. And my dad was a pioneer in venture capital and he ran for congress and lost to Shirley Temple Black. Oh no, to Pete McCloskey and Shirley Temple Black, and that ended up working out very well for us, because he became one of the great venture capitalists and a great pioneer.

So really the highest profile is probably mine, because the world has now recognized the value of venture capital. And I've been a pioneer also in venture capital spreading it around the world. Because I believe in entrepreneurship and venture capital. I think people work harder to make things happen if they have a mission and motivation. And I think that entrepreneurship can do that for people. Having ownership really does drive that kind of thing.

So the profile, really, I've brought it on the family so they can blame me.

Mayra Ceja
That's good. That's wonderful. So one of your most known projects is draper university. Let's start off there. You mentioned it at the beginning. Take us back to a year before founding it. Where were you at personally? What were you thinking? You know, you had already been such a successful investor. What made you take on this new challenge?

Tim Draper
Yeah so, I got this freedom. I built DFJ up, and it was a great firm and I have great partners and I'm really happy with the way that's all worked out. But at one point, it turned out it was better for me to go off and begin to operate on my own. DFJ became sort of institutional and a little bureaucratic or political or whatever. And I felt that venture capital was changing and I needed to go drive that change, but I didn't want to... I wanted DFJ to be able to continue to operate the way it was. It was a little bit of the innovator's dilemma.

So I spun out and went solo. And started to make investments. And I've had enormous success since leaving DFJ. I've funded Twitch, Cruise Automation, Robinhood, Carda, Coinbase, and have made many many times on those investments. And I thought, you know, I would like... I was talking to my family about this old hotel that I was about to buy. And I thought, "Well, what will we do with it?" And my son suggested a school and I thought, "Oh, that's exactly it." I've always wanted to do that. I was on the state board of education at one point, and I always thought, "I would like to lead by example and show people what a school can be," and I thought, "Well, I don't really know much about anything except entrepreneurship, so why don't I build a school around entrepreneurs?"

And Draper University of Heroes was born. And that was, our biggest surprise was that it worked. People liked it and enjoyed being there, and enjoyed the curriculum we created. It's very unique for a curriculum. And after now eight years, we now have had about 1200 students, and they've started about 400 companies. And they've ended up sending me deal flow of about 4000 companies. And they have come from 77 different countries. So it's a very international, very global business. And it has been, in our minds, incredibly successful.

Mayra Ceja
Did you ever think it was going to get this big?

Tim Draper
No, I had no idea what kind of an impact it would have. I just thought, "You know, I've always wanted to start a school," and making it a boarding school. Taking over a hotel, having thing that are in our school that no other school has. Like, we send our students to survival training with navy seals and special forces and army rangers. And we have a Tony Robbins acolyte that comes in and kind of rips their emotions apart and puts them all back together. And then we have a hackathon that leads to business planning that leads to a five minute, or a two minute presentation to a panel of venture capitalists. And then, the whole thing is team based, so they have a lot of fun. They're in a team, and they compete.

And they have projects. So, they have to go do some very unusual projects. And we make them do kind of things that are a little embarrassing. And we do that on purpose so they get that an entrepreneur sometimes has to stand up out there alone. Be a little embarrassed and make good things happen. So that, yeah, school's been amazing.

Mayra Ceja
Sounds so fun. I kind of want to sign up now.

Tim Draper
Absolutely.

Mayra Ceja
Let's talk a little bit about bitcoin. So I saw one of your recent tweets where you mentioned, "Would you switch airlines in order to get rewarded in bitcoin rather than airline miles?"

Tim Draper
Yeah.

Mayra Ceja
Are you that bullish about bitcoin? Tell me your thoughts about that…

Tim Draper
I think people never spend their airline miles. They make it very difficult to spend the airline miles. But bitcoin, sure. I would much rather have bitcoin. I also think the airlines might benefit from.

Tim Draper
I would much rather have Bitcoin. I also think that the airlines might benefit from using Bitcoin because they can keep it all in people's wallets. And they can drop it in. They keep much better accounting, and I suspect that the accounting bills for United Airline Miles are very high relative to what value is created by those airline miles. And of course it is a great marketing value for United. But this is actually, you know, it's even better. Bitcoin's even better for like the entertainment world. Because when they create a movie, they might have like ... A star Wars movie has 15,000 people and they have to send each of those 15,000 people a check every quarter. And that check might be for 3 cents or $4 and 22 cents. It costs them about $7 per check to send them out. It would be really easy to just build all that into a smart contract and drop Bitcoin into the 15,000 Bitcoin wallets.

And they would probably save a fortune and people would start trusting the studios a little bit more than they do today. I think that that, those kinds of things are major breakthroughs. I think the biggest breakthrough at Bitcoin than away is that today, whenever you swipe your credit card, you are sending your bank two and a half, some bank, two and a half to 4% every time you do it. And you do it a lot. I mean you turn it over a lot. And so the banks are making a fortune off of all those swipes of the credit card. Well, with Bitcoin, it's frictionless. You don't have to pay Bitcoin anything. It's just a software package. Bitcoin is that trusted third party that used to be your bank. In fact, it's even more trusted than your bank. And so people will save two and a half to 4% every time they buy something as we move toward a Bitcoin economy.

And that's just the beginning. I mean, of course, getting money, moving money across border. I think it's interesting that if you were stuck in Syria or Sudan and suddenly you had to become a refugee, you might've had a lot of money that was Syrian money. But when you're in, you've become a Greek refugee, you don't have any agreement money and they don't take your Syrian money in Greece. But if you had had Bitcoin, you could just pick up, start over and pull down your Bitcoin and, and start your life fresh so you don't have to be on refugee with no money. You can be, you know, a new citizen of a new country and, start fresh. Bitcoin is opening our globe and the geographic borders are falling. And I think we are all so much better off as a result. And I think we can, we're going to see the world embrace it and the consumers embrace it.

But we're also going to see people who, who are threatened by it. Because as geographic borders fall, the people who rely on geographic borders are going to feel a little bit threatened or some of them. And some are going to say this is a great opportunity to attract businesses, and citizens, and money and whatever. I know that Malta and Gibraltar, and Switzerland, and many in Japan have done a great job of attracting entrepreneurs and businesses, and money by saying Bitcoin's a national currency. We are a Bitcoin economy. We run ICOs here. Whatever it is that they do to attract people. They are looking at the world and saying now governments, small governments can now compete against the big guns. They can sort of say, hey, we can fight above our weight class because we now can actually have virtual citizens.

And that that all started with Estonia. They, they created a virtual residency program and I became the third virtual resident of Estonia.

Mayra Ceja
That's exciting.

Tim Draper
Yeah, the prime minister was here. Actually the new president was here too. But the prime minister was here and he said, you know, we instituted digital signatures and it saved 2% of our GDP. And then we did digital voting and all the young people started to vote, and then we did this virtual residency program and now we in effect have more citizens or whatever. I can now set up a business anywhere in the EU because Estonia is a part of the EU. I can go buy real estate, I can start a company, I can do a whole bunch of dirt, set up a bank account. I can do a number of different things because I'm an Estonian virtual residence and I never had to set foot in Estonia. I have, but I didn't have to. In order to get this card.

Mayra Ceja
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Mayra Ceja
You brought up two topics, so you discussed the use case of Bitcoin serving financial transactions and lowering cost, and then you've also discussed this notion of global competition and that brings me to my next point. You've also mentioned that they can can be a use case for providing investor liquidity. How do you think the US can remain competitive?

Tim Draper
Well I think the US is remaining competitive. They're doing good job. The SEC has done a good job of sort of balancing the need to keep technology rolling and the need to deal with all these antiquated laws. So they realize that like these SEC rules that were put into place are 80 years old and they know that these are really interesting new technologies, they don't want to lose these technologies. And so they're trying to still be sort of heavy regulators when people are doing, are stepping beyond the bounds of reasonableness. But they're also trying to allow and encourage people to innovate and try new things. This de-centralized world is a whole new ball. It's entirely, it's a major breakthrough and the SEC really needs to slowly, I mean slowly, but they need to deregulate so that, you know, still protect the widows but not the orphans. The orphans need a chance to be a part of this new economy.

You know, the young people who are trying to get going. They used to say, we're going to protect the widows and the orphans. Well, I get protecting the widows, but the orphans need the opportunity to do this step and they will do it in other countries if the SEC doesn't figure out how to allow that to happen. And it's not just our SEC. There are all of the equivalent regulators in different parts of the world and they're all struggling with this. They want to make sure that people, that they're still kind of protecting the investor from themselves. Which I'm not sure I believe in. I think that we should just educate people really well. So then that they can make their own decisions. But they also want to make sure that they're attracting all this new business that's going to, this new world that's going to be decentralized and open in and the people are going to be moving.

Bitcoin can move much faster, excuse me, much faster through the economy than any other currency can. And the more liquidity in an economy, the wealthier the economy. So the world economy is going to grow because of Bitcoin and all of these cryptocurrencies. It's going to actually make a wealthier society. So things will happen faster. You'll get your Uber faster, you'll get your food faster, you'll get your clothes faster, you'll get your accessories faster. Whatever it is, it will all happen faster because now we'll have cryptocurrency in the move. It will move the money faster.

Mayra Ceja
So I know you're very excited about Bitcoin and very bullish about it, are there any other currencies that you're excited about.

Tim Draper
Yeah, yeah. I'm very excited about tezos because it's creating a community of tezos owners that are all deciding on what happens with that currency. And I think that that could really be a big winner. It's proof of stake versus proof of work and requires less energy than Bitcoin or Ethereum or some of the others. So that's pretty exciting.

I also like a lot of these marketing uses, credo uses it for in your email. Like they value your time and so they make it so that if somebody wants to reach you with a product offering or whatever, they have to pay in credo. And that's kind of an interesting thing. So you're, it's a way of protecting you from having too much email. But if you get the email, at least you're getting paid some currency. Another group, Data Wallet is allowing people to control their own data. And this is a big hot button now in Washington with Facebook. But what they're doing is saying, you own your data, they're turning it all upside down. They're saying you own your data and you can then give it to the drug companies, or the hospitals, or the government, or to whoever, and you pay more for…

Tim Draper
... Or the government or to whoever and you pay more for it.

Mayra Ceja
So let's switch gears a little bit and talk about Meet the Drapers. How's that experience been like for you?

Tim Draper
So Meet the Drapers has been fantastic fun. Our distribution channel has so far been Sony Network and now we're potentially working with the Times Network. So most of our distribution is Indian and Indian Diaspora, which is great because there are certainly a lot of Indian entrepreneurs out there. But we really are hoping that we get picked up to do it somewhere else. We've had some amazing shows. There was one, we always have these great guest judges and one of the guests judges was a woman, first Iranian in space. She paid $30,000,000 to go into space for 11 days. And we asked her what was the strangest thing you learned while you were up in space? And she said, "Well, it's washing your hair. You have to find a bubble of water that's big enough. And then you kind of have to work your head and move your hair into the bubble of water to get your hair washed," and so I'm sure there are all sorts of other things she learned. But that was one of them. And I think it made for a great episode.

And the entrepreneurs we've had, we've had everything from, I don't know how old the entrepreneurs have been, but we had a 12 year old boy on the show and he was exceptional. He was extraordinary. And not just in that he could do a memorized pitch. I was asking very tough questions and he was right on it. Those are some of our highlights. I like the show. I think it's actually, well they do too, they think it's a hit. So they keep coming back. We're on our third season and hoping for great things and it turns out more and more money is being raised by these entrepreneurs. I think four or five of them hit the limit, which is $1,000,000 last time. And we're also able to raise more on top of it. But I think they hit the limit of of $1,000,000 from our crowd funding show. So that's pretty exciting.

Mayra Ceja
That's so exciting. Quick side by question. Would you go to space?

Tim Draper
Oh, yeah. Actually it's on my list of things to do. I have a list of 101 things I want to do before I die. I mean, I'm through about 70 of them and my goal is when I'm 83 years old to walk on the moon. Maybe I can get to Mars, I don't know. But I'm not sure about the idea of six months in a can. I mean, I think I'm probably okay with three days but I don't know about six months. Yeah.

Mayra Ceja
Yeah, I hear you. Okay, yeah. It would be a little bit more challenging and the ride back would also be less scenic. Another six months, right. Yeah.

Tim Draper
Another six months, yeah. Or maybe there's no ride back, which would be great.

Mayra Ceja
And who knows, yeah.

Tim Draper
Well, but if they Terraform Mars or they figure out how to grow things there, it wouldn't be. And you could kind of live and everything would be fine. That'd be a pretty interesting way to work through your final years.

Mayra Ceja
Do you think that's achievable in your lifetime?

Tim Draper
Sure. Sure. I think anything's possible. And it's funny that the optimists are the ones who really accomplish everything and the pessimists always find the problems. Both are needed in the world, but the ones who get something done, like getting us all to Mars are the people like Elon Musk, I mean, he is a major optimist.

Mayra Ceja
And so with that, my next question was going to be about your book. So you have all these prose of wisdom that you've condensed in this book. What was the inspiration behind writing the book?

Tim Draper
Well, I had taught a class at Draper University, by the way, nobody at Draper University speaks for more than an hour, so the students don't get bored. But I had a class that I taught and I kept saying sort of the same things over and over. And I kept telling the same stories and I thought, "Oh, well maybe I should just write these down because then it can spread to a lot more people, not just people who are able to come to Draper University, but to everybody." And I wrote a book. And the way I did it was very simple.

I travel a lot because we have a big network of venture capitalists and I check in on them periodically and then so I end up going to lots of different places, speak and I go talk to the world leaders and all that stuff. I get to meet lots of entrepreneurs wherever I go. And I think that all those airplane flights made it so that I could basically write a book, on my iPhone, in the airplanes.

Mayra Ceja
I love that.

Tim Draper
Yeah. You're on a plane for 13 hours or 17 hours or 4 hours or whatever. You pull out of your iPhone and you start writing and you get into the zone and you go, "Okay, what was that story? How do I remember it?" And you lay it all out. And then I'd edit it on my computer when I'd get back, but it ended up not taking very little time over the course of about a year.

Mayra Ceja
Do you ever sleep?

Tim Draper
It's very funny because I didn't really sleep last night much.

Mayra Ceja
You were nervous about this interview?

Tim Draper
Oh, absolutely-were you able to sleep last night? Weren't you excited about this interview?

Mayra Ceja
Yeah, I was so excited. I was like, "When is coming? Is he coming now?".

Tim Draper
No, I usually am fine as long as I get one REM, which is three hours. But most of the time I get to REMS, which would be six hours.

Mayra Ceja
That's a winning day to you. Wow, that's amazing.

Tim Draper
Yeah. But I have no reason to go too far more than that because you've got to go live your life.

Mayra Ceja
Yeah. Because you're excited to live your day. I do agree with you that there are those nights that you just sleep less, but you're so much more energized and I think if you have things to do in the morning that you're excited for and goals, right, that it just seems a little bit…

Tim Draper
Yeah. By the way, those times when you've got all this energy and you... Make sure you do get up and write down all the things that you're thinking about in those energetic moments, because half the time they're just weird scribbles and the other half the time they're really brilliant and something you really have to do.

Mayra Ceja
I will definitely make note.

Tim Draper
So always have a notebook by your bed and a pen.

Mayra Ceja
That are your best ideas?

Tim Draper
Or just have an iPhone or something. But just have something by your bed where you can quickly write down the idea and then you can wake up the next morning and decide whether this is brilliant or really ridiculous.

Mayra Ceja
That's great. I love that.

Tim Draper
A lot of people are put off by the other stuff I put in my book, I wrote a few poems at the end of each chapter, I made each chapter based on one of the concepts of the pledge. So each chapter is about a pledge, except that the last quarter, last third of the book is all advice to somebody who wants to be an entrepreneur. And I thought, "That's kind of what people want from me, is the advice on how to be an entrepreneur." But I wanted to tell them the stories first and get them to go through the pledge and understand the pledge before they became entrepreneurs. So I wrote it that way. I didn't want to give the advice until I had trained them to become good entrepreneurs and then the advice, it's advice. I have a whole bunch of interesting ideas in there for what businesses to start, and I have even said that I would back people who took those ideas and did something really interesting with them. I plan to back at least one of them. So we'll see how that goes.

Mayra Ceja
That's exciting…

Lukka is bridging the gap between the business and blockchain world by providing the leading institutional grade back in middle office accounting software and data services to the crypto ecosystem. For more information, please go to lukka.tech. That's L-U-K-K-A dot tech. If you liked today's show, you don't want to miss part two of the Tim Draper interview, where we discuss startup superheroes, Elizabeth Holmes, and spirituality. Tune in on Thursday for the full story. New episodes go live every Tuesday and Thursday at 7:00 AM Eastern time. If you want to continue the conversation, you can find me on Twitter at Mayra Ceja 007 and I'll see you next time.