The Exchanges

Q That really is a must recommend. And for any listeners in the UK or abroad, you can watch it on YouTube, um, which is a fantastic, really great watch. Um, and how much time then do you dedicate to, to being on the show?

A Well, what was great was they did it all in the background, so I really just didn't do anything I, I don't normally do, uh, for the school, and they did all the work in the background. They had something like 3600 hours of video just to get the 10 one-hour shows that they have, and then they, they took me aside for, for two or three sessions to make sure that we could string together the video that people were seeing In a logical way. So it really, um, was not, uh, it didn't take too much time away from me. It was actually a great fun to have the cameras around. I think the students performed at a higher level.

AI assessment note: “they took me aside for, for two or three sessions”

Q And when you look back at your amazing career, and your investing career now, you've invested in the likes of Skype, Tesla, Beidou, and many more. So, of all the companies you've seen, which was the best pitch, and why?

A Well, um, there's been a few pitches. Looking back, I actually think, um, Nicholas Zenstrom, who, who started something called Skyper, um, Pitch me in, in the most smooth and effective way, and then, uh, he called me after I said, yeah, that sounds great, and I was in. He said, well, oh, by the way, we're changing the business model, and we're just, we're going to use file sharing to go after the phone companies, and I said, oh, even better. So, um, I'd say he, he really knew how to pitch. In all the cases of the greatest entrepreneurs, I think it's been enthusiastic, but quiet confidence that I see, uh, in the ones that became enormously successful. So that was true of Robin Lee when I, uh, worked out the deal with him. Uh, it was true with, uh, Robin Lee and Baidu, the search engine for China, and it was true with Sabir Bhatia, who ran, who ran Hotmail. He had a nice, quiet confidence about him, and Real enthusiasm for what he was doing. And, uh, and it was actually true of Martin Eberhard when we funded Tesla before, uh, Elon Musk came in and, uh, refund, refinanced it and took it over. Um, and Elon, of course, is, has an amazing brilliance to him.

AI assessment note: “I actually think, um, Nicholas Zenstrom... Pitch me in, in the most smooth and effective way”

Q And then you've also got a new reality show, Startup You. Why, why did you choose to do a reality show? It seems quite out there. What, what were your thoughts behind that?

A Well, I think it's great, um, potentially great marketing for the school. What was great about it is the ABC family, well, the producers came to us, uh, the Ugly Brothers Studios came to us, and they said, we'd like to create a show about your, uh, They call it, they call it a documentary series, and it turned out to be pretty much reality TV, but it's, um, but it's really great. It, yeah, it follows 10 students through the trials and tribulations of being at Draper University, and it takes, and it shows The audience, um, some of the fun challenges that we, uh, apply to the students, and it's really fun. They, I think they've done an outstanding job. So that's Thursdays at five o'clock. So for anybody who wants to go watch that.

AI assessment note: “I think it's great, um, potentially great marketing for the school.”

Q So let's go back, let's go back to before venture. So before even maybe Draper, what made you start Draper Associates?

A Oh, ok. Well, I was an, um, an electrical engineering major coming out of Stanford, and then I worked for, um, Apollo Computer as the assistant to the president, uh, and then I went to, uh, Harvard Business School, uh, And then when I came out, I wanted to be a venture capitalist. But before that, my grandfather and my father were both venture capitalists, so it was kind of the last thing I really wanted to do. I wanted to be an entrepreneur, but I had so many different ideas for entrepreneurship, I realized that I needed to be, uh, more of a, a supporter of Or a, uh, consultant or a cheerleader than, than to be the entrepreneur myself.

AI assessment note: “I realized that I needed to be, uh, more of a, a supporter”

Q And when you look back at your amazing career, and your investing career now, you've invested in the likes of Skype, Tesla, Beidou, and many more. So, of all the companies you've seen, which was the best pitch, and why?

A Well, um, there's been a few pitches. Looking back, I actually think, um, Nicholas Zenstrom, who, who started something called Skyper, um, Pitch me in, in the most smooth and effective way, and then, uh, he called me after I said, yeah, that sounds great, and I was in. He said, well, oh, by the way, we're changing the business model, and we're just, we're going to use file sharing to go after the phone companies, and I said, oh, even better. So, um, I'd say he, he really knew how to pitch. In all the cases of the greatest entrepreneurs, I think it's been enthusiastic, but quiet confidence that I see, uh, in the ones that became enormously successful. So that was true of Robin Lee when I, uh, worked out the deal with him. Uh, it was true with, uh, Robin Lee and Baidu, the search engine for China, and it was true with Sabir Bhatia, who ran, who ran Hotmail. He had a nice, quiet confidence about him, and Real enthusiasm for what he was doing. And, uh, and it was actually true of Martin Eberhard when we funded Tesla before, uh, Elon Musk came in and, uh, refund, refinanced it and took it over. Um, and Elon, of course, is, has an amazing brilliance to him.

AI assessment note: “Nicholas Zenstrom, who, who started something called Skyper, um, Pitch me in, in the most smooth”

Q So let's go back, let's go back to before venture. So before even maybe Draper, what made you start Draper Associates?

A Oh, ok. Well, I was an, um, an electrical engineering major coming out of Stanford, and then I worked for, um, Apollo Computer as the assistant to the president, uh, and then I went to, uh, Harvard Business School, uh, And then when I came out, I wanted to be a venture capitalist. But before that, my grandfather and my father were both venture capitalists, so it was kind of the last thing I really wanted to do. I wanted to be an entrepreneur, but I had so many different ideas for entrepreneurship, I realized that I needed to be, uh, more of a, a supporter of Or a, uh, consultant or a cheerleader than, than to be the entrepreneur myself.

AI assessment note: “I had so many different ideas for entrepreneurship, I realized that I needed to be”

Q And having founded Draper Associates then in 1985, how have you seen the investing landscape develop since then?

A Oh, it's pretty funny. When, when I started Draper Associates, I borrowed money from the government to get going through the SBIC program, and I was knocking on doors. I went around to new real estate developments in the Silicon Valley, And looked for companies that were starting that were sort of in small offices that had the word software in them. And, uh, so I knocked on doors and I remember I got kicked out of Intuit's, uh, front office because the woman there said, no soliciting, get out. And you said, I missed a really good one there because I was, uh, I was not persistent enough. But, uh, then, uh, The business was, and it was a little bit of a clubby business because, uh, most venture capitalists needed other venture capitalists to help them fund a company. So they work together a lot more. Uh, now, uh, that works the same way in the angel community, but in the standard venture business, I think, uh, particularly in the Silicon Valley, it gets more, More competitive because venture capitalists have a lot more money under management. The other thing that's happened to the venture capital business is that it's gone global, and I, I enjoyed being a part of the expansion globally of venture capital, and that has really affected the All industry. No one knew what a venture capitalist was when I was getting started. They sure do now.

AI assessment note: “in the standard venture business, I think... it gets more, More competitive”

Q That really is a must recommend. And for any listeners in the UK or abroad, you can watch it on YouTube, um, which is a fantastic, really great watch. Um, and how much time then do you dedicate to, to being on the show?

A Well, what was great was they did it all in the background, so I really just didn't do anything I, I don't normally do, uh, for the school, and they did all the work in the background. They had something like 3600 hours of video just to get the 10 one-hour shows that they have, and then they, they took me aside for, for two or three sessions to make sure that we could string together the video that people were seeing In a logical way. So it really, um, was not, uh, it didn't take too much time away from me. It was actually a great fun to have the cameras around. I think the students performed at a higher level.

AI assessment note: “they took me aside for, for two or three sessions”

Q And now to the present, Draper obviously invests across a variety of stage, but what's your preferred stage? If you could choose one, where do you see the most opportunity for venture returns for you?

A Well, I like it, um, early, uh, because then I can, I can help guide the company early, and that's part of the reason that I started Draper University of Heroes, that is to, uh, grab entrepreneurs before they've even started their business, and then, um, Uh, my son's accelerator boost has made it so that we also have the ability to sort of accelerate a new business. And then I like investing, uh, when there are two or three people in the company and they have a really good mission. And that can be, uh, before they've gotten any revenue or just after. And then I like to, uh, to help get them set up in the right way. And that has evolved. Getting companies set up in the right way has become an evolutionary mission, because you want to make sure that they're using electronic shares, like eShares or CapShare, or you want to make sure that they're, um, you know, they've set up their, uh, their medical system for their employees through something like a Sherpa, where It's much less expensive to manage their medicines. You want them set up so that they use network accounting. It becomes a much more streamlined business, and a lot of entrepreneurs just coming out, they have a vision, but they don't know any of these operational, um, techniques that can improve their business, and so, uh, we like to make sure that they're pointed in the right direction there.

AI assessment note: “Well, I like it, um, early, uh, because then I can, I can help guide”

Q And now to the present, Draper obviously invests across a variety of stage, but what's your preferred stage? If you could choose one, where do you see the most opportunity for venture returns for you?

A Well, I like it, um, early, uh, because then I can, I can help guide the company early, and that's part of the reason that I started Draper University of Heroes, that is to, uh, grab entrepreneurs before they've even started their business, and then, um, Uh, my son's accelerator boost has made it so that we also have the ability to sort of accelerate a new business. And then I like investing, uh, when there are two or three people in the company and they have a really good mission. And that can be, uh, before they've gotten any revenue or just after. And then I like to, uh, to help get them set up in the right way. And that has evolved. Getting companies set up in the right way has become an evolutionary mission, because you want to make sure that they're using electronic shares, like eShares or CapShare, or you want to make sure that they're, um, you know, they've set up their, uh, their medical system for their employees through something like a Sherpa, where It's much less expensive to manage their medicines. You want them set up so that they use network accounting. It becomes a much more streamlined business, and a lot of entrepreneurs just coming out, they have a vision, but they don't know any of these operational, um, techniques that can improve their business, and so, uh, we like to make sure that they're pointed in the right direction there.

AI assessment note: “Well, I like it, um, early, uh, because then I can”

Q And I'd love to delve into another aspect of the future that you speak quite prominently about, and that is your support of Bitcoin. So why do you think that Bitcoin will be the major player that you predict? And when did you realize the potential for it?

A Well, I, I had heard a lot about it from, for, uh, quite a while, a year or two before, before really diving in. The, the reason I bought a bunch of Bitcoin from the U.S. Marshal's office, the Silk Road Bitcoin, that just before that, the biggest Bitcoin trader, uh, Mt. Gox, somehow lost all of the Bitcoin that was in that trading house, and Bitcoin didn't disappear. So I thought it went down like 20% or something in value, and I thought, wow, there are people out there who really need Bitcoin, and then, then I went out and I did a lot of work figuring out what uses there are, and there are many. You know what it's great for? It's great for people like you. For journalists, Bitcoin is really powerful because people can make micro payments to read things or, or hear podcasts or, or whatever. And it's a great way, um, also for people like if, if Lucasfilm does a Star Wars movie, you see all those, those, all those credits that go on for 10 or 20 minutes, you realize that each of those people has to get four dollars and 22 cents or 28 cents or Five dollars and 12 cents, and it cost them seven dollars to send each of those checks out to all those people. With Bitcoin, they could just get everybody's wallet or create a wallet for everybody and just push a button and it all would go right out. And, um, using the blockchain, they could, um, orderly figure out how much is due to each p…

AI assessment note: “I did a lot of work figuring out what uses there are, and there are many.”

Q And then you've also got a new reality show, Startup You. Why, why did you choose to do a reality show? It seems quite out there. What, what were your thoughts behind that?

A Well, I think it's great, um, potentially great marketing for the school. What was great about it is the ABC family, well, the producers came to us, uh, the Ugly Brothers Studios came to us, and they said, we'd like to create a show about your, uh, They call it, they call it a documentary series, and it turned out to be pretty much reality TV, but it's, um, but it's really great. It, yeah, it follows 10 students through the trials and tribulations of being at Draper University, and it takes, and it shows The audience, um, some of the fun challenges that we, uh, apply to the students, and it's really fun. They, I think they've done an outstanding job. So that's Thursdays at five o'clock. So for anybody who wants to go watch that.

AI assessment note: “I think it's great, um, potentially great marketing for the school.”

Q How long do you think this adoption will take? And do you think there'll be a tipping point?

A Yeah, I think the adoption, I thought it would be three years and that was two years ago. It might be, it might be another two years because all of these entrepreneurs who have worked very hard to create, um, uses, uh, for Bitcoin, Those uses are, are starting to be adopted. People are doing that. People are buying things with Bitcoin. They're sending money across with Bitcoin. They're doing all their banking, all sorts of things with Bitcoin. And Bitcoin now is, you know, my Bitcoin is more secure than, um, money at Wells Fargo or Goldman Sachs. So I, I actually think that it's only a matter of time. As, as there are more and more hacks into banks, As there are more and more, there's more and more need for more velocity of money. I think we're going to see Bitcoin being used more and more. The user interfaces of these uses are not as user friendly as they should be, and once they become more user friendly, and the companies who are building these Bitcoin applications Make them so that they're available and really easy to use for people's grandmothers. Then I think we've got rapid usage and what's happening are people are using it for certain things just quickly. I, I, I needed to pay for a bunch of books for my school and the author was in, uh, in Africa and he didn't have any access to a bank account. And I said, well, do you have a Bitcoin account? And he said, sure. And I, …

AI assessment note: “I thought it would be three years and that was two years ago. It might be, it might be another two years”

Q And as you said, though, you'd like to look forward to the future. I'm completely with you, and that's why I want to talk about Draper U now. So can you explain to us a little about what Draper U really is, and what are the plans for the future?

A I started Draper University of Heroes, uh, because I felt like in 2009, um, when the financial world was starting to fall apart, I thought, gosh, the world really needs more heroes, and so I thought, well, you know, just by creating a school, maybe we'll create enough heroes so that something like that doesn't happen again without people pulling us all up by our bootstraps, and so we've created this school to just create better people. Part of it is, a lot of it is about entrepreneurship. If they want to, um, create a Save the world from hunger, or create a revolution with a bad government, or whatever. We give them the tools to do that, too. We build their confidence, uh, we strip away any, uh, shielding so that they're open to the world, and, uh, and then we, we teach them in very unusual ways. We teach them future, which is taking Uh, the student, and instead of teaching history, we're, we take them and, and get them reading science fiction and using predictive analytics, forecasting their business, and then we, um, we take them through the most modern techniques for marketing, crowdsourcing, Viral marketing, social media, all those things. In finance, we teach them Bitcoin and blockchain and anything else that comes up that's a new method for finance.

AI assessment note: “we've created this school to just create better people. Part of it is”

Q And as you said, though, you'd like to look forward to the future. I'm completely with you, and that's why I want to talk about Draper U now. So can you explain to us a little about what Draper U really is, and what are the plans for the future?

A I started Draper University of Heroes, uh, because I felt like in 2009, um, when the financial world was starting to fall apart, I thought, gosh, the world really needs more heroes, and so I thought, well, you know, just by creating a school, maybe we'll create enough heroes so that something like that doesn't happen again without people pulling us all up by our bootstraps, and so we've created this school to just create better people. Part of it is, a lot of it is about entrepreneurship. If they want to, um, create a Save the world from hunger, or create a revolution with a bad government, or whatever. We give them the tools to do that, too. We build their confidence, uh, we strip away any, uh, shielding so that they're open to the world, and, uh, and then we, we teach them in very unusual ways. We teach them future, which is taking Uh, the student, and instead of teaching history, we're, we take them and, and get them reading science fiction and using predictive analytics, forecasting their business, and then we, um, we take them through the most modern techniques for marketing, crowdsourcing, Viral marketing, social media, all those things. In finance, we teach them Bitcoin and blockchain and anything else that comes up that's a new method for finance.

AI assessment note: “I started Draper University of Heroes, uh, because I felt like in 2009”

Q And having founded Draper Associates then in 1985, how have you seen the investing landscape develop since then?

A Oh, it's pretty funny. When, when I started Draper Associates, I borrowed money from the government to get going through the SBIC program, and I was knocking on doors. I went around to new real estate developments in the Silicon Valley, And looked for companies that were starting that were sort of in small offices that had the word software in them. And, uh, so I knocked on doors and I remember I got kicked out of Intuit's, uh, front office because the woman there said, no soliciting, get out. And you said, I missed a really good one there because I was, uh, I was not persistent enough. But, uh, then, uh, The business was, and it was a little bit of a clubby business because, uh, most venture capitalists needed other venture capitalists to help them fund a company. So they work together a lot more. Uh, now, uh, that works the same way in the angel community, but in the standard venture business, I think, uh, particularly in the Silicon Valley, it gets more, More competitive because venture capitalists have a lot more money under management. The other thing that's happened to the venture capital business is that it's gone global, and I, I enjoyed being a part of the expansion globally of venture capital, and that has really affected the All industry. No one knew what a venture capitalist was when I was getting started. They sure do now.

AI assessment note: “gets more, More competitive because venture capitalists have a lot more money under management.”

Q And then finally, Tim, what's the most recent investment you've made, and why did you say yes?

A Most recent investment? I mean, here's, here's the problem. We make quite a few, uh, investments, and so, uh, I, I'm battling myself as to which one to tell you about. I think, I'll tell you about Laurel and Wolfe. Laurel and Wolfe Is an amazing company that allows people to do all their interior decorating with, with crowdsourced interior decorators. And then Laurel and Wolf, uh, identified the best furniture for that application, and then they, they get the furniture to you. So it's, it's quite good and growing very quickly. So I think this crowd sourcing, uh, can be incredibly powerful, not just to get you a taxi, but to get you your food. Uh, we, we have an investment in favor, which gets you your food very quickly. Um, and then Laurel and Wolf and, and, I really do love that technology. I like it as much as I like the peer-to-peer technology back when we backed Skype.

AI assessment note: “I think, I'll tell you about Laurel and Wolfe.”