Tim Draper - Silicon Valley Billionaire on Investing, The Future of Bitcoin, and The Current State of The Economy

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Casey Adams here. Welcome back to the Rise of the Young podcast. First things first, if you are new here, make sure you take a moment to subscribe to the podcast so that you can be informed with all of the upcoming interviews that I have dropping. And that being said, today we have the billionaire Tim Draper on the show. Tim Draper is an American venture capitalist and some of his most prominent investments include Badu, hotmail, Skype, Tesla, SpaceX, Angel List, SolarCity, Ring, Twitter, DocuSign, Coinbase, Robinhood, Ancestry.com, twitch, and many, many more. Tim Draper is an investing legend and the conversation that we had today, it was not only amazing when it comes to the investing world, but we talked about some of the things that he would do different if he was to start all over again. And I believe like he said in the interview, there is so much opportun during a time like this. So before we get into it, I just want to say one more time, thank you so much for taking the time to listen to this interview. Make sure you DM me on Instagram AC and let me know what you think. And that being said, enjoy the episode with the one and only billionaire Tim Draper.

All right, what is going on everyone? Casey Adams here. Welcome back to the Rise of the Young podcast. On today's episode, I'm very excited to say that we have Tim Draper on the show with us. Thanks so much for coming on, Tim.

Terrific. I hope I'm rising to be young. I'm actually happy being the age I am. Every year gets better and better and better.

I love it. So I highly recommend.

And getting older, I love it.

Well, Tim, you've had such an incredible career and you've inspired me as an entrepreneur as well as millions of others. But I do want to touch on first, just in this interview, I reached out to Draper University, which I know is very important to you, and I'd love for you to talk about what you guys do at Draper University, what it is overall, because I know you guys are really making a profound impact in the entrepreneurship community.

So Draper University was a school I created to build heroes out of ordinary people. And I call them heroes in that they take long odds at extraordinary outcomes. So I'm looking at people when they're sort of in their early 20s and they're saying, hey, I don't know where I'm going. I don't know what next for me, but I got real passion around one thing. Or maybe I have a passion around something that's very horizontal. Like, I know a lot about a little. Or a little about a lot. A little bit about a lot. We look for those people and then we bring them into Draper University and through a five week program, we take them from ordinary, you know, happy citizen to hero. And being a hero is not easy. And we are not. We do not put you through an easy system. We challenge you in many different ways. Emotionally, physically, and intellectually and spiritually. We challenge you in all different ways. And we start with sort of, well, what do you have? And that's the beginning. And then you, you join a team. And that team is like your board. They, we give the team projects to work on together. And then you, you go through like a hackathon kind of.

Yeah.

Where you're gonna come through and you're gonna come up with a problem and then a solution. And then we have this, this time where we take you out to the middle of nowhere with, with Navy SEALs and Special Forces and we see what you're made of. And when we go through that, all, all that, that's sort of five days of just real survival training and leadership training. And then, and then it switches a little bit from the team effort to the individual effort where you, you now have to create a business plan, come up with a business, create a business plan, figure out how you're going to make money, and then do a two minute presentation to a panel of venture capitalists. So it's an amazing five weeks. It's life changing. And we've had amazing, amazing results. So that's been very exciting. It's great. We've had 1200 students, they've come from 85 different countries and they've started about 400 companies.

Love that. I know recently one of my buddies, Jose, who's the founder of Blue, I saw that you recently invested in that. That's just, you Know, we often invest.

In the entrepreneurial heroes we create. We know them, we've gotten to know them, and we've trained them. They're ready for anything. You know, we put them through all sorts of embarrassment. We put them through, you know, all of this, you know, emotional, like, what are you made of kind of thing. What's your world look like now? What do you want it to be and how do we get there? And then we put you through survival training. We see, you know, how tough you are, and it doesn't matter whether you're a super physical athlete. Some of them are crying by the end of survival. Yeah, it does matter, you know, how tough you are and, like, how can you. Because entrepreneurship is not easy. Starting a business is not easy. You have to go through a lot of ups and downs. And for some, you know, they'll hit a wall sometimes they'll look like they're succeeding, and then they'll fail, and then they'll have a horrible emotional response somehow. It's not an easy thing. But if you're successful, you will change the world.

Love that. I mean, you've had such an incredible investing career, and when it comes to, you know, looking at new companies, I know you've invested in companies like Skype and Tesla, and you're a huge advocate on bitcoin. But when you're looking to invest in a company, what do you look for? Because I know you. You put so much into optimism, right? And having. Giving optimism to entrepreneurs. So what's your strategy of investing?

So a lot of questions build into that question. So, yeah, we've had great success in funding entrepreneurs that are really extraordinary who we meet. And we say, you're going after something that's very important. And we think that that will be, if you are successful, that will be a great change in the world, and we are all going to benefit from it. And that's one of the things I always think about. In the case of bitcoin, boy, we're going to create some amazing fluidity of the marketplaces through bitcoin, where banks and governments have been resistant to progress. And bitcoin has opened up progress and it's opened up the world, and it's made the world decentralized, transparent, completely open place. And the Internet did that too, with communications and information, but it didn't do it with money. And now it's being done with money. And that becomes more serious because now our banks are saying, well, wait, what do I do if the trusted third party is a computer program? And so Bitcoin is really transformative, and I look at that as just another heroism. I sort of feel like, well, whether it's Satoshi Nakamoto or it's a number of people who have added more software to the bitcoin ecosystem, you have a currency there that's decentralized, open, transparent, global. It's frictionless. It doesn't cost you two and a half to. We don't see it, but every time we swipe a credit card, 2 1/2% to 4% goes to the bank. And then the banks take that money. And then they also manage your money instead of keeping it on a ledger. So I was looking around for a ledger, but keeping it on a ledger or on your phone, they're keeping it in the bank and they're managing that money and they're investing that money. They're putting your money at risk. They're doing all that. And now with bitcoin, you don't have to worry. You don't have to trust a banker. You don't have to trust that that bank stays in business. You don't have to trust that the government is going to be there with the FDIC insurance and cover the $250,000, which, by the way, doesn't cover a lot here in California that wouldn't even pay for a house. So the world is really going to go through major change. And that starts with banking and finance and commerce, but it moves into all these other fields. Insurance is going to change. Health care is going to change. Real estate is going to change. Government itself is going to change, because we now have new ways of operating. We have these new technologies that are going to allow us better ways to do things. And as customers, the customer is really always right. That is the person we're really trying to please. Because if the customer pays for it, then it spreads and it spreads around the world. And so let's please the customer.

Yeah. When did you first hear about bitcoin and what was your initial reaction?

I first heard about it in 2011. 2010. 2011. And my reaction was, wow, finally somebody's got one. Because I had been looking for digital currency for a long time. It was an obvious thing people for, you know, from 2004, there was some guy from Korea who said, hey, we've got half the Korean population playing this game. And I think it's called legacy or lineage. Lineage. And half the population was playing it. And so this guy felt like he. It was so important to him that he hired some guy to be his avatar. While he went away to work. And I thought, wow, there's going to be physical layer where we're all kind of living, and then there's going to be this virtual layer that is unlimited and you're only limited by your imagination. And that layer is also going to have its own real estate, its own currency, its own communication system. And so I put that together and I said, wow, this is really something important. And then when bitcoin came out, I was all excited about. I bought a bunch. I lost it all to the Mt. Gox fiasco. It just disappeared, you know, disappeared. I don't know whether somebody's got it or not. Anyway, it disappeared. And then I was thinking, well, that must be the end of this wonderful thing. But it wasn't. I thought it would drop to zero, like nobody would want it now, but it didn't. It dropped by like 10% on the news that the biggest exchange had just taken all this money. And I thought, wow, people really need this. And so then I started to dig in and I thought, yeah, people really do need it. And it would be very valuable. It's valuable for anybody who's sending money overseas. It's valuable for anybody who wants to store value, valuable for anybody who needs to pay someone quickly. You know, if I needed to send you money right now, it'd be really easy to send you some bitcoin. But to send you dollars, I'd have to, I guess, call my bank, get it wired, or write a check and hope that it gets through the US Mail. Or maybe you've got square and I can sweep, swipe a credit card, and then maybe somehow gets through to you. Three or four percent goes to square. I think that now we've got a currency that really works, and it's up and running now. The real value is going to be entrepreneurs who build services around bitcoin. I think there will be an opportunity to build software around the blockchain. Blockchain is this perfect ledger. Build it around the blockchain for accounting so that the accounting can all be done and reported and taxed and all of that. And that's what's the resistance some governments are having is they haven't figured out how. They always have to translate it back into dollars, and that costs more to accountants, and it gets more complicated. And if you're young, this is a way better currency. Think about that. You come out of college and you're $100,000 in debt, and you think, well, screw that. That's my grandfather's currency. I don't even care about that. They'd much rather operate with this new currency that's open, totally global.

What's your number one piece of advice for young entrepreneurs today, especially during a time like this where there's so much opportunity but just so much changing in the economy and how business operates? Working from home, what's your advice there?

Well, I go against the press here. The press is pounding on you to. I mean, God, you're 20 years old. You're not going to be. Your chances of dying from this disease are about the equivalent of getting if you're walking across the street or attacked by a shark. This is not. I mean, really, what should be happening is people my age should be locked in place and people your age should be able to go out there and explore the world with gusto and have a great time. I would not have operated the way these governments are operating. I would say, look, if you're at risk, you need to stay in place. You need to avoid young people who might be carrying the disease. You need to stay in place. But the whole economy, they shut down the whole economy. What were they thinking? That's going to create more deaths, more depression, more suicides, more horrible things because we've been shut down. So, you know, I'm this voice in the wind saying, what the heck are we doing? And so I'm saying, look, become an activist right now. Fight for your freedom. The governments are loving this because they're telling you what to do. Wear a mask, turn around three times, don't go out, avoid people, do whatever. You know, they're loving this because they get to tell you what to do. That's what governments love to do. But we're a global society. We're open, we're transparent. Government should just educate us, say, hey, we got a disease, Watch out for it. Here's what's happening. You know, figure out what's best for you.

Totally.

I think. So that's the disease side for young people. God, you've got to, you know, you got to find a mate. You got to find life. You got to create a life for yourself, for people who are just getting out if they're not yet employed. This is a tough, tough time because, I mean, we got 31 million in the US unemployed now that weren't six months ago and about 10 times that many around the world. I think we've got to get the world back. I also think that there's sort of two directions the world can go. And one grows to a utopia and one grows to a Dystopia. The dystopia is when our leaders tell us what to do and we do it. And we're like sheep running through, you.

Know.

In a corral. Or. The utopian view is land of the free, home of the brave. Be brave. Go out there, do something extraordinary. Be free. Allow, allow people, if you're in government, allow people to go out and create because you know better what to do with your life than I do. And if I'm your government, I'm telling you what to do. You really think that I'm. I know exactly what you should be doing. No, you're going to know better than I am. You should be able to do what you need to do. You got to. And then one more piece of advice. Make money. Make money. You've got to make money. If you are not making money, you are not doing anybody any favors. You know, people say, oh, you know, we got to save these poor people. Then they end up poor. You know, get rich yourself first. Then you can help other people get rich, hopefully get rich. I love what I do because I'm a venture capitalist. So I made money and now I am investing it in other people. And then they'll make money. I'll actually make more, hopefully, and then I can keep plowing that in and making the world more dynamic and better. Now, here's what I'm going to. This is where I'm going to go into sort of a. Of thought, okay, there are two of us on the Earth, and you've got a house and I've got a farm. So if we don't do any trade, you die of starvation and I die of exposure. If we trade, we're both better off. Now multiply that by 8 billion people around the planet. Those 8 billion can all do trade and do different things and make all of our lives better. And as they do trade, they make money. If they don't make money, they're not doing people a favor enough so that that person will pay for it. And so if you've got a business, you're the farmer or you're the real estate guy. You start working that business, you start doing deals with people. Some of the deals will be good, some will be bad. But in any case, you're better off. You are better off for doing those deals. So anytime you go buy something, anytime you start a business, anytime you work for a business, you are helping, and you're helping keeping yourself alive so that you're not sitting out there on the homeless street and you're helping Other people survive. And I think that's the way you've got to look at the world. Help people, but make sure that you are making money. Make sure that you're doing something people will care about. You know, there was. They say, oh, let's drill. Drill a well in this one place in deep dark. And people say, oh, yeah, it's so good. But they're wasting a million dollars to drill one well for one family or one small town. But Google has sent out a message. Here's how you drill a well. Yeah, so you got your smartphone. Here's how you drill a well. Drill your own well.

Yep.

So anyway, the world's. The world's wide open. We're at a restart here. This is a big opportunity for people. So take advantage of this opportunity.

Totally. If you were, you know, because I want to touch on just starting, starting your career. Looking back, what was the first moment in your career where you're like, ha, I'm getting some momentum and you started really making money? Because I think a lot of entrepreneurs, right, that's. They're looking for that initial break. So I'd love to. I'd love for you to take us back in time to when that break was for you.

So the first thing I did, I borrowed money from the SBIC program, and that helped me get going. And then I was able to invest that money and put it to work. And then year three, I was still very confident, but all the people around me would look and say, you've basically lost all the money you borrowed. And what was fortunate is year four, the IPO market opened up, and I about five IPOs, and suddenly, whoa. I went from being on the SBIC's watch list to the SBIC's dirt list to being put on the wall as venture capitalist of the year at the sbic. And that kind of was a moment, but it was funny because it was work I had done early on that benefited me later. The work I was currently going through, I was focused on that. And then all of a sudden, there was this money and success that had happened, and I was just focused on what the success would be kind of going, you know, five years later from that. And so I think the best way for an entrepreneur to operate is just keep going, keep your head down, do the work going, take it one step at a time. Whenever there's a change in your perspective, change course, think in terms of, well, where do we go now? But keep that vision in mind, like, we're going to Mars. You know, the big vision that you keep that in mind and. And then all these little things along the way add to that and you think you're not making any progress. Day one, day two, day three, you're doing the same things. You're calling people, you're doing programming, you're creating a product you're doing. And you think you're not making progress. But think of it as, like, every day you're building a house, and every day you're putting a brick down. And by the end of. By the end of your career, you know, or mid career, all of a sudden you're going to go, wow, I built a.

Totally love that. But I have one more question before I let you run, Tim. I know I want to be respectful of time, and that is when an entrepreneur is ready to raise capital from a venture fund, what advice do you give to that entrepreneur when going to raise a significant amount of money for their company?

Before you do that, you've got to think through what you really want to do first. What do you want to do with your life? Then what's the big problem you're trying to solve? Then what's the business that will solve that problem? What technology will solve that problem? And then you put all that together and you say, okay, now I think I'm ready. Then go and pitch it to your friends. Pitch it to young people and old people, and pitch it to people who might be vaguely interested in sending you $100, not those that are interested in sending you a million. Because what happens is you're going to get feedback all the way along. And then it turns out that entrepreneurs, it's usually somewhere around their 20th pitch to a venture capitalist that a venture capitalist says, I like it.

Okay?

It's because they had to go through that process of, like, testing it against people and seeing what they think and then adjusting it. And you make small adjustments you aren't even thinking about, but you make these small adjustments and eventually you come to a place where an entrepreneur, a venture capitalist, goes, yeah, this vision, I want that thing. So that's where it sort of. And it's not practice, practice, practice as much as try it iterate. Try it iterate. And at Draper University, we say fail and fail again until you succeed. Fail small for a while. Don't fail big. Fail small, and then you can work toward failing big later.

Awesome. Well, Tim, like I said, I want to be respectful of your time. But before I let you go, where is the best place for people listening to learn more about Draper University and what you've created.

Oh, you can go to DraperUniversity.com and if you've gone through that whole process and you've got a business plan and you know that it is ready. It is venture capitalist ready. Then send it to me. I'm Timraper vc.

Love that. Thanks so much, Tim.

All right.

Foreign.

Legacy of Monsters. An Apple original series. The world is on fire. I decided to do something about it on November 17th.

Display Place.

It's not ours. Believe me. The most massive event of the year arrives. If you come with me, you'll know everything. I promise.

My God.

Go, Monarch. Legacy of monsters streaming November 17th only on Apple TV.

Plus.