Tim Draper on Fearless Investing and the Venture Studio Model

Let me introduce Tim for everybody here. I mean, maybe he needs no introduction, but I'll do it nonetheless. He's founder of DFJ, founder of Draper Associates, founder of the Draper Venture Network. Tim was doing things that like today we take for granted, like long ago when they were novel, everything from, you know, Baidu, Skype, Hotmail, Tesla, SolarCity, Coinbase, Ledger, Robinhood, Box, Twitch, SpaceX, Cruise, Planet Labs, and many others are all investments that Tim has been a part of. A little-known fact, he created viral marketing, a method for exponentially spreading things from customer to customer that was instrumental to the success of Hotmail, Skype, and others back in the day. He's number 7 on the Forbes Midas List, and he's also author of a bestselling book, How to Be a Startup Hero. And that's a lot of, you know, his lore is helping other people to build some of the seminal companies of our time. Tim, do you want to come on stage for a second here and show your—

Show my face. Ah, here I am. Good. Hey, Adeo. Great to see you. Thanks for having me on your event. This great event. This is amazing, Venture Trailblazers.

Yeah, thank you so much. You know, you're following another legend, Roloff Botha. You know, you were a little harder to schedule. You're quite busy these days. So I want to jump right into personal stuff. A lot of venture capitalists from your generation are retiring. Right? And you're doing survival training with your founders. And I know some of the founders have been through your program, and I was like, what did you do? And they're like, really hardcore things. And I'm like, was Tim there? And they're like, Tim was right there. So, so talk to me about that.

What's, what's going on? Well, um, we, we have this, uh, feeling that to be an entrepreneur, you've got to be really, you've got to go way beyond what you expect you can do. You might be, as an entrepreneur, you might be working all day and thinking, okay, I put in a great day. And then your biggest customer calls you and says, I need this thing by, you know, 4 in the morning. And you got to be there and you got to be going. And so we do sort of a physical replication of that where we put you through whatever you think you could possibly do. And when they think the day is over, then we say, okay, now the race begins. You know, it's like, what? What happened? And so, it's a part of Draper University. Draper University is now 10 years old. We've had how many? We've had 3,500 students. They've come from 102 different countries. They've started 800 companies and 5 are unicorns so far. And that's pretty short time for unicorns. And, you know, Stanford and Harvard say, we only take them for 5 weeks. Stanford and Harvard say 85% of our students go out and get jobs when they graduate. What I say is our average, Our average student created 5 jobs.

Wow, that's a much better metric.

But it's because what we do is we change their mindset. We build confidence, we build determination, that kind of thing. Anyway, that's Draper University. I highly recommend it. It's hard to get into now, I'm afraid, but it's still great. And people have done some amazing things after they've been through it.

But you yourself are doing some of these things, right?

Oh yeah.

So, so where did that come from? Like, where did like you wake up, you're like, I'm gonna go get in ice water today. I'm gonna climb this mountain. And you're doing it with like 25-year-olds, right?

I mean, no offense.

I know you're not 25, you know.

Well, I didn't want to put them through anything I wouldn't do. And so I generally did that for years. And it just got to be a habit. And ice water, yeah, the ice bath, I think I'm still the record for the ice bath. And my friend is shoveling ice into the thing, you know. The whole thing, it just, yeah, we actually was sort of a tie, 3-way tie at 40 minutes. There were, I mean, that's out of, I don't know how many students, but a lot. And I was also, I believe, the first one to hike to the lighthouse, which was a 16-mile hike that started at 9 o'clock at night. And I did that. I made a mistake. A lot of them were from Saudi. So I thought, okay, we're going to do something and we're going to do something around Ramadan. And it turned out Ramadan was a week later. I didn't realize it. I thought Ramadan was while we were at Survival. And so I thought they were going to have to not eat during the day and then at night they could eat. And do stuff. And so, we had a pretty easy day and then we started the night hike at 9 o'clock at night. And it was supposed to be a roughly 10 or 11-mile hike, but we went off on a weird tangent and ended up being 16 miles. We finally got back at about 4:30 in the morning. It was a beautiful hike, though. Beautiful night. Totally worth it.

So you, and as part of this, you know, you recently fell off a horse.

Oh, it wasn't survival training. It was survival, but you're just this attitude, I'm going to do these things. Yeah, I was in Chile, and I was with the president of Chile on his ranch. And he said, "Do you want to go for a horseback ride?" And I said, "Oh yeah, of course." So we went horseback riding and everything was fine. Horses were galloping. I had, I don't know if you are old enough to know the song, "The Horse with No Name," but my sister got on a horse called La Estrella, and she's a star. She's an actress. And I thought, how appropriate, that's wonderful. And then I said, what's my horse's name? And you know, my horse is this huge, it's like 3 times the size of all the other horses. And I thought, well, that's appropriate, I'm kind of big. And they said, no name. And I thought, well, I've been through the desert on a horse with no name. And so we took off, we were galloping, everything was fantastic. And then we're walking back. We've like lassoed a calf, or we kind of corralled it back in and had a really great time. And it was so beautiful out there. Everything was fantastic. But then the guy behind me, we're walking back, and the guy behind me says, Tim, hey, something's wrong with your saddle. And as I turned, to look back at him to say, you know, point at what's wrong with my saddle. The horse, my horse just took off and the saddle went like that. And I fell on a rock and it kind of ruined my whole trip to— well, didn't ruin it. It was an adventure and a new adventure. But I was going to be all over Latin America. I needed to get to— I was going to get to El Salvador where the Bitcoin president is. And I was going to get to Brazil and Uruguay where there's sort of a free market there. Brazil where we get 1,000— I mean, we get tons of— not 1,000, probably 100 of our Draper University students have come from Brazil. I was all excited to go. But that ended the trip. I went into a local hospital. They had to medevac me to the one in Santiago. The president actually asked a doctor to come off vacation to operate on me. And then it took about, I don't know, 4 weeks to recover or whatever. Anyway, so yeah.

I'm happy you're here. But that's like, so you really do take this extreme, right?

Well, I still haven't gotten back on the horse. I'm looking forward to getting back on a horse, but I still haven't.

You know, I had a similar— I was bucked from a horse, but I was holding the rein when it happened and ripped the fingers on this hand off, which are fine now. Oh, it's not like you want to get back on the horse after something like that.

No, it's not easy.

Not easy. Maybe we do it together. Smaller horse.

Good idea.

Have a name.

Maybe on our trip to Mongolia.

Yeah, exactly. We're coming to Mongolia. So not a lot of people— I don't even know all the things you're involved in. Let's talk. So what funds do you have right now or what things you got?

Why don't you list?

I have an idea, but I'm sure there's more than I know about.

So, yeah, this is a little confusing for investors. I know that because we I only really manage one fund at a time, and that's Draper Associates. I created Draper Associates a long time ago. It evolved into DFJ. We grew this big institutional venture firm, and that was when I set up all the other Draper funds around the world called the Draper Venture Network. Well, after working at DFJ for a long time, I realized that with 12 partners, I wasn't getting the things done I wanted to get done. And so I spun out and started to do my own thing again with the old Draper Associates name. And now that's the only fund I actually manage. The other funds are all, think of them as like loose franchises or something where we all get together It's actually similar to the network you're putting together, Oddeo. We bring everybody together about twice a year. Once is for just the GPs to understand each other and think about best practices and see if there are ways they can help each other. And they're from about, I mean, I think we've got like 100 general partners from about 60 cities. Now, and they, and then one day is our annual meeting, 3-day event. And that's when we bring all of them and their companies together. And then we invite in a bunch of CEOs and biz dev people from Fortune 500 companies and a bunch of other venture capitalists. And we do, we do a big event. But what's great about it is I can travel around the world. Like when I was in Chile, I met with our— oh, some of them have a brand of Draper and some don't. This one was called Monetara. And they're in Chile and they showed me 4 or 5 companies. We actually had a pre— I don't know what they call it, but anyway, it's a part of Meet the Draper. Sorry, we have a show. Okay, maybe I can help you with this. There's another thing. A lot of the things I get involved in have to do with— I met this guy Edelman who runs the biggest PR firm in the world. And I asked him sort of the key question, like, you know, what do you recommend? And he said, I recommend every company become their own marketing department. And I thought, huh, okay, I'll do it. And so, I started experimenting with marketing and most of it failed. So, I tried a podcast, got very little traction, didn't really know why or whatever. I tried this Startup U, which was a TV show run by a network. And that was a total bomb. Although in Mexico, apparently, I was on a better— I was on their history channel and all of a sudden, I was famous in Mexico for some reason. But except not my voice because they dubbed it. And that was kind of a reality show around the school. And then, Tried a Twitch show, which was, I thought, hilarious, but no one ever came. I mean, we had 6 people and they were all the same people and they were all asking me the same questions and I went, this is not working. 6 may have been, maybe a de-exaggeration.

You know, most people exaggerate the other way.

Then we we hit something, which was we did Meet the Drapers, where I brought on my sister, my dad, my kids. They're all venture capitalists, except my sister's an actress. And we did it ourselves. We didn't go through Hollywood. We did it ourselves. And by some measures now, we're bigger than Shark Tank. I think we have more viewers.

Which one is it? Meet the Drapers?

Meet the Drapers. Yeah. And so, suddenly, we've got the biggest show in venture capital. At first, it was supposed to be just so the viewer could invest. We went with a crowdfunding partner. And then, we— It was too complicated, too much regulation involved. So, we simplified it, but we're still, now, and this, the reason I was down in Chile and the reason I've been to all these other places around the world is that we've done a show now, Meet the Drapers, I don't know what we're calling it, Startup Globally or something. It's like the Olympics of venture capital. And we're going to all these different countries. So, we've been to Taiwan and Chile and India and Sri Lanka and Dubai and Saudi and Copenhagen and whatever. And each time we have these really fun entrepreneurs and these guest judges. And the guest judges have been, get this, the cardinal who's probably going to be the next pope, the, um, the, the print, one of the princes of Saudi Arabia, the grandson of the king, a, uh, beauty, uh, beauty, uh, Miss Sri Lanka. Wow. Beauty contestant. Um, a, uh, a guru, uh, Guru Sri Sri Ravi Shankar, who is just wonderful, by the way. I don't know if you've ever gotten a chance to meet him, but totally worth it. Fantastic guy. And then a judge, a Supreme Court judge, who I made a guest judge. And I've adopted all these people. Oh, and the former treasurer of the United States. So, we've had— oh, and Joe Montana, the, you know, Super Bowl champion. 4-time Super Bowl champion.

So just let's tangent on that for a second.

Oh, and by the way, we make them all drapers. So I adopt everyone who comes. So it's like Sri Sri Ravi Shankar Draper.

So they're like, meet the drapers, and they're like, now you know me.

It's a little bit of an extended family.

So, so out of curiosity, do you do— I'm looking at the set and I've heard so much about the show. I haven't seen it. So is this your production studio? You did everything yourself?

Yeah, yeah, yeah. And it turns out, you know, and I, in my book, I published that myself on Amazon. I have found that The new world is really just better than the old world. It's better if you have a really good TV show, it's better to publish it yourself. You have a really good movie, better to publish it yourself, particularly if you have a big—

music too, by the way.

Music, oh yeah, absolutely, because we, I mean, that's what we all did, right? All the technology, all the digitization of everything, that was so that you could do that. So, if I went the old-fashioned way, I wouldn't be eating my own dog food.

That's insane. So, literally, you tried all the other ways, all the sort of ways from the past, and then came to the conclusion, let's just do it on my own. And then that's where the hits came is sort of living the dream there.

Right, but I failed a couple of times first. I failed even with the new systems. I mean, like my Twitch show, I thought that thing was going to take off, but no, nobody cared.

All right, I've got a question for you about— I want to go back to the fund structure for a minute. I also want to be sensitive of time because we want to get questions in from everybody along the way. So you, you, in the structure side, you're mainly doing Draper Associates, as you said, and you, you built your own marketing department, and you tried a lot of different ways, and you eventually made the show. But you also have Draper University, and there's this— and so, but let's just stay with the fund before I go there.

The—

does the fund have a wide mandate to kind of do fund of funds, crypto, whatever you want, or is it more focused?

Well, legally, um, we can't just buy a bunch of crypto, um, yeah, unless we're registered investment advisors. So that, uh, is always limited to about 20% of our fund. The, um, and, and sometimes that 20% is eaten up just by the entrepreneurs we back because some of them do ICOs that kind of thing. So, um, so no, mostly this fund, uh, it's one at a time. I just do one at a time. We're doing one now, and, and, um, and I just see whatever. And so I am limited by nothing. I have no limitations on where I can put that money. Other than I can't, it has to be in startups. Oh, I can't do a fund of funds. Not with that. I can only do startups. And I go, and we're, I mean, we backed, we tend to like to back entrepreneurs that are cutting new turf where we don't know if it's going to work or not, but if it does, it's a big industry. Those tend to be the places we go.

Yeah, I'll leave the fun stuff, come back to it later. Let's talk about that. Like, that says a lot there. So, you know, a lot of people are afraid of what they don't know, right? They're like, oh my God, I don't understand this. For example, crypto before, or whatever. And you're saying quite the opposite. Like, if I don't understand it but I think it could be big, that, that's what gets me excited. Can you unpack that a little bit? How do you even know?

Yeah, when I first meet an entrepreneur and they're speaking in a language I've never heard, you know, whether they're talking about neuroscience or they're talking about space or they're talking about some new drug or some new computational biochemistry, something or other, I dig in. I say, wait, what is that? You know, I'm always there with a stupid question. Wait, I don't get it. What is that? So I just keep coming with a stupid question. Turns out the stupid questions are the ones that really help people. They help me. And so, and then I have them go through it, and then I go, you know, I don't get it. I don't get it at all. You got to tell me again. I'm sorry, it just isn't coming through. And so, then I dig in and then I think, oh, wow, this is really cool. And sometimes I'll see something that maybe they don't see, something in the marketplace. Because I'll say, wow, you know, you could create viral marketing here. You could make your customers into your sales force. You could, yeah, these are often things that the technologist isn't thinking about. And, or you could apply this to the mining industry or whatever. And I think just being exposed to so many startups and so many companies over so much time, I do, I can put the startup into a direction that might help them. And so that's good. But the way I look at it is a startup, no matter what they're doing, is probably about a 50/50 bet. And so you might as well— I mean, our business wouldn't work if we only made 1x our money or 2x our money on a win and 0x our money on a loss. But it sometimes, it can be many times on the money. And so I figure why don't I give myself as many shots on that goal as possible. And I know that it's still going to be about 50/50 whether the thing works.

How many companies are you in?

Oh yeah, we need a very wide, diverse portfolio. So, we'll do in any given fund, we'll do 60. Maybe even 80 companies.

Wow. Do you have follow-on reserves for the ones that actually get the traction, or are you kind of one and done?

We do. We don't reserve. We just assume that if a company comes to us at a time when our fund is— I mean, we assume we're going to be able to raise funds. I put about the same percentage of each fund in. And so, there's no, I don't have any perverse motivations. So, we can just take something from some deal from Fund 1 that we seeded and then do a Series A from Fund 3 and do a late-stage investment from Fund 5 if the company is really rocking and rolling. And because I found that by allocating follow-on money, it, and then raising a new fund, it created a disconnect with, because you could have a whole bunch of follow-on money for a bunch, for very few companies that are worthy of follow-on financing. Or you could have the opposite where you don't have enough. So I would rather just, hey, look at each investment as it comes and just do the ones that make sense. Now, LPs are horrified when they hear that, but that's the way it works.

Right, so people are like, ah, that's not a strategy.

But so, like, did you—

I mean, it is a strategy, but it's not a very common strategy, maybe is the way to say it. So did you earn the money?

For me, it's clean. For me, it's clean. I look and I say, well, that's the cleanest way we can do it. And we— and so our LPs, I think, are going to benefit, continue to benefit from that ongoing strategy. Sorry, you had a question?

Well, to your point, there's no perverse incentives. You're not like sitting on follow-on allocation that you need to put to work if you don't have companies that deserve it, right? Right. Or as you said, too little. But yes. So did you earn the right to do that or did you just kind of start out and say, like, the way I'm going to do it, like, take it or leave it?

Okay. So I built DFJ over that many years with my partners and it was— and there were a few things that were a disconnect between us and our LPs and I wanted to make sure that those were sealed. And there were a few disconnects with our entrepreneurs, and I wanted to make sure that those were sealed when I went off and went solo. So, there is a benefit to having had a long career in a fund that became an institution because you see where the institutions get it wrong. And you can make a few adjustments. I mean, it feels to me like I've got at least like half or a third of the money that can be better put to use than I was able to when I was in the institution. So I think that's kind of a big deal.

So what, okay, all right, but you said something that's, I want to, I want to be sensitive of time and get to audience questions, and I have so much to talk about here, but What are some of the lessons you learned in the institution that you say, you know, that's wrong, here's a better way? So, follow-ons, I'm going to chalk up as one.

Are there others? Yeah, there's another. And that is 10 partners on a startup don't work. Or 12 partners. We had 12 partners. And we tried all sorts of different voting systems and whatever. It turns out maybe the best determiner of a great success was the decibel level in the room.

So if everyone's yelling, it's probably—

Yeah, when everyone's yelling, it's probably—

Goddamn it, I hate this deal.

No, I think it's great.

Like, well, that's really loud, guys.

We should do this deal. We should do the deal. But we never actually did that. We tried all sorts of voting things. We tried garage deals. We tried, you know, majority. Then we tried, you know, a vote where people could have an extra piece of passion. We had silver bullets. We tried everything. None of it worked because we had 12 partners. And so I feel like 1, 2, or 3 is the magic number. And we're back at 1 because I'm the sole decision maker, but I do have another partner and I have an investment committee. I have a bunch of people who who come and make recommendations and say, oh, this is— so we still have the decibel level, but then I make the final call. And I think that's good because then the responsibility's on my shoulders and the authority's on my shoulders. It's not just like— and now there's another thing that was really ugly, and I didn't see it happen much, but I did see it happen where with 12 partners, one would say, hey, I'll push your deal if you push my deal. And then suddenly it's politics, and that's not going to do our LPs any good. So, fortunately, it didn't happen that much. And what I mean, I don't know how— there were only 2 of us that thought Tesla was a good idea, and we shoved that thing through the partnership, and I don't know how we did it. But after that—

Steve, the other one?

After that, I did realize that I wasn't getting really interesting companies through the partnership. I mean, I brought some real dogs, but I also brought some real winners that turned out to be real winners. And that was when I started to say, well, look, if the partnership turns it down, I'm going to do it. And then that was the beginning of the, like, I'm going solo. And going solo was a big break. And when I went solo, I worked with a partnership to bring the Draper Venture Network with me because they didn't really have that kind of an interest in traveling around the world. And seeing all that. But I love it because I get arbitrage.

Yeah, let's talk about that.

You—

the people don't understand this, but forever venture capital was pretty much Silicon Valley, US, and it started expanding a little bit. But you basically were one of the pioneers to bring venture capital outside of the US. And even within the U.S., right? And that was, I think it was called something else in the beginning, right? Um, DFJ Network, is that right?

Yeah, actually, first it was called the Draper Network, and, or first it was just me doing a few deals in the, around the U.S. where I set one up in Pittsburgh and New York and L.A. and Utah, and started with one in Alaska because there was some money available for an Alaskan fund or something. And then when we went international, it started with DFJE Planet, and that actually was still we decided we were going to still control that. And I flew around the world doing deals for E! Planet. And then, and then we sort of abandoned that. And I kept doing more ventures around the world. And But ePlanet was a huge success. I don't know why we let it go, but I heard that it's like that, that funded very well. Oh my God, Skype and Baidu. Skype and Baidu made that fund.

Yeah.

Yeah. And we, so I kept going around the world and the way I thought about it was, look, if I see something interesting, it really doesn't matter if it's in Denmark or the US or wherever. The valuation may be much lower in another location. The opportunity may be much greater. Sometimes, more of a provincial country will be more forgiving to an entrepreneur early on. And so, there are a lot of things that can happen and it doesn't have to all be in the Silicon Valley. But it did at the beginning because it was all hardware. It was like disk drives and processors and I/O gates and what else? Printers. And it all had to be nearby because it was like all hardware. You had to get the semiconductor onto the board, the board into the computer, the computer had to get the screen. It all had to be pretty close together. And so Silicon Valley had a huge edge there. Now Silicon Valley has an edge just because we're on a roll, but we don't want to rest on our laurels. And it feels like other countries are deregulating and making it so that they are better places to start businesses. And so California hasn't caught up.

California is overregulating. All right. We have so many questions. I want to just do one last thing and then we'll go into questions. We'll try and speed through them. Like you were early in crypto. Was this like you said, if someone comes in and I don't understand it, listen, I don't understand a lot of stuff. Stuff that people say in crypto half the time. Was that how it came to you? Or like, what was your inspiration to get so involved?

No, it was, that was interesting. I was looking at digital currency for a long time before Bitcoin, but it was things like there's digital currency inside of games. Right. But then when, it was Peter Vissenne who sort of explained to me what Bitcoin was. And the light went off. And so, we backed him with CoinLab and we also sent him money to buy Bitcoin. And somehow, he lost that Bitcoin in Mt. Gox. And so, that ended up being not great. But what was great was after Mt. Gox, I thought, well, that's the end of Bitcoin. But the price of Bitcoin only went from like $38,000 to $35,000 on that news. And I thought, whoa, people really need this. This is something very important. And other than drug deals and gun deals and all the things you read about in the press, people were using it to remit money to their families in Philippines. They were using it to pay people who were not banked. They were using it as an easy way to move money back and forth across borders. And all of a sudden I thought, oh my God, this is so cool. And so I just kept going and going. And then when that US Marshal's office, they took some Bitcoin and then they put it up for auction. I thought, you know, this is so big that I don't care if I get it below market. All the people around me were bidding above market. I mean, below market, thinking what kind of a deal you think you can get on this because it's a volume discount. And I was thinking, well, you know, even if I bid 10% above market, I'll— the upside's really big here. The downside, yeah, zero, but the upside's really big. And so I put in bids above market to this auction. And I got them all. I didn't expect to get them all. I didn't want them all, but I got them all. And I thought, well, okay, I'm in bigger than I thought I'd be, but that's all right. We're good. And then Bitcoin went straight down, $632 down to $180 or something. But I still kind of thought, huh, I still believe in this. It's nuts that it's going down, but I still believe in it. And I bought one more. There was another auction at about $180,000. And the Winklevoss brothers got some of that. I got one of the ones at $180,000. And I used some of that to fund some companies in Bitcoin and some of the Boost companies. My son started Boost, this accelerator for Bitcoin. Well, now it's a huge venture fund, but he— so I said, okay, it'll be whatever it was, 30. I don't know. I forget what the— it's very sad to think about because it was— now it's like tens of millions of dollars for 3% of the company or something. But it was It was so complicated that I realized that the systems have to catch up because all of the accounting had to go back from dollars to Bitcoin, Bitcoin to dollars, da, da, da. Fortunately, now, Cryptio is solving that problem. It's still complicated, though. Let's be honest. Yeah.

It's not like, oh, but there's solutions coming or on the way.

Yeah. Yeah. And I think once— Governments realize that they can tax you for, without having to follow you around and break your kneecaps, they can tax in Bitcoin and it would all be automatic. And as soon as they realize that, then they'll make it a lot easier to do business in Bitcoin. So, I'm hoping My next fund will be, I'll raise it all in Bitcoin, invest it all in Bitcoin, and have the companies pay their employees and suppliers all in Bitcoin so that the whole thing is in a walled garden that can be like a subledger or just like all the accounting can be free is what I'm really getting at. Because it's done. You know, that can happen.

That's, would that be like a, That's okay. That's a pretty big idea. We're— VC Lab is launching a, uh, what we're calling a Crypto One, which is a crypto-focused, uh, program for ideas like that, right? Because they're not enough out there. Like, let's all just do it straight in some sort of currency, Bitcoin, whatever. And the investments are bought. Let's, let's think outside the box a little bit. I love that. All right. There's so many questions, Tim. We got not tons of time, so I'll try and go through them fast. And I'd love to keep talking about this. And frankly, I was like, we could talk all day, but I know you got other things. You're down in L.A. So Nick is asking, how did your investment strategy change over time and what's the biggest lesson you learned? Now, you mentioned like big teams don't work. And some other things. So, what are some additional lessons?

Raise as much as you can, don't spend it. But for me, as a venture capitalist, what am I looking for? And what has changed over time? I used to think in terms of like, oh, I can invest in this company. It sort of seems like a safe investment and it'll make me 4 times my money and everything will be great. Turns out that's where I lost all my money. Any time I lived in fear, I lost all my money. When I lived in opportunity, I made a fortune. So, opportunity over fear. I think that would be the one thing. The second thing I learned is because of China. I was the first Silicon Valley investor into China. I was the first one out. What I learned was weak leaders are the ones like President Xi, President Putin, who want to control everybody. Strong leaders are the ones who trust people and set them free. And whenever you get a strong leader, whenever I see a new strong leader put in place, like there was one in Uruguay, now there's one in El Salvador, there There's one in Dubai. There's one in Saudi, believe it or not. Then I go there because I know that that's where opportunity is going to lie. And so, I like to go where you see a strong leader who trusts people and sets them free and doesn't try to regulate because the regulating people are, They think everybody has to be kept in a box. And what they do is every time you add a regulation, you add a bureaucrat. And every time you add a bureaucrat, you add the possibility of corruption. And that cycle is a downward spiraling cycle. That's what happened in Cuba. That's happened in North Korea. It happened in the USSR. Happened in many, many places, and that is the downward spiral. So, whenever anybody says there ought to be a law, shut 'em up.

Well, you know, a mutual friend of ours, Elon, he's like, "For every law, we should take 2 off the books." You know, it's not a bad idea.

It's a great idea. Or just sunset every law. Just say, look, every law from right now has a 20-year life.

Right. Max.

And then, like, you're not going to— don't force your— I mean, if you're going to force your values on one generation, don't ruin the next generation too.

I, you know, the fear versus opportunity paradigm. That was such a beautiful— I'll get to some more questions. Sorry, guys. Like, I just want to double-click on that. So, this goes back to you saying you come in, you don't understand it, you see the possibilities. How do you, like, but they can also be scary. So, how do you squelch your fear and open to the opportunity mindset, if you will?

I think I've got to be comfortable with failing. And that, I think that over time, I've become more and more comfortable with failing. Failing. And I think if you have that comfort in yourself that if you fail, you'll still have your ego intact, then I think you'll do better. Because it's also interesting that once a company hits profitability, all of a sudden, all the world opens up to them. And until they're profitable, it's like grinding their head, you know, head against the grindstone. It's just torture, torture, torture, torture, because there's no, you know, there's no light at the end of the tunnel. There's nothing. But all of a sudden, as soon as a company has 3 happy customers and they're profitable, it's like, whoa, this is anything, we can do anything. And having that mindset is a wonderful point of view and being able to try different things. You know, people always used to say, you know, throw spaghetti up at the wall and see if it sticks. But that was always talking just about marketing. But it wasn't talking about how to develop new technologies. It wasn't talking about what, you know, what might be possible in the world or how a business model might work or whatever. But I think it's worth it to try things. It's a big part of Draper University. We say, I will fail and fail again until I succeed. That's a part of the motto, the, the, the value of Draper University. Yeah.

So Felipe has a question around this, which is like, what's your ideal diversified investment portfolio But I would even phrase it differently. Do you consider portfolio construction or are you just more opportunistic? Now, obviously with the Bitcoin fund where you're only going to fund in Bitcoin and want them to pay in Bitcoin, that's different. But just in the general—

Oh no, but I would still invest in space and I'd invest in all sorts of things in a Bitcoin fund. It wouldn't just be Bitcoin. I'm saying that that is a new financial model that will be frictionless, or at least more frictionless than our existing one. No, the way I look at diversification is it's diversified by entrepreneurs. It's not— I'm not— I mean, right now, of course, I'm all in on AI and, you know, I'm in anything you know, neural networks, whatever is going on that's really transforming the world right now, I'm definitely going all in. But at the same time, personalized medicine is a huge opportunity. And that's something that could easily, you know, bring trillions of dollars of value, hopefully taking the the big pharma down with it. The insurance is a big, huge market. And I think there's some interesting things there. But those are my biases. I want the entrepreneur's bias. I want them to come to me and say, this is what the future is going to look like. And then I will follow my entrepreneurs. I'll follow my nose, but I'll follow my entrepreneurs.

Okay, so following your nose, this is another great question. You're teeing up questions from the audience perfectly. Uh, so Tainy is asking, how do you identify these potential opportunities? So you mentioned like it's got to be a big opportunity, you don't really understand it, but you're in a meeting with a founder, they may be showing you a deck or whatever, and like what is it that, that, that that's like, yeah, this is the one I want it back, or this is the thing?

Well, sometimes I ask the question, why are you doing this? You know, this is like you're taking your life and doing this, and, um, and usually the answer to that question comes out and it's very clear as to whether this person is really dedicated to what they're doing or they're thinking, well, I got one foot in, one foot out. And if the first thing that comes out of my mouth is that, well, when I was at Google, all of a sudden I realized they are missing that salary they were getting at Google. Unless they're saying, when I was at Google, those idiots, I was, I knew, I pounded the table, I thought they should have been you know, the customers were all telling me one thing and they were all doing another. And we know exactly where we're supposed to be going. That's different when I was at Google. But if it's like, you know, one foot in, one foot out, you can't do that. You got— if you're an entrepreneur, you got to be all in. It's really interesting because now that there's no money around, the entrepreneurs that we're seeing are pretty much all in. Well, you're either not gonna do it right there, right?

There's no $100 million seed rounds for like idea stage companies, right?

Right.

Anymore, at least. Uh, so passion of the founder. Um, I got another question here, like, uh, from Jim about venture studios, right? He's like saying, uh, venture studios on the rise. We see it too, like almost every fourth or fifth entity that applies to VC Labs is a venture studio. What do you think of the model? Would you invest in venture studio spinouts?

Or, you know, I did, um, I funded, uh, uh, Bill Gross with the first venture studio. And, um, did that do well for you, by the way?

Was that financially—

or, you know what, Yeah, you know what's interesting is if he had stayed with his first one, which was GoTo, GoTo would be Google today. And so, he got distracted, wanted to do 50 different companies, and none of those have gone as well as that first one, GoTo. He figured out paid search. That was the— he Yeah. Broke the mold there and figured out.

And then competitors came about and Google bought a competitor. Yeah, exactly.

Oh, yeah. And then they, and there have been a bunch. There are some that are very good at this and they get in a lane and they keep going. And you could argue that they're good serial entrepreneurs, but when people come to me and say they're serial entrepreneurs, it's usually a turn-off. Not always, but usually a turn-off because I think, I don't know if you've done, like, how'd the other ones go? But I like it because it's one of many models out there that are new and And I am always happy to look at more deal flow because that's how I get my information. And I've, you know, of course, I have no idea what's going on in the world today, but I have a pretty good sense of what's going to happen in the next 5 to 10 years.

That's a whoa. I mean, I just looked at my watch and I'm like, we could unpack that for like an hour. So, just to re-say what you said, I have no idea what's going on in the world today, but I have a pretty good idea of what's coming in the next 5 to 10 years. That's fascinating. That's because you're talking to all these entrepreneurs all the time.

Yeah, I meet with about 8 a day was what I figured out. And that is a lot. I mean, I think that's more than any other venture capitalist ever does. But I love it. And I love the entrepreneur and I love what they can do for the world. And I've been able to People ask me, why aren't you retiring or whatever? And I think, what? There's too much to do. It's so cool. It just keeps getting better. You know, there was the internet and I was thinking, wow, we really got a great ride there. And then Bitcoin showed up and I went, wow, we got a bigger one. And now we've got AI and that might even be bigger than that.

Oh yeah. I mean, there's a lot of big things happening right now. So you just find, so yeah, because Like, I've been trying to dig at like your deep motivation here, right? And is it, are you curious? Do you feel you're shaping the future? Are you curious about the future? What's driving you to keep doing it?

That's a really good question. Because when you said shaping, I thought, yeah, maybe a little. And then when you said curious about, yeah, a lot of that. I guess the shaping part is really to shape. I mean, I want the entrepreneurs to do what they do, which is like transform everything. But the shaping part is really a little bit more shaping governments to do a better job to encourage more entrepreneurs. And one way we've done that, we have this Draper Innovation Index. It shows up every month. And we rank all the countries in the world and all the states within the US on how good they are for innovation. And it's amazing. It's a dynamic list. It keeps changing. The US is still number 1, but number 2 and 3 are constantly changing. And California was way out in front, and then now it's Texas and Florida and Wow. Wyoming, and I mean, there are other states that are, that are doing a better job. So, and it's all data-driven, and so the data keeps changing, and these things keep changing. And by measuring this, we feel that countries are going to look at where they are on the listing, and if they say, hey, we want to be the 'Innovation Center' or 'We want to be the entrepreneurial center or startup center of the world.' We look and we go, 'Well, you're number 183. You're nowhere near it.' And they said, 'What can we do?' So, there, when they say, 'What can we do?' That's where I can have sort of an advantage. I can guide it. But other than that, I kind of just love watching funding entrepreneurs. And I mean, God, first Hotmail changed everything. All of a sudden, the whole world can communicate. And I had a hand in that through viral marketing. And I thought, wow, wow, we really can do a lot with entrepreneurs. And I just went through the Tesla factory in Fremont. And apparently, it's the old factory. The new one in Texas is like way ahead of it. But it was so automated. The whole thing was robots. And I thought, oh my God. First, by the end of it, I thought, I definitely want another Tesla because they look so awesome. But the other thing I thought was, God, you know, I seeded this thing with just because I went around with this guy, Ian Wright, who took me on a little, this little jalapeño with PVC tubing, and he made me use a 5-point seat belt. And I thought, why?

What?

This is— isn't it going to be like a golf cart ride? And he goes, no. We took off like a rocket on 280 and then stopped on a dime. And I went, whoa. And I realized that you didn't have to be, you know, a golfer or a tree hugger to want to be in a electric car. And so then I looked around, I saw all the different electric car companies. They weren't really companies, they were sort of hobbyists.

Kit cars and stuff. Yeah, yeah.

And they all, they all pointed me toward Tesla. They all said, oh, you ought to talk— I mean, Tesla has this thing. And, or either they were jealous of it or whatever. Anyway, Tesla, Tesla. And I met Martin Eberhard at Tesla and And we, you know, we pushed to get that thing done. And we funded it, not with as much as I wanted to put in, but we still funded it. And then the company was almost out of business. And Elon said, you know, I'll put in $10 million, but I'm going to run it. And we went, whoa, win-win. And that was the beginning. And Then, you know, I remember Jervetson saying, you know, I got to be on that board. And I thought, well, yeah, I'm not really a car guy myself. I'm a startup guy. And he's still there. Yeah. So he was the right choice for it. So that was great.

20 years and change.

Yeah.

That's crazy.

But it's amazing what an entrepreneur can do. You know, you get them, get something started, and just little by little, yeah, and of course they go through, in fact, who was it, Mike Maples said that all of his winners, all of his biggest winners were pivots, which meant they went after something and they found something else. And I think that's what adventure is all about.

It happens.

I know you got to go, but I had one last question.

I don't mean to be rude here. So, you know, I like— Lisa was asking about your fears and limitations and sort of a question that I've asked over and over again. But is there anything you've done, any practice or any mental model that you use to help, you know, quell the fear, fears and go after these bigger opportunities? Any tips that you could pass along?

Make it, yeah, here's my tip. You do one crazy thing and they go, "Oh my God, why did you do that?" You do two crazy things and they say, "Oh my God, this is awful. I can't understand what's going on." You do three crazy things and they go, "Oh, that's just Tim." So, you can get over the social limitations of the fears that are socially driven by making sure everybody around you knows that you are more than a one-dimensional person.

That is a beautiful point to end on, Tim.

Thank you. Adiós. This is my favorite interview. This was so much fun.

I know. What a great group of people we had. Thanks for everyone for tuning in.