In this talk, venture capitalist Tim Draper recounts how the internet’s border‑less nature inspired him to build a global venture network and invest in transformative companies. He describes early successes with Hotmail, the first Skype video conference, and his early backing of Baidu in China. Draper then details his investment in Justin.tv, its pivot to Twitch, and the explosive growth of live‑streamed gaming. A pivotal anecdote about a Korean player purchasing a $40 virtual sword leads Draper to argue that virtual worlds will host valuable assets and currencies that may eventually outweigh those in the physical world. The talk weaves personal stories with a broader thesis that the rise of virtuality will reshape economies, mirroring the internet’s earlier disruption of communication, search, entertainment, and transportation.
Chapters
So Hotmail opened up the world. Geographic borders began to fall, and some governments started to realize that they might have to start competing for us. I got a sense of this and set up venture capital firms all over the world, forming the Draper Venture Network, so I could invest anywhere. So I was able to discover and fund Skype, a company in Estonia started by Niklas Zennström that used file-sharing technology to provide free long-distance telecommunications system— service. Before that, he created Kazaa, and he was not allowed to come into this country because he was under legal pressure. Kazaa, file-sharing program from before your time. About 6 months after I invested, Skype had about 3 million audio-only users and about 100,000 simultaneous users. And they scheduled a board meeting in Estonia at the same time I had to be at Stanford giving a speech. So I had to be 2 places at one time. I asked if I could do the conference speech to video— to a video conference. And the conference organizer kindly said, okay, because at that time video conference was like this. You could not hear. And then he said, can you bring Nicholas into the video conference? Just sort of thinking, well, if it does work, it'll be fine. He was skeptical that we could get The video conferencing setup in Estonia. So he backed it up with, okay, we'll use a phone and a photograph of you two. And Niklas was game. He jumped at it as quickly as I jumped to become a speaker here. And he was a little too game. There was something odd. And I thought, well— He said, yeah, we can get a video conferencing system here in Estonia. And so then I sat down with Nicholas with a camera. Nicholas reached back and said, okay, throw the switch. I'm kind of looking going, what switch? And so then we had the video conference and the organizer was thrilled. He said, we could see the pores on your skin and we heard you clear as a bell. And Nicholas starts chuckling to himself. He's kind of— and I said, what? He said, you were just in the first Skype video conference ever. And I said, you used a beta for this? And then I said, oh my gosh, we have a winner here. This is amazing. Nicholas said, not so fast, Tim. We cut off 100,000 simultaneous audio phone calls in order to get the bandwidth so that we could do this video conference. So entrepreneurs, you, those of you who are entrepreneurs, you'll do whatever it takes to make it work. We had an office in China, so I visited often, and I saw the fast follower economy firsthand. On one of my first China trips, I met with Robin Li and negotiated to invest in Baidu. the Chinese Google, in its infancy. I worked with Robin on his business model, and Robin built Baidu to become the largest search engine in China. I backed the 4 guys who started Justin.tv. It was really just set up so that a camera would follow Justin Kan wherever he went, and people were starting to watch that. And so people then started to post all sorts of videos. They did their own, they watched themselves, they watched other people. It became kind of a big phenomenon. But after 4 years in, they discovered that 40% of the usage was people watching other people play video games. They changed their focus completely. They changed their name to Twitch TV. And now there are 150 million people watching other people play video games for an average of 2.5 hours a day. So the internet was big, really big. It transformed communications with Skype and Hotmail, information with search engines like Google and Baidu, gaming with Twitch TV. entertainment with YouTube and later Netflix, taxis with Uber. The internet was a really big deal. Then I realized there might be something even better when I met this Korean man. He told me about how 40% of the Koreans were playing this game, and I think it was called Legend or something like that. He told me that it was so important That he hired a person to be his avatar when he went off to work. He went on to tell me that he bought his son a $40 sword for his birthday, and I thought, what? I thought it was a non sequitur, and he goes, no, it's a $40 sword in the game. It's pixels on the screen. Simply pixels for $40. And as a businessman, it dawned on me, people are going to live a part of their lives in this virtual world. And there would be assets there and currency. And that asset— those assets and that currency may be more important than the assets and currency in the terrestrial world.
