What are you reading?
I am reading a book that has not yet been published. The author is challenging the way we have approached physics since Einstein and Niels Bohr had a disagreement. It is possible that we have wasted billions of dollars going down a scientific rathole.
You wrote the afterword in your father’s [VC – Bill Draper] book, The Startup Game. Your kids, Jesse, Adam, & Billy, have also learned the family way as fourth generation entrepreneurs. What have they taught you about investing and business?
My father taught me to make sure that both sides of an agreement are happy with the agreement. He also taught me that a deal is a deal and I need to honor my word.
My children have taught me plenty about investing and business. Mostly they have been early adopters and have shown me new technologies as they come out and how they and their friends use them. They also ask great questions that make me come up with answers that challenge my way of thinking.
You have all been very large proponents of Bitcoin. What future do you envision for the currency?
I believe that Bitcoin will be as important to our world as credit cards or paper money. When money velocity is increased due to reduced friction in the economy, a society becomes wealthier. I believe Bitcoin and the Blockchain technology reduces a significant amount of friction in the economy. We no longer need to pay a “trusted third party” or a bank to make a transaction occur. I think with all the fraud and hacking of the banks, that Bitcoin will accelerate as a currency even faster than it would have without these external threats.
Of course, the uses are vast. Anything you use your bank for, you can use bitcoin for. The immediate applications are sending money overseas, paying for things, paying out micropayments to people who need to be paid for their services (e.g. residuals for actors or cameramen), payments by the unbanked, etc.
But longer term, any contract will be better served by being fixed on the Blockchain. The Blockchain allows any contract that revolves around an event (like a company sale, a dividend, a royalty distribution, a death, the outcome of a game, etc.) where cash or stock or something of value needs to be distributed or paid out, can be agreed to, executed and disbursed without a lawyer or an accountant, since the trusted party is the Blockchain and all the people of the world who can see it.
By questioning the status quo of many industries, you have been a creator of many successful businesses. What disruptive qualities did DFJ see in Mimeo?
Mimeo saves time. Any company that saves people time seems to be a great value creator. And Mimeo was taking on the status quo. Mimeo also had the benefit of challenging the print industry, an industry that had been set in its ways and had not innovated enough to continue to create value for customers.
In 2012, you founded Draper University, a school for innovators and entrepreneurs. What type of advice would you give to aspiring entrepreneurs finding their way?
Entrepreneurs should think about a few things before they venture out and start a business. First, is the industry big enough? If all goes according to plan will the business be able to become worth $1 billion or more. Second, does the business control its customer? Do margins continue to increase over time, or does the business become a commodity, where the only differentiator is price? Third, does the business pass my 15 year test? Is the business going to be relevant 15 years from now, when we are flying around in self-driving flying vehicles, and writing books with our minds? Most entrepreneurs are thinking too small or with too short a timeframe. If you start a business today and market it to the hilt, the general public will not really know about it for at least 5 years.
Your students complete urban and rural survival training. This has even entailed requiring students to go out and get a job offer, on paper, in 24 hours or less. What types of skills are developed as a result of these experiences by graduation?
We do both urban and rural survival training with our students. Urban survival includes asking students to go into San Francisco and come back within 24 hours with a job offer on paper. This helps potential entrepreneurs understand that if things don’t go well, they can always get a job within 24 hours. The rural survival training is all about survival. We have Navy Seals and Special Forces and Army Rangers come teach the students leadership, resourcefulness, and teamwork. We also try to bring the students to a breaking point so that they understand how they respond to exhaustion, and we make them realize that they can go beyond their breaking points if they have to. The most important thing we teach in rural survival is teamwork. They all have to understand what it is to work with a team and how various team members are best for various roles to success.
Do you see similarities between Draper University and Mimeo?
Yes. Mimeo customers use the platform to create a knowledge exchange. Mimeo allows people to educate each other, much the way we do at Draper University. Our goal is to create great talent and to get that talent to understand how best to work as a team. Mimeo has the same goal. We are encouraging people to transform industries and challenge the status quo. Mimeo does that with every customer who used to work with printers. And Mimeo saves people time. We bring in 50 speakers each session allowing our students to get a vast amount of knowledge in a minimal time. Mimeo sends vast amounts of information to millions of people easily and in clear formats.
Your forwarding thinking initiatives have included Elon Musk’s SpaceX developing a way to land a human on Mars. What is space travel going to look like in 10-15 years?
I suspect in 10-15 years, we will have people beginning to terraform Mars for human inhabitants. Now that they have confirmed ice on Mars, we know we can make that into water and that can help plants grow and people live. I think there will be probes going to other solar systems that start to bring back information on other planets that humans can inhabit. I think we will be actively mining asteroids and the moon might be a tourist location.
What would you like to be doing in 10-15 years?
It is less what I will be doing than what I would like to have happen due to my work. I would like to see Draper University have global status as a leader and innovator in education. I would like to see California become a well run state that encourages business, And, I would like to have Draper Associates show some of the best returns in the industry. There are a few other ideas I have, but based on what I am doing now, these are my goals.
Tim Draper is the Founder and Managing Director of DFJ and Headmaster of Draper University. DFJ’s notable investments include Skype, Tesla, Baidu, and Mimeo. Draper’s new show, Startup U airs Thursdays, 5pm est on ABC Family.