The Snake Blood-Drinking VC Dad Who’s Not Afraid of Bold Bets
WHY YOU SHOULD CARE
Because you’re never too young to learn how to be an entrepreneur.
The 2018 RBC GranFondo Silicon Valley is a new long-distance cycling event in the heart of the Bay Area. It’s not too late to register for the event, which takes place on June 23.
Venture capitalist Tim Draper knows how to take risks. Sometimes this involves swimming from Alcatraz to Aquatic Park in San Francisco without a wet suit, running for his life from a Cape buffalo in Africa or drinking snake blood in Taiwan. But other times, it means investing in Hotmail, Skype, Tesla and TwitchTV, or the cryptocurrency bitcoin, before almost anyone else had heard of them.
Due to his successes and his family name (his father, Bill Draper, is another well-known VC), Tim Draper has become one of the most well-known venture capitalists in Silicon Valley — and he stands out from the pack. “He thinks differently than all the other VCs that I know,” says Howard Hartenbaum, a general partner at August Capital, another VC firm in Silicon Valley. “He bets on people when there’s not a lot of data and everyone else is too afraid to invest. He will bet up and down all day on hundreds of companies that other investors won’t touch.”
To find the right people, he looks for entrepreneurs who are unique, driven and passionate. “He’s more interested in funding someone who said they built the world’s farthest-flying balsa wood propeller airplane than someone who says, ‘I worked for 10 great people, and now I’m ready to go out on my own,’” Hartenbaum says. He also looks for founders who are motivated by something beyond money. “He’s looking for someone who has identified a problem and wants to fix it,” says Andy Tang, an investment partner at Draper Associates and CEO of Draper University of Heroes, a for-profit university Draper founded to train the next generation of entrepreneurs (more on that later).
I have often been too far ahead. I have lost money many times where I invested in what amounted to science projects.
Draper also stands out in Silicon Valley for his lineage. He comes from a long line of venture capitalists in a place long considered a meritocracy — where a founder can make millions regardless of who his or her parents are. The so-called “Draper dynasty” began with Tim’s grandfather, Gen. William H. Draper Jr., who went on from the U.S. Army to become what many consider the first professional venture capitalist on the West Coast. Tim’s father, Bill, was one of the first employees. Bill later launched two VC firms, Draper & Johnson and Sutter Hill Ventures, and has invested in more than 500 companies. Today, three of Tim’s children have immersed themselves in the venture capital world as well.
“We work with each other a lot,” says Tim of his family. “My dad and I [backed] Skype together. My son Billy works with me. My son Adam focused on bitcoin with me. My daughter Jesse and I backed Laurel & Wolf together. We are constantly sharing ideas and opportunities.”
His firm, DFJ Venture Capital, has backed 27 companies that have reached values of $1 billion or more. But he’s also sought to give back. In 1997, he launched BizWorld to teach elementary and middle school children in the U.S. and around the world how to run a business and develop entrepreneurial skills. He was inspired to start it after his young daughter kept asking him, “Where do you go? What do you do?”
“I founded it because people need to learn more about businesses,” he says, “how they start, how they operate and why they are important to society.” And in 2012, he launched Draper University. It’s not an ivory tower kind of place. Students can pay tuition in bitcoin, and the graduation ceremony includes students bouncing off a trampoline into a pile of beanbags.
“Tim is passionate about education, and his ideas often challenge the status quo,” Tang says. “He looked at education and said: We ought to train our kids differently. We need to teach creativity, leadership, the passion for the learning and the confidence to try new things.”
In June, Draper is participating in the 2018 RBC GranFondo Silicon Valley, a 75-mile cycling event that is attracting entrepreneurs and riding enthusiasts alike. The ride starts in East Palo Alto, and weaves through Redwoods at Pursima Creek, the ranches of Pescadaro and the rugged coastline that hugs the Pacific Ocean. He is racing to raise money for BizWorld.
“I am excited about this new event and helping BizWorld build out a new dimension. It’s always fun when I make a short-term sacrifice for a long-term benefit,” Draper says about the race.
While he is brimming with confidence in his risky endeavors, the misses still gnaw at Draper. “I have often been too far ahead,” Draper says. “I have lost money many times where I invested in what amounted to science projects. I’m never 100 percent certain. And my biggest regrets are the decisions I didn’t make. I passed on Google and Netflix, and got outbid on Facebook and Yahoo.”
But as Hartenbaum says of Draper’s success rate: “If you bet on 100 companies and a few of them make you 1,000 times your money, you’re a great investor.”