The Next Generation of Entrepreneurs


Tim Draper
Founder and Managing Director, Draper Fisher Jurvetson

Tim Draper, founder of Draper Fisher Jurvetson and the Draper University School for Entrepreneurs, affirms his belief in the power of crowdfunding, and discusses his efforts to support entrepreneurship through one-of-a-kind education initiatives. Read the full transcript below.

Draper: It’s great to be here in Detroit. I had no idea how beautiful it was this time of year. It’s spectacular! And coming off a red eye, you kind of feel, hey, this is a pretty nice place, you can breathe the air. I think any time you’re in a city where it’s gone from a population of 1.1 million down to 750,000, you know, you don’t have a lot of traffic. Not a lot of pollution, it’s actually kind of nice. For an entrepreneur, you look at this and you just say, wow, wide open spaces.

So I thought I’d say, this is what I do. I support heros, I look around for great people. I wish I had supported that guy in the middle. But I did support Elon Musk and I did support Janus and Niklas Zennstrom. Janus Friis and Niklas Zennstrom. And I support all the women out there who are starting businesses and all these other superheros.

That’s my goal in life. I see more and more that the world is sort of having troubles, tough economies, big unemployment, a lot of problems. The world needs more heros. So you’re all entrepreneurs, business people here in the Detroit area, and it needs you. You need to start getting creative. You’ve lived off this automotive tit long enough. It’s, what, three, four generations of living off this automotive tit. It’s time to do something else.

I think Tesla is going to take you to task, so you’ve got to come up with something—if you’re going to stay in automotive, you’ve got to make that car fly.

You come from a great history of entrepreneurs. But other than the founder of Little Caesar and Gerber baby food and Boeing, it’s mostly in the car business. Except you also have James Bailey of Barnum & Bailey circus. This place has some fun, creative thing about going on. I think that’s the guy we should all be focused on.

Now, these are the guys who left Detroit: Steve Ballmer, Scott McNeely, Bill Hewlett, Bill Joy, Larry Page, and my partner John Fisher. You’ve let a lot of good brains go. But now I think it’s a really good time here to start to build the place.

Now I’ll do my preroll. Buy this book. My dad wrote it. It’s called The Startup Game. I came from a long—third generation venture capitalists. A lot of genetic dilution along the line there. But my dad wrote this book. It’s great. It’s about the relationship between the entrepreneur and the venture capitalist. And now this is my daughter. And she’s the valley girl, and she interviews great entrepreneurs. And she got Elon Musk to launch a bottle rocket with her. And she got Vinod Khosla to paint her green, because he’s a green investor, and she makes people blow bubbles and dance and it’s great fun. So watch this show, Valley Girl. It will teach you something too.

Crowd fund your companies. You’re going to hear a lot about crowd funding. We tried it. What David was talking about. I actually went out and I did something called meVC, which was going to be a public venture capital fund, and it was. We were able to go public. But then the regulators surrounded us, and we were regulated, in effect, out of business to where a hedge fund went and bought the thing out of our hands, and we were never able to accomplish our goal.

Now I blame the regulators there, but really, I can’t even blame regulators. We—we’ve gotten to be chicken. We’re not the land of the brave — home of the free, land of the brave anymore. I think we’re chicken. We have a law for everything. I bet there’s a law that says you have to have 3 inches between seats. There’s probably a law that says only half this room can be filled. We’ve got too many laws.

And the regulators are overwhelmed because they are going, oh, my God. They’re trying to read the laws, and they sometimes conflict.

In building this building that I was—that I’m doing for this entrepreneurial school that I’ll get into in a sec, I have found one law that says you have to increase the size of the elevator by 7 inches, which basically means that I would have to tear the whole thing down. And then another law that says, no, you don’t have to, and if you do, it creates this whole other problem. So I have two completely conflicting laws.

Anyway, regulators, they are overwhelmed. Too many laws, too many problems. I think we should sunset all the laws, and let’s just move forward with the ones that really count.


So crowd funding is terrific. It could be a great way we can all participate. Actually, let’s do something. Can anybody give me a ride to the airport? That’s called crowd sourcing. Okay.

Now, here is another one. Who would pay a dollar to cure lung cancer forever? Okay. That’s crowd funding. Every hand went up, I think. Except you.


So the crowds, this is one small room. I just raised what is that, $300, and then 10,000 people are seeing this, so another 10,000 for lung cancer? I think that’s pretty cool. You do it just like that.

The world is opening up, and all of that crowd sourcing and crowd funding is getting more and more efficient. I think it’s getting to be a really exciting place to be, and if you’re an entrepreneur I think it’s a good place to point your arrow.

This is a company that my other son created called Mobber. And he created this great new social marketing tool that could actually create a social media bomb that would make things trend on Twitter, and Twitter shut him down. So, anyway, that’s my son.

And this is my final ad. We’ve got a new logo and a new slogan: Fueled by DFJ. That’s our venture fund.

Okay. There are big opportunities out there, and I saw this big opportunity in going global. So I got started thinking global. There was global warming, global finance, global communications, global health, all these global things.

So DFJ went global and became a big thing around the world. And I’m going to take you on a little trip around the world, just because it was fun and there are some fun little stories about it.

But what’s happened is that the world has completely opened up, and global distribution has commoditized. So we’re starting to change our thinking. Let me take you first to India.

We funded two young guys at Hotmail, and they came up with this web-based free e-mail. And I asked them, Well, how are you going to market it? They didn’t really know, TV ads or something. And I thought, Whoa, I’m a venture capitalist, but I don’t have that kind of money.

I said, Can’t you just put a message at the bottom of everybody’s screen that says, PS I love you. Get your free mail at Hotmail.

They looked at me like, God, there were 21 investors we met with. Why was this the guy that said yes? And then I just kept pushing. They said, Okay, we’ll do it, but no “PS I love you.”

So, within 18 months we had 11 million Hotmail subscribers. The founder, Sabeer Bhatia, was Indian, and he sent one e-mail to India. And within three weeks we had 100,000 registered Hotmail users, at a time there weren’t even 100,000 computers in India.

So this was the beginning of viral marketing. It grew, it was spectacular. But to this day, if they had left in the “PS I love you,” I believe we would have a more peaceful and loving world.

Oh, incidentally, when I went back to India and I was with my partner, and we were walking the streets, and he said, Okay, are you ready to walk across the street in India?

I said, Yeah, I guess so. He goes, Okay, here we go. And meanwhile, there’s a guy with a rick-shaw and a motorcycle zipping by and a car coming this way. It felt like an intersection with seven roads coming to the middle and a cow coming this way and a camel and a donkey, whatever.

So I walked across and people were zipping by in all directions. And I’m halfway across and I saw my opening, so I sprinted across to the other side of the road. And he goes: No!

I said, What’s wrong? I got here. No problem. And he goes, No sudden movements.

So I figured it out. Everyone in India is doing partial differential calculus in their head as they cross the street. It makes them incredible software engineers.

Estonia was a wonderful opportunity. I was with—David and I have a mutual friend, Tony Perkins, who put on a great conference in Palo Alto, and I was scheduled to be there. And I said, Tony, I’m sorry. I’ve got to be in Estonia for a board meeting with Skype.

He said, That’s okay. I said, How about if we do a video conferencing event? And he goes, Sure, sure, let’s try it. And at that time video conferencing was like this. But he was still bold enough to try it. And I thought, okay, well, we’ll give it a shot. And he said, Can you get that guy Niklas to be on it with you? I hear Skype is starting to pick up. And at that time, there were 3 million users, and it was all audio, just audio.

So we said — I said, Niklas, can you do this? He said, No problem, video conferencing. We’ve been thinking about something in the lab. I kind of went okay, but set up a video conferencing system. He goes, Oh, yeah, fine.

So we got there, and the cameras were all on me and ready to go, and he goes — Niklas turns to the back, behind the curtain and he goes, okay, throw the switch. I thought, what, what? He said, You’re on. So then we had our whole video conference, and it was perfect. I said, How did you do that, Niklas? He said, Well, we cut off roughly 100,000 phone calls and used all that bandwidth to make sure that this video Skype call was perfect.

So startups, entrepreneurs do whatever they can to make it happen. If you were on a Skype call at that time, I apologize.

China, I went to China the first time and it was this—oh, my gosh, I am almost out of time. So I’m not even going to go to China or Singapore or Russia or Ukraine or Egypt. Or this.

Well, I want to get through this. So there is—Moore’s Law says that $1,000 of computer power doubles every 18 months, and it’s accelerating. Now it’s every 14 months. So almost every year, we have a platform that is twice as powerful as the platform that was there the year before.

So for an entrepreneur, this is a new platform from which they can create that is much faster, much better, and it’s a great opportunity for an entrepreneur. And it makes you start to think about all the things that have happened over the last 150 years, and you say, wow, you know, this was the light bulb and the telephone and the electric car and the airplane and digital cameras, smartphones, fiber optic, indoor plumbing.

And then you think about, well, in that same amount of space time continuum, another 15 years, you will see as much change as you did in the last 150 years. So think of all the human change that’s happened over that 150 years. That same amount of change will happen in the next 15 years.

And so you can imagine, you know, desalinated water and near infinite energy supply, self-navigating electric cars, vertical hydroponics, design genomics. I always thought it would be fun to have something that said—I was always hungry as a kid. I never wanted to stop playing. So I thought there should be something where you can go, “food, drop.” So I think there should be a food drop.

I think there is also this new concept of near thought communications. I don’t think it’s working quite yet, but we’re close.

And two years after that, imagine what’s possible. Two years after that, that same 150 years worth of change could also be happening. So we could have everything from a holodeck to need anticipation to human-animal communications. I think the human-animal communications, we are not far from like deciphering what they are talking about when they bark and tweet at us—tweet, like Twitter. That I don’t know if we will ever figure out.

Okay. So there are really cool crowd sourcing applications, and I bet you guys have some. We are going to commodotize distribution, breakthroughs are spreading faster.

Now there are big changes in venture capital. Venture angels, incubators, crowd funding are changing my business. And I think it’s cool, because I love it when some sort of a monopoly or oligopoly gets taken down by a cool entrepreneur who comes up with something great. I can think of a lot of interesting industries that have that feeling to them.

One is medicine. Medicine has an oligopoly, and it is messed up. And you guys can go after that with a vengeance. One is banking, investment banking. That is completely dominated by Goldman Sachs. I think you can go after that with some of these interesting crowd funding ideas or other.

And one is governance. I think governments are competing for you. They’re competing for the great minds and the capital of the world and they have to get more efficient. I think—there’s something called Blueseed. Have you guys heard of Blueseed? It’s this boat that’s 15 miles—planted 15 miles off of Silicon Valley. It’s its own country and has its own rules, and it’s all about — it’s a big incubator. It’s a big, huge, old aircraft carrier.

I think things like that are going to force governments to say, oh, hey, we’re really screwing up here. We’re way too bloated. We can run a much better ship if—better ship.

So anyway, at DFJ we’ve reorganized, because we’re saying if things have commoditized globally, then we need to focus on just the most creative, most innovative entrepreneurs, because those are the ones that are going to push the edge. Because if you’ve invented something, a new app, whatever, that everybody wants, it will spread around the world very, very quickly.

And so anything you innovate should be thinking years and years ahead, because it’s going to spread very quickly. We have made distribution around this planet very efficient. So what we look for, we look for iconoclasts that change the nature of business. We look for clever business models. We look for things like Amazon where they have no accounts receivable and no inventory. Or in Hotmail’s case, no marketing expense.

You want to win through putting a zero somewhere in your balance sheet that your competitor doesn’t have, not at sales or cash but anywhere else.

So we look for disruptions. One thing I will mention is that in space, SpaceX has figured out how to launch the exact same payload with their Falcon as the Vulcan that NASA launched. And the NASA Vulcan cost $400 million in hard costs and another 2 billion in soft costs. SpaceX launches the Falcon 9, and it is $30 million. Should that be done by government or private, government, private, what do you think?

We look for black swans wherever they are. And now I’m going to say quickly Draper University heros, before you give me the hook. Okay?

I decided that there were not enough heros in the world. So I bought a hotel. It’s an old hotel, and I decided it was going to be an immersive 10-week program for 18-to-24-year-olds to go and unlearn everything they’ve learned and then be forced to think creatively on the other hand.

So we have—instead of teaching history, we teach something called future. We combine predictive analytics with science fiction. They have to read Dune or Neuromancer and then they have to project and decide how many years before we land somebody on Mars, how many years before we’ve got 50 percent smartphone penetration around the world. How many years before whatever.

And so then it starts with future and then we do design, and it’s creative design. They learn to paint. They learn to do a wide variety of things. And then distribution, we teach all sorts of marketing tools, viral marketing, social marketing, whatever.

And then finance, we make them do a full simulation of an industry broken into teams, and then they learn balance sheets and income statements just from the gut, rather than by rote.

And then at the very end—well, then they have survival training where we ship them off to a place where they have to live for four days in—who knows. And they’ve signed their lives away.

And then the last period of time, they go and they create their business and focus their business, and then pitch venture capitalists for two minutes. And it is — we had one pilot program, and it was a huge success. We had 40 kids there, and three of them got funding. My goal was not to get them necessarily funded, but to just get them thinking big and thinking heroic.

And so anyway, You can see some of the things that they did online, and you should definitely check it out and tell your kids, grandkids anybody? And tell yourself to go to And remember, wherever you go, whatever you do, entrepreneurs are heros. They take long odds at extraordinary outcomes. They help us build wealth, jobs, create great things. Thank you very much for your time.

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