Tim Draper of Draper Associates joins Nick to discuss Lessons from Tim Draper on Investing in Elon, Where Theranos Went Wrong, and Why Decentralization is the Next Great Tech Frontier. In this episode we cover:
Why Tim Draper invested in Elon Musk
The Theranos Post-Mortem
Why Tim believes Decentralization is the Next Frontier
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Transcribed with AI: 0:16 Tim Draper joins us today from San Mateo. Tim is a prolific venture capitalist and is founder of Draper associates, DFJ and the Draper Venture Network, a global network of venture capital funds. He’s also the founder of Draper University and immersive entrepreneurship program in the creator and star of Meet the Draper’s an international Pitch Competition reality TV series. Can’t wait to hear more about that. 0:41 Tim has also been called the creator of viral marketing. He’s a huge and early proponent of Bitcoin blockchain and web three. And he has led investments in companies such as Coinbase, Carta, Tesla, Skype, SpaceX, Twitch, Hotmail, and RobinHood, amongst many others. Tim, Your reputation precedes you, sir. Welcome to the show. 1:06 Great. Thanks for having me on the show this fun is first time I think I’ve been on the full ratchet. It is the first time it’s kind of it’s crazy to me that we’ve been at this eight years. I know we’ve had your son that was probably six or seven years ago. But it’s such a pleasure to have you here. So Jim, I know you come from a long line of venture capitalists. Can you tell us a bit about your your family’s history and venture? Yeah, my grandfather was the first Silicon Valley venture capitalist and my dad was a pioneer of venture capital. And then I wasn’t planning on being a venture capitalist. But I found that as an entrepreneur, I couldn’t focus just on one thing. So I needed to have a variety and I found the venture capital was just the right thing for me, and I saw what it did for the Silicon Valley. And how incredible it was for creating wealth and jobs and, 1:58 and just a good economy. And, and for sort of being a change agent for the world. And I got excited about it. And so I made it my mission to spread venture capital and entrepreneurship around the world. Oh, also my children. Three of my children are venture capitalists, my son belly runs path ventures, he worked with me for four years. My son, Adam runs boost ventures, and they they focus on Sci Fi, you know, turning sci fi to reality. And my daughter, Jessie Draper runs halogen ventures, and she only backs women. And she has been fifth, she’s on her third fund, and she is the real force for good. They’re 2:47 what an amazing family. I’ve spoken with Jesse a few times. And then I think last time Adam was on the show, he said his goal was to develop an Iron Man suit some day, and I’ll have to get the update and see where he’s that on that venture. Yeah, that’s gotten him into VR, and exoskeletons, somehow he’s involved in the oceans now. And Bitcoin, mostly because he figured that that was just going to be the currency of the future. So Iron Man would only use Bitcoin? Well, you’re not afraid of deep tech and sci fi either. I know that you’ve been an investor, longtime investor in space and frontier tech. Yeah, the way I describe how I invest, is, I start swimming really, really hard and hope that a wave comes 3:37 in. 3:41 And sometimes it does, sometimes it doesn’t. But yeah, we, we’ve invested in a lot of interesting companies and, and Elon Musk, you gotta give him the credit for this. But he blowed broke a logjam and transportation and space, that is, has opened up entrepreneurial creativity in a whole new way. So I think that there going to be some interesting things happening there. 4:07 And I also think, of course, that Bitcoin and 4:12 the blockchain and smart contracts are, are going to completely transform the world economy it 4:22 when you have a currency that moves money faster, more efficiently. 4:28 One that doesn’t require an accountant doesn’t require a lawyer that has the ability to increase circulation. And with better circulation, you have a better economy around the world. 4:43 I mean, that is the key finding you get the circulation is the key to your body to better circulation means you don’t get Parkinson’s or Alzheimer’s, better circulation around the world, means you don’t get poor. Everybody’s rich and 5:00 to Bitcoin creates better circulation around the world. 5:04 How do you feel about inflammation? 5:08 Inflammation is happening in Russia. 5:14 And inflammation is happening in the ego of Mr. Xi. And I think that, that those two inflammations are creating huge problems in our world. And I think you’re right, I maybe you need leaders analogy, you need leaders who kind of push, 5:31 trust their people, leaders who trust their people enough to give them the freedom to operate. And then if they operate freely, then everybody makes a living, and everybody figures out how to make 5:44 for a good life. So let me challenge you, you know, a certain degree of control. And a certain degree of having elected representatives has a long historical track record of providing some balance in society, right, we can’t just leave, everything can’t be decentralized, right, because a lot of constituents don’t know how to best represent themselves very funny, I created a t shirt that said, decentralize everything. But it’s really because you, 6:13 you probably can’t get there. 6:18 Even though, if we were all completely decentralized, there would be certain things that would have to slowly creep up to be centralized. But instead of having the president comment on every little thing, 6:36 it should be the other other way around, it should be the family starts. And if they have a problem, then they can go out to the community. And if the community has a problem, you go out to the city and the city has a problem you go out to 6:51 bigger and bigger and bigger. And so most great presidents should have almost nothing to do. 6:59 They should trust their people, and only engage when it’s a very, very, very important thing that will affect all 300 million citizens of the US and all 8 billion people in the world. But there are times, of course, where you if you set the whole thing free 7:23 that certain people might harm other people in building their value. And that’s where 7:31 better incentive systems are not a bad idea. 7:36 Now, that doesn’t mean that they have to have slapped down laws. But sometimes incentives to do the right thing are required. But it’s interesting people live up to trust. If you trust people, my job is all about trust. My job is about investing in people with an idea. So I’m completely betting on the future, I’m trusting them to do the best thing they can with that money. And, and they live up to the trust more than 99 times out of 100 they live up to the trust. 8:17 And I think that that is a much better way to run a business, a society, a government, whatever, it’s just better. So I do like the decentralization of everything. I do think that most bet most best decisions are made very locally. Is it fair game to ask you about Theranos? Sure. So tell me how did you know was there trust there and did trust breakdown? Or, you know, what was the I don’t think I ever lost trust in her. I think she got scared and surrounding yourself with lawyers and 8:55 and the lawyers told her not to say anything. And so by not saying anything, the press felt like there was maybe more there than than meets the eye. And so they kept coming, and then the government came in. 9:10 I think you get that kind of scrutiny, I’m sure there are going to be some things that 9:15 that don’t look perfect. 9:18 Most the time, when you make a decision based on fear, it’s usually a bad decision. 9:27 And if something goes wrong, you got to come right out with it. And that’s if there are any lessons learned there that that would be one of them. If anything’s wrong, come out with it right away and then say but we still you know, we’re saving all of these, all this angst because you don’t have to take a pint of blood from a child. You know, there were you think with with more time, a little more money and more transparency that they could have gotten the science and the product to work. Well. They had it working in two places. 10:00 with herpes and something else, so it was already working for some things, but 10:06 I wouldn’t have given her more money at that point because she’s spending it all on her lawyers. I was a big mistake. 10:15 And that was a fear driven decision. You know, and you listen to the lawyers lawyers say Don’t talk. 10:21 Don’t talk to the press. Yeah, big mistake. 10:25 So I think, 10:28 yeah, I mean, I think most of the best decisions people have made have been 10:34 building opportunity rather than cowering in fear. 10:39 And those are, that’s a, that’s a good lesson to learn. 10:43 So back on decentralization for a minute, Tim, I, I suspect you’re more of a Jefferson guy than a Hamilton guy. But you know, when it when it comes to these decentralized structures, do you think the DAO is the right mechanism for managing, 11:01 you know, these decentralized entities? Or, you know, do you see this evolving into something else? 11:10 Well, first, Jefferson versus Hamilton, I love them all. Because the Founding Fathers created freedom for our country. And that has taken us, you know, for 200 years, that was, it was really the best thing going on the earth. 11:30 Recently, somehow, we’ve allowed the government to creep into too much of our lives. And I think that that lack of trust in our people is taking away our freedoms. So I’m very concerned about that. But the Dow’s are really cool, and I love I love what technology often does for us, it opens up new avenues. And the corporate structure has served us well for a long time, and probably well for years to come. 12:04 But when Jeff Bezos becomes super wealthy, 12:11 somehow people are angry about that, I honor Him and bless him every day when I say I need a toothbrush, and it shows up four hours later, I think, Wow, thank you, Jeff welled up. 12:25 But a lot of people are saying why is he rich, and I’m not. 12:29 And I think that Dows might be able to solve that shut and Freud that some people have in their minds, 12:36 it will allow a corporation is set up for the good of the shareholders, and the shareholders are the founders, the early investors, the investors, and the employees, and that’s who gets shares in the business, and they build the value of the business and go, Well, it turns out that people aren’t allowed to just ordinary people aren’t allowed to invest at an early stage in companies like Amazon, because 13:11 I guess our government is protecting us from ourselves. But it’s making a mistake, I think. And it would have been, because what you’re doing is saying you’re not allowed to invest in Amazon until it’s beyond the growth stage. And it’s just sort of a mature company, and gone public goes public. 13:32 And you’re not allowed to be a part of it. But with Dows with a decentralized autonomous organizations, 13:40 and the whole business is based on tokens, rather than shares, similar kind of thing. But those tokens can go not just to the employees, and the founders and the investors, early investors, but they can go to the early customers, or the suppliers or anyone at the community, anybody else who might feel that they should benefit from something like this. I mean, we all benefit when Bezos pays his taxes. We all benefit when we make a transaction and the Amazon delivery shows up, right? Right on time, we all benefit from every deal we make. And Amazon made a lot of deals with a lot of people, and they fulfilled those their side of that requirement. 14:30 So I think 14:33 when people sort of get angry that he’s rich, and they’re not, I think they’re missing, that he has made a zillion deals with a zillion people, and they are all very satisfied. But with the Dow, more people would be wealthy from something like an Amazon. Well, you’re wealthier and your toothbrush, right? Like collectively he’s raised the standard of care. 15:00 Listening and convenience for, for all in ways that we can’t really put value on. Tim, you know, as you’re sizing up opportunities, you know, we’ve seen decentralization with three blockchain manifests mostly in in finance, banking applications so far, but we’re seeing use cases and applications outside of that, whether it be insurance, real estate, you know, geopolitics, internet, you know, as you’re thinking about killer apps and use cases, as an investor, what do you think are the profile characteristics of an opportunity that lend you lend well, to decentralized technology? Well, here, I’m gonna just start with Bitcoin, because Bitcoin 15:48 actually created a banking system that didn’t require all the people living in all those huge beautiful structures, talking to all those other people in government, living in all those big huge structures that we are all supporting by using the current banking system, suddenly, it can all be done in software, and all of that is not as necessary as it was before. So that transform banking? Well, you’re also seeing that it could transform finance, it can, it can transform accounting, because all of the accountant, all the accounting can be done right on the blockchain, automatically, we have a company that does that called crypto, if 16:39 it can transform the way we’re taxed, the taxes can be on every transaction. And that way you don’t get you actually can, can catch all the cheats to or not catch them, but they’ll have to pay taxes. Because on every transaction, you know, some rich guy who’s been dodging taxes in 17:02 Greece owns a boat when he bought that boat if he bought it for Bitcoin, that the government could have just tax that transaction and it would have been and that tax on transactions that could be like point oh, two 5% and all the governments would have more money than they ever imagined. 17:22 The other thing is that in, in other industries in finance, I can’t wait for the time I can raise a fund all in Bitcoin. Investor all in Bitcoin have the employees and suppliers. Sorry, have the entrepreneurs pay their employees and suppliers all in Bitcoin? And then have the all of that being in one walled garden where everybody knows exactly where all that money went. And that is a really valuable thing. And we wouldn’t Why is that not possible today, Tim? Because because everything has to be in the US everything has to be translated back to dollars, and then back to Bitcoin and back $2 Back to Bitcoin, it triples the accounting bill. 18:08 If they just said, Hey, look, if you keep a walled garden in Bitcoin, will you can pay your taxes in Bitcoin, then I could do it. And I could do it, and I wouldn’t. My accounting bill would be way less, I would have wouldn’t need an audit wouldn’t need a transfer agent wouldn’t need a lawyer on the thing. I mean, that could we could have a really good relationship that is just about the investor and the entrepreneur. And that could be incredibly valuable. And to society. Think of the friction that that takes away. It’s fantastic. 18:46 You’ve been bullish, but you either gotta go into the other industries, real estate, the blockchain can keep track of title, the tokens can tokenize ownership of real estate, so real estate purchases can be shared. You know, you know, if you wanted to get into commercial real estate, I think you’d need, 19:07 you know, to make a $10 million investment or something. It’s a big purchase. But you could get into commercial real estate just by, you know, if somebody were able to tokenize then you could buy a piece of someplace in Miami or Boston or where and then insurance is going to change 19:27 in a number of ways and governments going to change. biggest industries in the world have the potential to be transformed because of Bitcoin, the blockchain and smart contracts. 19:39 Tim, you’ve been bullish on Bitcoin and blockchain as long as I can remember been hosting the show for eight years. And I remember back in probably 2016, early 2016 timeframe, we’re going deep on the blockchain and people were snickering about Bitcoin, you know is oh, I believe in blockchain. I don’t believe in Bitcoin. It seems to be not secure. 20:00 During any more, snickering when Bitcoin was at 200, and now it’s 20:05 there grumbling now 20:11 usually snickering is not a good strategy. 20:17 It’s not 20:19 a better strategy, optimism works very well. So tell me why you’re so you know, it’s clear to me why the killer app for Bitcoin a store of value, but tell me why you’re optimistic about medium of exchange and all these other applications for Bitcoin where, you know, some may argue that it’s not the most efficient method for transactions, for instance, oh, it isn’t yet, but it’s about to be well, with open node on the Lightning Network. Bitcoins faster than the visa network. So why are we still using the visa network? The retailer’s haven’t realized that they’re gonna save 2% Every time somebody swipes a credit card, if they use Bitcoin, so I think that that’s coming. People you said store value you sure but people use it for remittance for paying people without bank accounts for paying people remotely? People use it for 21:18 you know, I was 21:20 buying a house and they they knew who was buying it? And they said, Well, no, we don’t want dollars. We want Bitcoin. That’s it. No. 21:29 The moment you can get food and clothing and shelter all in Bitcoin is the moment you realize that you shouldn’t hold any more fiat currency ever. 21:40 And you don’t have any qualms or concerns about compute in energy and power, you know, required to execute these transactions. No, because the ones that are like all those transactions are happening on open node. Off chain. They don’t use any energy, very little energy is used off chains. This. This is where one of those, you know, where the press and the technology have not quite meshed. 22:11 The press is saying Oh, but it uses all that energy? Well, it uses a certain amount of energy. And it’s all based on transactions of seven transactions a second or something which is tiny. But what open node does is it takes it off chain, does all of these transactions, and then brings it back chain back on chain. So you’re not using the Bitcoin Blockchain that often. You’re doing all the transactions off the chain, and then you’re doing them and they don’t take any energy. They’re they’re proof of steak if that, you know, they they’re just such lots of small transactions. And then you aggregate them and do one big transaction on the blockchain doesn’t take pretty much energy at all. 23:03 So Tim, the other sort of element of, of web three that we haven’t talked about is sort of the metaverse and I guess NF T’s we haven’t chatted about that either, you know, meta, or Facebook has kind of had its struggles well documented earlier this week. Is it too early to expect consumers to sort of embrace and adopt the metaverse? And if so, you know, when are we going to see some more mass market use cases? Well, I, you know, I have VR goggles, and I enjoy them once in a while. And we’ve done that we’ve done meetings in VR, which is great fun. We use Arthur for that. And we tend to be early adopters of this sort of thing. And so it’ll take some time. And I think people need to connect to 23:55 web two with web three, they need to be able to connect their phone with their VR so that if they’re not in a VR call, they can still participate through their phone or their computer. So I actually think that that’s all coming. And the creativity is there you see it. I mean, boy, I can remember every I’ve probably been in VR 20 or 30 times. I can remember everything I did in every VR incident. So something cool is happening there. You know, I think we’re moving into a time where the brain and the computer are going to interface in better and better ways. 24:39 And the human and the computer, continue to interface in better and better ways. And I guess you can call that the metaverse and of course, they’re all all these engineers who read. Ready Player One, are very excited about what the metaverse could be, because it really brought you into a world 25:00 Hold where you said, Oh, wow, this is so fun. 25:03 And then people’s definition of web three are very different. So sometimes they mean, they mean that everything is on decentralized Web. Or sometimes they mean, everybody’s in VR. Sometimes they mean that everybody’s identity is proven. 25:22 But lots of things are happening. And I guess they’re all getting incorporated into web 3.0. 25:29 So Tim, we’re talking about frontier tech here and the original next frontier was space. Right before the metaverse, you talked about Elon before, can you? Can you tell the audience a bit about how you first met Elon, and then when you first made an investment in SpaceX, 25:47 I first met him when he was pitching something called confluence, or conformity or something like that, which merged with x.com. And, and the combination became Pay Pal. And he was very impressive that he’s very impressive now, we’ve had a number of conversations that that continue, which is great fun. And he is on a mission to either improve this world or get us off it. And his innovations are, they seem sci fi like, but when when he says, Okay, we’re going to, you know, do the boring company, we’re gonna bore holes through the Earth, people thought he was think he thinks he’s crazy. But they thought he was crazy when he said we’re going to Mars. And he ended up getting all the best engineers in the world working on that project in SpaceX. 26:49 I think that that that’s really what we have in Elon, we have a a great leader who is taking us and helping us progress in by picking big targets. He’s attracting great people to those targets, and, and whether the boring company or the 27:11 neurological one, the brain computer interface, are successful or not. There will be successful entrepreneurs who do those things. And a lot of that will be because Elon opened up people’s minds to the idea. Tim, what was the hardest check, you had to write to SpaceX? I know there were your first ones on that journey. 27:37 You know, what I how that happened is 27:41 I was talking to Jurvetson. And you’re spending all his time launching rockets. And he was flying to Nevada to the desert so he could launch rockets, so he could do this or whatever. And I said, Steve, you’re spending a lot of time in rockets. Why don’t you Why don’t you just find us the best rocket company you can and bring it in and and we’ll do it. And he got all excited. He went back and then about four months later, he came and he said, you know, the best rocket company. 28:13 It’s a Yuan’s you know, this after we were thinking you Elon is already, you know, spending, he should be spending more of his time on Tesla. And 28:27 and we said, okay, Steve. 28:33 And but that first check, it was at a high valuation. But Elon had put so much of his own money into it, that he had to have it be at a high valuation. Of course, it looks pretty low. Now. I think it’s 1000 times on the money. 28:49 Wow. How do you think even think about underwriting a deal like that? When it’s deep tech it by the way, mark it down now that you’ve told me that I, the hardest checks I’ve had to write are usually the ones that work out the best? 29:05 Is that right? Yeah. Cuz I’m kind of on the fence. It’s like, ah, should I shoot? Anyway, they those, those end up going very well. So how do you think about underwriting those and thinking about risk and upside, when, in some cases, the technology component is deep. So it’s very challenging and the markets may be nascent, you know, and like Metaverse, and 29:29 even the space market, you know, its massive now and it’s it’s easier to measure now, but at the time that you wrote that check, it was probably very difficult to imagine the ecosystem that would spawn around SpaceX. Well, venture capitalists fry their brains thinking through all the all the risks of making an investment in a new startup, and they’re right, but they’re making a huge mistake. Because if you think about all the risks and all the horrible things that can have 30:00 happen. You drive yourself crazy. So what I do is just the opposite. I say what if it works? 30:08 Is that a world I want to live in? 30:11 And that’s what helps me make the decision. 30:15 If it works First, how big does it get? And is that a world I want to live in? And that turns out to be a great way of investing. And our investors are very happy with my strategy. 30:33 And it seems to work and I, I have been with a lot of partners who are really good at telling me all the risks. But look, it’s two girls and a cat getting a business started. And you’re saying, Okay, you’re going up against Google, and they’ve got 100,000 employees. 30:52 There are a lot of risks here. 30:58 So I, I can’t even fathom the risks. My brain doesn’t even go. They’re 31:04 amazing. You know, little counterpoint here, what’s the hottest space in tech that you’re least excited about? 31:12 Oh, that I’m least excited about? Yeah, doesn’t matter. You mentioned, you don’t want to invest in things in a future you don’t want to see, you know, what would? Is there anything in the space now that? Well? 31:27 I, you know, I feel like if I answer this question, I’m going to miss an entrepreneur that’s doing something cool. 31:35 So it doesn’t feel like one I really want to answer because if I say, you know, whatever, that I’ve seen too many specialized social networks, for instance, 31:49 then somebody will come with his social network that specialized in all of a sudden, I go, Oh, my God, I totally missed that. Because I didn’t want to do any socialize, socially. 32:03 Specialized network, a lot of entrepreneurs overcome, just, you know, trying to save the world. But they haven’t figured out, they haven’t gone through all the thought process. So here’s my advice to entrepreneurs. First, think about what’s the problem you want to solve, then figure out how you’re going to solve it, then figure out what the product or services that you’re going to provide, that’s going to help solve that problem. And then figure out how you’re going to make money solving that problem. And then how you’re going to distribute it around the world. That’s what I make my students at Draper University do. Because there are a lot of people who who just say, oh, there’s a problem. And they’re, they’re the cynics and the whiners and whatever. And then they’re the group that say, here’s a problem, and here’s how I would solve it. But then they never really do it. And those are the ones who have the creativity, but not the energy to create it. And then they’re the ones who create the products. And some of them haven’t thought through, what’s the business model? How am I going to make money. And if they don’t make money, they’re not doing anybody any favors. In fact, that could become part of the problem. They could end up being on the street themselves, if they don’t make money, 33:24 and then how to distribute. That’s also a technology technique that is very important. And what I say to them is make your customer into your sales force. So you delight your customers so much, that they start selling your product for you. And that’s the best way to distribute your product. 33:45 You know, most people over the years that have been on the show say that entrepreneurship can’t be taught. But it seems it seems a Draper University, you may disagree. I know what’s right about that, is that I, whenever anybody says something can’t be done, that’s when I think, Hmm, how would I do that? 34:08 And that’s how I started Draper University. People told me Oh, entrepreneurship can’t be taught. It’s like you’re an entrepreneur, you’re not. And I thought, Well, how would I teach entrepreneurship. And that’s what we’ve done at Draper University of heroes, we encourage people to become entrepreneurs, and they have to kind of become heroes. And that means they’re willing to take long odds at some extraordinary outcome. 34:32 And the odds improve over time, the longer they stick with it. 34:40 But we have a very unusual way of teaching. 34:44 And it’s nothing like the school thing that any of these other people get. 34:51 Do attempt to measure success. You know, your success with that program. Here’s one, we can measure success in a lot of ways we’ve had 35:00 3200 students, they’ve come from 103 different countries, they have started about 800. Companies, five are unicorns. I think something like 20 are worth more than $100 million. 35:16 They were Harvard and Stanford say, Yes, we’re such a great school. 85% of our graduates get a job when they get out. Our average student creates five jobs. 35:30 So you want to measure, we win. And we only take five weeks of that entrepreneurs time, we don’t take four years. Well done, sir. Tim, you know, you’ve seen many cycles, every one is different. Give us your take on the venture market today. And, you know, whether we have further to fall or if you think we’re poised for recovery and 23. 35:56 I think we’re gonna go falling a little farther. But 36:00 it’s 36:03 this is the same kind of inflationary thing that we had with Jimmy Carter, way back when, where he was spending. 36:13 And we were printing too much money. And somehow we’ve got some program that’s it’s a bill. I don’t know if it passed or not. I never keep track of those things. But where they said, This is the inflation fighting bill. And they’re spending another $1 trillion. 36:32 And I’m thinking, But wait. 36:37 How are you stop inflation. And by 36:42 spending $1 trillion. 36:45 I don’t get it. But people have tried to explain it to me, I still don’t get it. And I don’t think I ever will. Because I don’t think it works. I think 36:55 when you have inflation, if you want long term control over your country, and you want your country’s economy to grow, you need that inflation under control. Just ask Argentina and Venezuela and Nigeria, those are countries where Bitcoin would be incredibly popular. But the governments are there are so bad that they’re actually making it tougher for people to use Bitcoin. But 37:27 when you have to fight inflation, there is a, it’s when the 37:34 birds come home to roost or whatever, people have to pump up the interest rates. And if you pump up the interest rates, that means that the return, the no risk return goes up, which means that people are more willing to put their money in something with no no risk return than a stock. And so a 1% interest rate translates to 100 P E price earnings ratio in the stock market. If it goes to two, that brings it down to 50 goes to three, it goes down to 33 and so on. Which means that if you were at 100 times P E, 38:19 it it’s pretty quickly you move to 50 and then to 30. And if the stock market drops, people get poorer. And they’re a little more cautious with their cash and then they have to sell again. And then so it overcompensate. So the stock market overcompensates, it goes further down than it should, because people are forced to sell they don’t want to sell but they’re forced to sell just to eat or to pay for their housing or whatever it is. And that is what starts creating the 38:56 the depression there, recessions and depressions, the and then it gets worse because then the big companies do big layoffs. So there are a whole bunch of people out of work. And then they being out of work, they don’t have money then. So somehow, you need to put more money into the system. That’s where, you know, really good argument for Bitcoin. It’s stable, and there are only 21 million of them and you’re, you aren’t Yeah. And you aren’t at the mercy of some political force. Yeah, this should be a great environment for Bitcoin, you would think, yeah, but except that the speculators came in, they have the same problem. They can’t buy their food, clothing and shelter in Bitcoin yet when they can. That’s when there’ll be a huge divergence between bitcoin price and and the stock market. But right now, there people are having to sell their Bitcoin in order to pay for their groceries. Well, when I can buy my groceries with 40:00 Bitcoin I no longer need to sell my bitcoin in that don’t pump them back up. 40:06 So Tim, I hate to transition here, but you know, I was reviewing the Draper innovation index q3 findings. This is a bit of a double barreled question here. But you know, what do you think? First of all, you know, can you enlighten the audience on the takeaways from that? And then what do you think this means for Silicon Valley in the Bay Area at large, and, you know, other regions, whether they be within the US or international centers of innovation? Yeah, I tried to split California into six, and then into three, but I got outmaneuvered by the public, employee, union bosses, 40:45 who really don’t want anything to change because they control everything. But they’re killing the golden goose, they’re killing the Silicon Valley, people are feeling like they’ve got to move, they’ve got to do whatever. I have, for years believed that the best governments recognize that they’re in competition with the other governments of the world. 41:06 And they need to be accountable to their people and improve if they’re not. And it’s starting to happen, even though California has this weather and it kept people here for a long time. We lost Elon Musk, and we lost probably two thirds of the best venture capitalists in the world. And we lost a whole bunch of entrepreneurs. And now entrepreneurs are starting, they still start a lot in the Silicon Valley. But they’re also starting in Texas and Florida, and Wyoming in places where government is more willing to allow them to try new things. So 41:45 I created the Draper innovation index. 41:49 And I got these great data scientists on it. And they have done an outstanding job. And the findings are extraordinary. So what they do is they measure which governments are best for innovation, and which ones are worst. And, and that’s which nations and which states within the US so far, that’s what we’ve measured. And what we found is that the United States of America is still number one, but But slowly losing ground, to Switzerland and Singapore, and some of the northern European countries of all things. It used to be called socialist, and now they realize that no free markets were. And then in the US, where California had this huge advantage, and they still do in technology. They’ve dropped to like number nine or 10. And number one is now Texas. Number two is Florida. Number three is Wyoming. And that’s because those three have governments that are very welcoming to new concepts, new ways of thinking, you know, they have the mayor of Miami says we want to be Bitcoin city and the 43:05 governor of Wyoming was contemplating 43:12 paying my taxes, if I would move, they’re paying, paying the taxes I would have owed to California, for me to move there. And they have been the best regulator for Bitcoin. 43:27 Wyoming has and and then Texas, of course, has has built in freedom into their, their hearts and minds. And they’re very proud. And I think that that they they have attracted probably more entrepreneurs and venture capitalists from the Silicon Valley than any other state. So why is Tim Draper still in San Mateo? Oh, well, I had built this school. I mean, I guess we could we could move this school, we are slowly putting our toes in other places. I have a Draper startup house in Austin, Texas, and we’re probably building one in Miami. We have we’re kind of all over the world, and I don’t mind paying my taxes. I feel like that’s fine. The regulations, I will fight until I’m blue in the face. And that I think that California is fine if they want to charge high taxes, but if they’re not providing good services, they’re not doubling my regulatory load. Those things are not good. And those are not good for Silicon Valley and people are going to move and then 44:47 you know, it’s interesting is that the propositions the the initiative process was supposed to be a check against a government like this. That was out of control. That was just at the money. 45:00 Mercy of one group and that group is now the union bosses, public government union bosses not proud of, yes, they can. They’re great, too. But 45:12 public union bosses seem to have such a stranglehold over all the elected officials all the bureaucracy accuracy. In fact, the entire bureaucracy is a part of that union sort of feels like it’s all a special interest group that seems to be running the state. I keep thinking that maybe that will swing the other way. And we will get people say, Well, look, you know, it wasn’t so great when Ilan left. You know, there was some politician who said, Oh, good riddance to Elon, in California. And I thought you just said Good riddance to 100,000 jobs, and an icon of the world. What Why would you do that? But they clearly don’t understand what they’ve what they’ve done to California, how damaging they’ve been. So I think eventually, that will dawn on people. I don’t know how many more homeless we have to get before people realize that, that we’re getting the homeless because we’re losing the industrialists, or losing the people that would have employed them. 46:18 Tim, if we can feature anyone here on the show? Who do you think we should interview and what topic would you like to hear them speak about? 46:25 Well, it’s, you know, I, I’m a big fan of Marc Benioff. I think he’s really amazing. And, and how he manages people. That would be that is really good. He, how he met, he’s got 100,000 employees or something. And how he manages them. really extraordinary. 46:46 Who else? I mean, who do I interview, I interview entrepreneurs. And it’s, that’s fascinating for me, because I get to see what the future is going to look like, I get a 46:59 five year window. Maybe 10? 47:03 If you had a superpower, what would you say? Is your town? 47:08 Well, I’d say it was it was earned not given to me. I I think the Earn superpower is the ability to see into the future, but it’s really not me. It’s really all the entrepreneurs I meet with. They give me that superpower. And then I guess my passion for encouraging innovation change, that kind of thing. I guess that could be a superpower. Oh, and I guess at Draper University, I sort of identify mostly with 47:39 Professor X. 47:42 Like, you know, the guy who runs the school? 47:47 Why not? 47:50 Last two here, Tim, what do you know, you need to get better at? 47:55 I need to get better at fundraising. 47:58 I don’t, I don’t understand. My record is extraordinary. My I have a great sense for entrepreneurs, I have a huge deal flow. But I think I’m getting it, we now are the venture firm for the family office. And I think that positioning makes much more sense. Because institutions don’t like having a single decision maker. And I’m not going to go back to a partner Sinking Ship decision maker. 48:31 Because I spun out of a big partnership. And I decided that I wasn’t going to do that again. Because I want to be able to if I if I see somebody and I see something in in that person that is going to change the way the world works. I’m not letting partners talk me out. 48:49 And finally here, Tim, what is the best way for listeners to to connect with you and follow along with all of the ventures in sort of the Draper ecosystem? So I’m at Tim Draper at Twitter. I’m also firstname.lastname@example.org, but only Email me if you’ve got a business plan. Or if you’re an investor. Otherwise, you know, I can’t. I gotta focus. 49:20 That’s all. Well, Tim, this is a huge pleasure. Nice to be long overdue on this interview. And thank you so much, sir, for sharing your wisdom with us today. Great. Okay, thanks. Bye bye. Transcribed by https://otter.ai