Tim Draper’s “weird” rules for investment success – Cointelegraph Magazine

Indeed, Tim Draper picked the loser. He told me even before I asked him. The VC legend who supports Hotmail, Tesla, SpaceX, Coinbase, Ledger, and many other successful companies readily complained that he invested in Lemon. He said that some people have completely closed down, but some people just haven’t returned the money to him.

“For the same reason, some winners made us several times the money, and some gave us 1,000 times the investment,” he told the magazine in a rare face-to-face interview appearance At the Web Summit in Lisbon, Portugal, in early November.

To be fair, this is a question he is often asked. His investment success rate is impressive, even his lemons are impressive-such as Theranos-but he manages to keep looking for good projects. Of course, successful VCs can be selected from the essence, which may tilt the results in a positive direction, but Draper attributed it to his four-step evaluation process.

Golden rule

Draper said that the biggest denominator of successful companies is trust. Another key factor is that there is only one decision maker in the company-the team is full of confidence in this leader.

A clear company killer is when the co-founders are not getting along, maybe they all think they should be the CEO, which may cause a lot of second guesses and delays.

The market in which the project hopes to operate must also be free of restrictive restrictions or over-regulation.

“If the US government had regulated the Internet as early as the 1990s, we would not have had the same success in Silicon Valley and elsewhere. Companies need to be free to innovate. They would not feel overwhelmed by government regulations.”

His fourth evaluation criterion is weird. Yes, weirdness is good for business.

“A lot of the winners are often a little weird. Their ideas sometimes turn to the left. I often go, wow, what are you doing?”

Hotmail is one of them-the idea of ​​free web-based e-mail is completely different from the way the Internet was built at the time. And Skype changed Just as Draper and his team were about to write a check, their business proposition quickly changed to a freemium model.

“As for Tesla-who needs another car company Especially when people see the disaster of DeLorean? “

Draper is with mankind’s best friend and Bitcoin swimming trunks. (Source: Instagram)

In the end, everyone needs enough money to succeed, and Draper feels that sometimes people don’t anticipate how much money they need. “In terms of finding funding, it’s better to build on a long runway, rather than give up halfway.”

On the positive side, Draper believes that when entrepreneurs enter the 25th pitch, their business, competition, and market are already in trouble. He likes to watch the 25th course instead of the first because it saves him time.

Enter the dragon

Draper’s knack for picking winners extends to picking cryptocurrencies.As early as 2014, Draper Buy The U.S. Marshals seized 29,656 Bitcoins at a bid of $640 per Bitcoin. He unexpectedly won all 9 batches of Bitcoins, but he was not upset either at the time or now. Keep calculating: at today’s value, this is almost $2 billion. However, Draper thinks it will become higher and higher. By the end of 2022, or early 2023 at the latest, he will pay a tip of $250,000.

He thought he was too confident about the Marshall auction in the United States-but he did not expect to win all nine auctions. Many people have only heard the auction part of the story, but this is actually just a way to make up for the 40,000 bitcoin he lost in the Mt Gox fiasco.

“I have always been optimistic about Bitcoin-for me, it represents freedom, cross-border freedom. I also like the trust element-freedom and trust are a good combination,” he said.

Draper Associates owns approximately 30 unicorn companies, including Skype, Hotmail, Twitter and Tesla. When asked about this degree of success, Draper said that he is slightly different from other venture capitalists.

“I am a seed venture capitalist, and entrepreneurship is in my blood. When I meet someone with the same drive, the same “Let’s do this work” method and I click. I need to see To the motivation in their eyes and know it is in their hearts.”

“The other difference is in my opinion. Other investors asked what might go wrong. I asked what if this worked? If it worked and something truly extraordinary happened to humans and society-then it It might be worth a try.”

Web summit
Tim Draper on the stage of the Web Summit. (Source: Barrage, Twitter)

Bitcoin changes the world

The recent news that governments around the world have taken steps to adopt Bitcoin has encouraged Draper. He is excited that countries such as Panama, Uruguay and Ukraine seem to be following the example of El Salvador, which has become legal tender.

He has first-hand experience in decision-making in South America. He recounted the ongoing dialogue with former Argentine President Mauricio Macri. When Bitcoin was worth $10,000, Draper talked to him about Bitcoin for the first time, and talked to him again when Bitcoin fell to $4,000 two years later. At the same time, the Argentine peso rose from US$0.75 to US$0.25. Draper bet with him that if the Argentine peso outperforms Bitcoin, he will double his investment in the country.

Macri agreed.

“Then I added that if Bitcoin performs better than the peso, then you should make Bitcoin your national currency. However, Massi is worried about the consequences of the International Monetary Fund-just like El Salvador is facing international sanctions.

“This is the wrong way to look at it. When a country like El Salvador makes these decisions, money will follow. I will go to El Salvador in person, and so will more investors.”

Draper believes that El Salvador has made a wise decision and will have the first mover advantage. Not only will citizens get used to using cryptocurrency, but the introduction of blockchain will also help eradicate corruption across the country.

Draper is bullish on everything about Bitcoin. He really likes the idea of ​​running Bitcoin end-to-end in his investment.

Tim Draper
Tim Draper is a popular speaker at global cryptocurrency conferences, although he often attends via video.

“I really want to run a venture fund in the Bitcoin field. I will invest in Bitcoin. The company will use Bitcoin to pay employees’ salaries and Bitcoin to pay suppliers’ salaries. The whole process is a blockchain managed by smart contracts. closed loop.

“In addition, when the company is sold, all the money will go through the natural waterfall into everyone’s Bitcoin wallet-everyone gets what they deserve, without the need for transfer agents, layers, accountants, bookkeepers and auditors. .”

His belief in Bitcoin made him shook his head about the recent COVID Payroll Protection Program (PPP) loan in the United States, and saw it as a lost opportunity. These PPP checks totaling approximately US$953 billion are designed to keep the company credit and keep employees on the books.

“Why don’t they pay in Bitcoin? They will spend another 3.4 trillion dollars so that it can maintain its value.”

Here, Draper clearly expressed his feelings about the people who run Washington, who “have passed their peak period” and “they don’t want to change.”

Although Draper is pessimistic about the leadership of the United States in the government, he is still excited about the technology industry, especially entrepreneurs in this field. He will vote for someone like Miami Mayor Francis Suarez to be the president of the United States.

“People like him can ensure that the United States will not fall behind,” he said.

Universal enthusiasm

Draper is passionate about Everything in the field of digital assets, And even the results of the central bank’s digital currency are doubtful.

“I like every innovation that occurs around Bitcoin-blockchain, smart contracts, second-layer solutions, NFT, decentralization, BitcoinCash, Ripple, Algorand, Tezos, and all the great innovations. However, I am the most I like Bitcoin because it is completely decentralized.”

“So if a government like China says no to Bitcoin, then Japan will appear and say we will accept it. The last laugh is China, because the brain drain will flow to Japan.”

The core of Draper’s vision of the future is to touch the government. He once again cited the example of the US government trying to regulate the Internet because “it will destroy economic value, and the brain will leave this country.”

Draper’s children followed him into the investment field. His daughter Jesse through her start-up company Halogen Ventures and his son Adam focused on women-backed businesses, the latter is the founder of Boost VC, which invested in Start-ups bring the future of science fiction closer. Draper is proud of having both, and at the same time he firmly maintains a generalist himself.

Although he is a conscious American, he sees a future world without borders. He has seen that owning a smartphone can open up the world for the holder.

“I hope that one day my grandchildren will ask me what a border is, and when I explain, they will say-it’s so stupid, grandpa,” he said.

“If someone is an excellent programmer in Timbuktu, I hope they will join my team. We are moving towards a world without borders. All nationalism and patriotism are just the roar of a dying lion. Actual existence is no longer relevant. The sooner people understand this fact, the better. If the government makes rules, people will move to places where the rules are easier or better.”

Tim Draper
Draper University offers a hero training program and a survival course to teach startup founders how to endure adversity.

Draper thinks these The border will fall It was earlier than people thought. In fact, he believes that the border will become full of loopholes in just five years.

“We don’t need borders or customs to restrict the entry and exit of people and goods. People will become citizens of the world and they can choose which government they want to belong to.”

Moreover, cryptocurrency is only part of this development. Draper has been asked many times if he is willing to sell his bitcoins in fiat currency, but he believes that fiat currency is the currency of the past and cryptocurrency is the currency of the future.

“Will I change Euros to drachmas or French francs? It definitely won’t work. I’m waiting for the day when I can buy food, clothes and shelter with Bitcoin. When I can do this, why on earth should I hold? Dollar?”

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