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Tim Draper: Think Big and Drive Progress | E05 · In Search Of Excellence

• 2:12
  Randall Kaplan: Welcome to a Search of Excellence, which is about our quest for greatness, and our desire to be the very best we can be to learn, educate and motivate ourselves to live up to our highest potential.
• 2:20
  Randall Kaplan: It's about planning for excellence and how we achieve excellence through incredibly hard work, dedication, perseverance. It's about believing in ourselves and the ability to overcome the many obstacles we all face on our way there. Achieving Excellence is our goal. And it's never easy to do. We all have different backgrounds, personalities, and surroundings. And we all have different routes on how we hope and want to get there. Today, my guest is Tim Draper. Tim is a visionary and one of the most successful venture capitalists of all time. There are too many to name, but some of the companies he's funded include Hotmail, Skype, Twitter, Robin Hood, Tesla, SpaceX and Coinbase. Tim is the Tim created the first Silicon Valley venture firm to raise a global venture capital fund. He was also the first capitalist venture capitalist from Silicon Valley to invest in a Chinese company, that company was Baidu, which currently has a $75 billion market cap. He was an early investor in Bitcoin has been among its biggest proponents since 2010. He is the star of the TV show, meet the Draper's, which allows people to watch it and invest in their living rooms. Tim is the author of the book, How to be the startup hero, a guide and textbook for entrepreneurs and aspiring entrepreneurs. And he is the founder of Draper University.
• 3:33
  Randall Kaplan: His mission is to ignite the entrepreneurial spirit of students from around the world, and prepare them for success in the real world. Tim, thanks for being here today. And welcome to In Search of Excellence.
• 3:43
  Tim Draper: Oh, thanks so much for having me, Randall. This is just great. And what a great introduction. And I thought about it, thinking about Search of Excellence. And I was just thinking, my route toward if I ever get to excellent, has been very circuitous. There have been ups and downs and difficult times and wonderful times. And, and it is definitely one of those things where you get there, if you get there. It is a very unusual route. But keeping your head down and building your business, one brick at a time is usually a good, good long term strategy.
• 4:23
  Randall Kaplan: We're gonna go through all of that. But I want to start with our family because from the moment we're born, our family helps shape our personality and our values and the preparation for our future.
• 4:30
  Randall Kaplan: You grew up in the wealthiest suburb of Atherton and you had two extremely successful and accomplished parents. Your mom had a master's degree in early childhood education. She worked for the Peace Corps. She was on many nonprofit boards, including the Kennedy Center. Your dad went to Yale, he served in the Korean War. He got his MBA at Harvard. He worked as a steel salesman for a few years. And then he became a very successful venture capitalist. You're basically the son of Silicon Valley. loyalty your grandfather was also a venture capitalist was made you the third generation to be a venture capitalist. And the story about her how your parents met super cool. They made on a ship to Europe, about, they met on a ship to Europe when your mom was engaged to somebody else. And three days later on the ship, your dad jumps in there, and he asked her to marry him instead of the other guy. And they went on to be married for 65 years.
• 5:23
  Randall Kaplan: So tell us, what were they like as parents? And how do they help shape your future?
• 5:28
  Tim Draper: Oh, they were the best parents. My dad has this ongoing undying optimism and it permeates everything that he does. And it spread to me and my sisters, it had a very positive effect. We always had a can do attitude. And we said yes, a lot more than we said no. And we really had very full lives. My mom was a wonderful mother. And you said we we weren't really that wealthy growing up. In fact, we were kind of poor for part of it, because he ran for Congress and lost. And we were in some hot water there. But I always felt like everything was there for me and everything was good. My mom, every time we go to a new place, she'd say, go explore. And I don't know whether she was just trying to get rid of me or what but it was the best thing that anybody could have ever said, Go explore, I explored all sorts of different places, whether it was in the city or out in the country, or in a forest or in the desert, I explored. And I think that really helped me help kind of pull my life into a direction where I, I could I could try things, I could go out and make mistakes, I could go you know, see something, take it on as a challenge, go after it.
• 6:57
  Tim Draper: And keep after it until I succeeded. My dad did have that.
• 7:04
  Tim Draper: Which was he had a determination to get to get wherever he was intending to go in a in a very systematic way, you'd have one goal at a time. And he just go after it until he got there or failed. And then he move on to the next goal. And that has been a great role model for me. And yeah, I'm a third generation venture capitalist, my my grandfather was the first Silicon Valley venture capitalist ever. And now my children, three of my four children are venture capitalists. So we got it in the blood.
• 7:43
  Randall Kaplan: Right? You have an extra venture capitalist chromosome and your DNA, DNA Atlas. Yeah. And its own app.
• 7:50
  Tim Draper: And the business has evolved. So it's so different from when my grandfather got into it, and my father, and then how I got into it, and now with my kids, they're going into a whole new world of venture capital.
• 8:04
  Randall Kaplan: So did your parents encouraged you to be the best in whatever you did? Did they lead by example? Do they actually use the word Tim, I want you to be the best at whatever you do.
• 8:18
  Tim Draper: No, although they, you know, they might as well have. They, they expected me to be the best that I could be in whatever I was going after. And they encouraged me to follow whatever it was I was interested in. And I think they, they were probably pretty concerned about me in seventh and eighth grade, because I was basically, you know, running wild in the streets. But I was really good at math. So they they decided that it was worth it for me to go look at the cost of going to prep school. And I went to Andover and and that was a really critical time. For me, it was a great time to get away from your parents. I was 14 years old, maybe a little early for a lot of people but not for me. And it gave me this independence. And I was able to start prioritizing things myself, rather than having my parents telling me what to prioritize. And most people get that when they go off to college or they leave the house, leave the home. But I got it very early. And I think that was a great edge that I had on a lot of people because I was able to filter through what I felt was not important to me and focus on those things that really mattered to me.
• 9:50
  Randall Kaplan: So you love math. But what were you like as a kid were you one of those popular kids? Were you a natural born leader. And what do you do for fun?
• 10:01
  Tim Draper: I was a natural born leader until people started drinking and taking drugs because I didn't, I had a bet with my dad not to drink or smoke or take drugs until I was 21. I didn't want to break that.
• 10:12
  Tim Draper: But all my friends were starting to get into alcohol and drugs, and my leadership do it. My followers dwindled. And so that ended up working long, short term, it was very painful, long term to my advantage, because now, as an investor, I can think for myself, I can try things when, when the world thinks something's coming to an end, and I don't, I'm willing to step against the tide. When the when I see an entrepreneur, and he or she has something extraordinary in her or him. That is a that is a very exciting thing for me.
• 11:03
  Tim Draper: And I think I see that in myself for having had to struggle through something. And it and I think it formed me a lot. And I understood peer pressure, because there was a lot of peer pressure that I had to resist.
• 12:15
  Tim Draper: And I understood it in a great way. So I could use it when I needed it and defend against it when I was being pressured. I think thinking for yourself, is a powerful thing. And you know, and particularly today, when people are just following the snooze, I call it the scary news is snooze. If they follow the snooze, thank you very much.
• 12:49
  Tim Draper: They all act the same. It's like oh, okay, now we have to wear a mask. Now we've got to wear the walking the goose step. Now we got to know whatever they tell him to do, we got to do. I think it's good to think for yourself and say, Well, what are the numbers? How important is this virus? How big a deal is this virus? And how do I operate given those circumstances. And I know everybody goes through some of that. But a lot of people just go along because they're, they're told to, I do not do that. And I think thinking for yourself turns out to be one of the most powerful things. And I think in the next decade, it's going to be the most important thing for anybody who wants to make a great living, because artificial intelligence is going to take the mundane job away. So you're going to have to come up with a job that is creative and open and, and with multiple branches, where you don't know which way to go. And you've got to be able to decide for yourself which way to go. And, and so I do think that people need to break from the snooze.
• 14:13
  Tim Draper: And they've got to start thinking for themselves because their jobs, if they're mundane, in any way, are going to be replaced by computers and robots. And then they're going to have opportunities to do jobs that are much more interesting, more creative. There'll be like these jobs that take these abstraction leaps. And they're going to be so much better for it and their lives are going to be better and more open. So I think we got good things happening and good things coming. Particularly for people who are willing to think for themselves.
• 14:56
  Randall Kaplan: When you were eight years old, your first job was picking apples in the backyard, you had a couple of trees, and you'd pick the apples you'd sell them for five cents each at the end of the driveway.
• 15:04
  Randall Kaplan: At the end of the summer. He had sold 160 apples and made a massive amount of money $8 And one of your buddies helped you when his mom found out that that you would help them that she that he had helped you she forced you to share $1 with each of your buddies who helped sell the apples what what did you learn from the apple picking experience and profits? I
• 15:27
  Tim Draper: think you got the story just right. Shoe came and you know, I did this for days and days and days. I picked the apples I sold them. It piled up I kept the money all there for all this time. And then one day a bunch of people were there.
• 15:43
  Tim Draper: They were just hanging around watching the sell apples. And and I think there were five other people and the This mother came up to me and said, Oh, great, so you're selling apples, how much have you made, and I went $8. And I, you know, those$8, over about four weeks or six weeks or something, and, and she picked up the dollars, and she said, good. And then she handed$1 to each of the other four guys, and five guys. And then she took the other two and walked off. And I thought, that's socialism. I didn't, I didn't know it was socialism, but I knew I didn't like it.
• 16:27
  Tim Draper: Because I put in all the effort, and then they just spread it evenly, and then took the money.
• 16:34
  Tim Draper: And then she took $2 for herself. And I thought, Whoa, this is wrong. And that, that really did have some effect on what I believed, you know, my, my political philosophy is freedom, capitalism, free markets, open systems, and not a lot of government control. Well, of course, you know, the difference is you either have freedom, or you have government control, and she was my government control. Anyway, I knew I didn't want to be a socialist from that moment forward.
• 17:14
  Randall Kaplan: Let's talk about the value of education, which is one of the building blocks of our success and our search for excellence. As you mentioned, you went to Andover, you're a good student 13% acceptance rate. And then you went to Stanford, which has a 4.3% acceptance rate, and you graduated with a degree in electrical engineering. That's incredibly impressive and very, very hard to do. It's not possible for most of us to do that. We're going to talk about Draper University in a few minutes and a specific focus.
• 17:47
  Randall Kaplan: But before we do, what's your view on the importance of education and where it ranks in terms of the factor for our future success as part of that, for us to reach our potential?
• 17:58
  Randall Kaplan: Do we even need an education at all?
• 18:01
  Tim Draper: Yes, I think education is perhaps the most important thing we do. I think people have to learn how to learn, they have to learn what has gone on in the past, so that they can create the future. They have to understand what the world is like they have to deep dig deep into the human spirit, and understand how they how humans think and operate. So many things. And, and I think they need to really study a lot of math, a lot of engineering, one science, a lot of art.
• 18:44
  Tim Draper: Because that is where our progress is going to come from.
• 18:48
  Tim Draper: So I looked back at my education, I had amazing education. I went to Harvard business school after Stanford Engineering. And, and I came out realizing I when I went off to start a business, I realized they had taught me nothing about starting a business, even Harvard Business School. And they taught me kind of more how to rise up through the ranks.
• 19:15
  Tim Draper: And so I had to kind of wing it.
• 19:15
  Tim Draper: And then I started to think, Well, what else is wrong with education? And I think it's this, the A means you didn't make any mistakes. But if you think through history, most of the really great innovations came from the steaks. penicillin was moldy, feeding moldy bread to people in the hospital, electricity was gone. If you believe it, he went out and he was flying a kite to see. Okay, would be hit by the electricity.
• 19:49
  Tim Draper: The telephone, that was a lot of mistakes. They tried and tried and tried. And they finally got there. The velcro is somebody who studied a burr under a microscope. It was people doing thing America was discovered by somebody who was just testing to see if the world was round, and he's looking for the West Indies. Reese's Peanut Butter Cups, you know, chocolate and peanut butter got smashed together. It's a lot of these mistakes are important. And I noticed that when I did something really extraordinary in school, that sometimes it turned into an A and sometimes it was an F. And I thought, you know, there's something wrong with this because I think that that that F was really valuable.
• 20:46
  Tim Draper: I did something really cool, but it was just something the teacher had never seen before.
• 20:49
  Tim Draper: And So that's why I started Draper University. I, I saw after the financial crisis, the world was coming apart, the financial world was coming apart. And I thought, well, the world now the heroes of the world are going to rise. Well, the only one I really saw was Satoshi Nakamoto. And he, he went on a pseudonym, he wasn't even willing to stand up and say, Look what I did. And so that was the beginning of me thinking, Boy, the world needs more heroes, and our education system might be failing us, because they're telling us to do, you know, to be on assembly line, you know, do the same thing as everybody else does, memorize this, memorize that and just do it by rote. But what we really want is, I mean, now we have machines that can do that for us, we really want people who are creative and open and have tried things with their life. So I think that that's where I think the world needs to go. And it's going to be very difficult for the existing education, educational institutions to make that shift.
• 22:06
  Tim Draper: I understand why they are the way they are, it's because, you know, they were building factories, you know, you set up the system to build a factory.
• 22:18
  Tim Draper: So you move people in and out the way you move a factory worker, and you move the machines in and out. But now, we need, we need to get people to serve a higher consciousness level. And I think we'll get there. But it's going to take some challenges. And, you know, we think Draper University is sort of step one toward that.
• 22:45
  Randall Kaplan: So you said we need education is a building block for our success. But what about all the people who drop out of college who are successful? I mean, Peter Thiel, he encourages people to drop out of college. What about people who don't graduate from high school? There's a lot of people in the history of the world who have been massively successful who didn't finish high school.
• 23:05
  Randall Kaplan: So what's the what's the balance there? You said, we need it. But can you be successful without it?
• 23:14
  Tim Draper: Well, we need education. That doesn't mean we need the existing education we're getting now. We're getting we're getting the the manufacturing education, we're getting the conveyor belt education now. And, and that isn't particularly good for entrepreneurs. And that's why entrepreneurs did drop out and they go say, Hey, I got a better way to do this. I'm gonna go do it. And I, there's no reason for me to learn ancient Greek, when the school doesn't even teach Bitcoin or coding or whatever.
• 23:51
  Tim Draper: And, and so, and, you know, it takes Draper University started teaching Bitcoin immediately, right there right at the beginning. And it allowed three of our students to go create quantum, one of our students create Tron, and all of our students to go out and explore the crypto world. And it took five more years before Stanford or Harvard, had any kind of a Bitcoin or blockchain course. So we were way ahead, our students got a huge leap on everybody else. Because we weren't waiting for some committee to decide what we should be able to teach.
• 24:35
  Tim Draper: We just said, Hey, these things are important. Let's make sure our students know about it. And so I think it's the quality of education. Yeah. California used to be number one in education best in the best state in the union. And now they're number 50. Well, why? Well, part of it is because California for the last 50 years has been completely dominated by union bosses. And they're just saying, No, it's a conveyor belt, we move people in, we move people up, we move teachers in, we move teachers out, we don't care whether the teacher is good or bad or whatever, they're all paid the same. You know, that's their system. But I think we need better education. So you don't want students to drop out from high school. I mean, you know, a high school student who drops out is a very dangerous person. We don't want them dropping out. We want the school to adjust, so that they can encourage somebody like that and mentor somebody like that. teach somebody like that. Because that's who we want. I mean, that's the kind of people we want to be the big successes down the road. And, and I think, college, same thing. The colleges there, they got everybody on a conveyor belt.
• 26:02
  Tim Draper: And they you know, it's interesting. One of the statistics is that Stanford boasts that 85% of their students coming out of undergrad Get, get a job. And at Draper University, we only take them for five weeks, and our average student creates five new jobs.
• 26:23
  Tim Draper: So it's just another way of looking at the world. It's like you look at the world. And either you just leave it the way it is, and, you know, blend in and watch this news. Or, or you you try to improve it and change it and make for a better things happen. And I think that's what education needs to go to.
• 26:51
  Randall Kaplan: So you created Draper University in 2012, you invited me to speak there in 2018. I absolutely loved it. By the way, I sent you an email thanking you. But let me thank you again here. For those who are listening and watching, you can find my Draper University videos online on YouTube. When you go to the Draper University website, a banner comes up with a title fundamentals of entrepreneurship program. And it talks about heroes, which you've already mentioned here. When you go there, you see all kinds of signs about heroes. When I spoke there, there were three large banners behind me in big bold letters that said, think big drive progress and go full steam ahead. Can you tell us more about this, and we talked about why you created it. But talk about what you mean by heroes, and you walk into this incredible room today, there's a Tesla there, there's superheroes on the wall, there's a big picture of you with an X and a cape on it. I mean, you walk into this thing, and you say, holy moly, this is incredible.
• 27:54
  Randall Kaplan: The inspiration when you walk in the room is different than any other room I'd ever seen. And I walked in there, and I was inspired by just being in the room and seeing all the people working and all this cool stuff around you. But let's talk about heroes. And then tell us about the room and the murals on the wall.
• 28:11
  Tim Draper: So we called it Draper University of heroes, but we really probably should have called at Draper University of superheroes. Because when I think of a hero, now I kind of thought it through. I think of Henry Ford or Albert Einstein, or Thomas Edison, or Steve Jobs, or Elon Musk, those are heroes of the past. Well, Elon still going but heroes in the past. I think of superheroes. I think of science fiction, I think of what's possible, you know, and super villains to supervillains are flying around on on vehicles that seem to defy gravity, they're, they're changing themselves into lizards or, or bats or something. So you kind of there's something about the comic world, the science fiction world, the the world of future possibilities that I want to capture, and I want, I want people to start thinking, what's the world going to look like in 15 years? What's it going to be?
• 29:27
  Tim Draper: Like 50 years, but 15 years from now? I mean, who have self driving cars on the ground?
• 29:38
  Tim Draper: personal vehicles that fly? You know, I think certainly Bitcoin, some sort of cryptocurrency will dominate the the economy, fiat currencies will be gone. The the borders will probably be very irrelevant. And, and so what's your business going to be at that time? And that's what I want people to start thinking how powerful this new future is going to look? And how do you fit into it? How do you build something that drives that future makes that future even better than it could be? And that's what the school you know, that's the ambition of the school. And now we've had 1200 students there, they've come from 95 different countries.
• 30:27
  Tim Draper: They've started about 500 companies. And a couple of them have their there is one unicorn and then there are a couple that are are just close and that I feel like in 10 years that's pretty good at count I'll push.
• 30:54
  Randall Kaplan: So for those who are not in the venture capital business who are watching and listening to podcasts, a unicorn is company with a valuation over a billion dollars. So they started with nothing. They come into Draper University. They go through the exercise and pretty incredible Tim.
• 31:10
  Tim Draper: Yeah, actually one of our favorite stories is about a woman who went through and, and she had gone through testing her ovary for cancer, and they had to destroy her ovary to determine whether or not she had cancer. She didn't have cancer, but they destroy her ovary. So she actually came up with a fiber line idea that goes up to the fallopian tube and detects cancer in women, and then she built it got FDA approval, none of this would have happened without her going through Draper University. But she built it got FDA approval and sold her business for $275 million. And you know, that wouldn't, none of that would have happened.
• 31:58
  Tim Draper: Without us doing what we do.
• 32:02
  Tim Draper: Encouraging people driving them, I did put some money into that one. So I'm gonna ask, but there are a couple that I missed that are also that kind of quality.
• 32:11
  Tim Draper: They've gotten to be that big.
• 32:16
  Tim Draper: There's a yogurt company in China that I didn't back that, I think is well over 100 million in revenues.
• 32:24
  Randall Kaplan: Incredible, let's talk about the curriculum there, which you design is definitely unorthodox. Yeah, some of the some of the tasks you have the students do, going to San Francisco and getting a job offer on paper and 24 hours, selling something embarrassing and going through survival training in the wilderness. So tell us about a couple of examples about selling something embarrassing. And if you want to talk about the other things I just mentioned, there's everybody knows to
• 32:53
  Tim Draper: the embarrassing things, we always want them to have to do a face to face sale of something that is among the most embarrassing things that they could possibly sell. So no, normally it's condoms. But some once it was the Flex, which is new kind of tampon, and they had to go one was underwear, kind of funny underwear, that the women had to sell men's underwear and the men had to sell women's underwear. We do it and we want it to be face to face because we want them to go through that embarrassment. So that that when they actually have to sell their product, they're going can't be any harder than selling condoms.
• 33:36
  Tim Draper: Face to face. You know, so they're not afraid. A lot of people are afraid they go through high school and they're worried about what their friends think they're worried about, what's, you know, what society you're going to think and all that stuff. But if they if they're forced to do something that embarrassing, they, they it has an effect on. And then the 24 hour thing is fine, because they had 24 hours to go get a job offer on paper from somebody that they didn't know. And it's pretty impressive. About 90% of people actually did come back with job offers. But what are the two that stick out in my head are one one person got a job at Twitter, which I thought was a pretty big deal. Yeah, one day, they're amazing. Yeah. And the other person got a job sweeping up a gay bar from three to seven in the morning. And, you know, so some, you know, it was it was a highfalutin one and a low flute and one but the whole point was, Hey, your downside is in 24 hours, you can go get a job. And so what you're upset, and the same thing with survival training, we want them to see, hey, you know, so you might have to live in a tent.
• 34:57
  Tim Draper: You might have to live out in front out in the middle of nowhere. But it's not that bad, and you can survive it. And I think then, when people have that they go, oh, yeah, well, I you know, I slept in a tent. So you know, I can I can I know what it's like to have my back against the law and I can actually survive it. And then by the end, they they create a business plan. And we always play with their business model a little bit and then they pitch for two minutes to a panel of venture capitalists. At the end.
• 35:39
  Tim Draper: At the very beginning, we do something kind of interesting too, which is it's we call it a hero a it's like a hackathon.
• 35:47
  Tim Draper: They have to come up with an idea for a problem. They have to come up with a problem or global problem that they think is a big deal, then they have to come up with a solution. But then they have to come up with a product that creates the solution to that problem. And then they have to figure out how it's going to make money. So they have to create a business model. And then they have to figure out how they're going to delight their customer. So that their customer becomes their Salesforce. So that that process is a very powerful woman at Draper University. And I think it's been very effective. I think we, we feel like, it's interesting that people who start businesses, you know, they get a little bit of a jump, because they've been trained to do whatever it takes. And the ones who who don't. It's interesting, either they go back to school, and they learn something that they think is practical, and usually it's coding, or going back to business school, or, and then their grades either go sky high, or they go down, because they're, they're studying at the same time, they're running their business, or they go to a big company, and they get promoted faster than anybody else. And I'm convinced that in a big company, a lot of people are just watching each other, making sure nobody steps out of line.
• 37:19
  Tim Draper: But if somebody comes in there from Draper University, it's like, their bulls in China shops, shaken the whole place up. And so then they might get fired, but they generally are getting promoted.
• 37:37
  Randall Kaplan: I want to talk about the condoms for a minute for fall, we all are proponents of safe sex, but that's not the purpose of my question. The purpose of my question is, what exactly are they doing? And how are they selling condoms or bringing condoms someplace, and then they're walking in, and we,
• 37:54
  Tim Draper: we were at Draper University logo,
• 37:58
  Randall Kaplan: I was gonna ask you about that
• 38:00
  Tim Draper: we have logoed, Cabo. And they, and they, they get a stack of them, each team gets a stack of them. And whatever they sell for their team, that money goes into whether they can money that pays for the food and survival training. So there is a great incentive to go ahead and do those things.
• 38:29
  Randall Kaplan: But where did they go? Are they walking up to people on the street?
• 38:32
  Tim Draper: Yeah, San Francisco.
• 38:32
  Tim Draper: Yeah. And then on a train on the way there, we always say you've got to get a life story of the person next to you on the train.
• 38:40
  Tim Draper: So on the train up, they get the life story. They get to San Francisco, they have to they usually go to Union Square, they sell the condoms. And then they win, we may have to combine those two things, then they have to go get a job, and then they come back. But they've been two trips to San Francisco historically.
• 39:04
  Randall Kaplan: I think there's two things that I'm hearing when I when you share this with us.
• 39:06
  Randall Kaplan: The first is the art of the cold calling, I think the ability to cold call, as a founder as an executive, I think that's critical to our success. And the other thing that I think of is the ability to close. So where do you do you think cold calling is a necessary skill for those who are going to start a company, you've got nothing, you got a piece of paper, you got a business plan. You think, Gosh, I hope somebody likes what I'm doing. I hope I can raise money from someone, some people don't raise money. I mean, that's the best way to start a company not to raise money, and you own all of it yourself. But where does cold calling come into this? And what do you what do you tell people? People are afraid? I think when you people walk in, they don't know about you gotta go sell condoms. People are thinking. I mean, in a million years, if you had told some of these people this, they would have said, I'm never going to do that. So you make people do that. But what are you going to say to all the people out there that have the fear of doing this? Because I think that's an impediment to a lot of us a lot of people who you know, to get motivation. And to be well, they should
• 40:19
  Tim Draper: stop watching the snooze. That's the thing that scares everybody scary news. But I also think when you do it, it changes you. Because you you're afraid to do it, and then you do it. And you go, Oh, that wasn't so bad. And then you also realize that a cold call is really an opportunity to talk to somebody and to connect. And I think that that's a powerful thing, be it whether you're cold calling or not. I think Think it, it's really important to be able to connect with people.
• 40:57
  Tim Draper: Even if it's the people you work with, or your customers or whoever, it's important to be able to connect, and I think you have something like that. And, and, you know, it's something, they can laugh about something they can, you know, tell people, oh my God, these guys had it, you know, got me into this. And now I'm selling condoms on the street. And it's actually it's pretty interesting because some people go and sell the condoms.
• 41:26
  Tim Draper: And then others, like, become street musicians or whatever mimes. And they try to get money that way. So it's it, it forces them into odd situations that are a little embarrassing. And I think if you can get over your embarrassment, you can do great things. The think of Elon Musk.
• 41:46
  Tim Draper: Elon says, we're going to Mars.
• 41:51
  Tim Draper: You know, most people are gonna look at him go. That's nuts. But who, who joins him? The best engineers in the world? The ones who are going, that's a cool idea. Let's see what I can do with that. That's gonna be fun.
• 42:04
  Tim Draper: But how are we going to feed people? How are we going to house people how we're going to clothe people on Mars. And so he ends up with the best engineers in the world. And all because he's not afraid to be embarrassed. And look at what he does. I mean, his tweets are hilarious is, I mean, he's doing a brain computer interface. He's doing a boring company and bores, holes in the earth and trash allows people to travel that way. That, you know, the guy's willing to stick his neck out over and over and over again. And take the embarrassment at the beginning because he knows down and deep in his heart, that he might just be able to do it.
• 42:51
  Randall Kaplan: I want to share with our listeners and our viewers, I started cold calling when I was a freshman in college, I sold T shirts door to door, room, the room you knock on the door, some people you know terrible get out of here.
• 43:04
  Randall Kaplan: And then some people bought the shirts, but I bought him for five I sold them for 12. The long sleeve I bought for seven, I sold those for 20 bigger margin there. I sold them outside the big house, Michigan football stadium, 100,000 people in and you got your box there and you're selling shirts, and I've done it. I've had some success, and I've done it. In the last 10 years, we had a portfolio company based in Palo Alto, the CIO of Salesforce was the chairman. We were at the big Salesforce conference, we had a little booth in the back. And my job was to go and find people and bring them into the booth.
• 43:40
  Randall Kaplan: And you know, that's like you're looking at badges and you're pulling people and you get blown off 99% of the time, but a couple of people went by the booth. I have a product. It's called a collar card. It's basically a credit card that has four pop out collar stays. We sell them to hotels and dry cleaners. Our business was we had record sales, first quarter Tim's $0, for the first time in the 11 year history of the company, but I went to the clean show two years ago, and I'm sure it's one of your favorite conferences. It's the dry cleaner show every dry cleaner in the country goes there. I'm walking around with my collar cards, and I'm cold calling Am I fearful? Yeah, the people blow me off. Yeah. Does it bother me?
• 44:24
  Randall Kaplan: You know, I'm used to it. I'm 52 years old as 50 When I went there, and I still have to do it for my own success. So for those listening today, you can call calling us something that I think we all need, no matter how young or old or whatever you've done in your career to that point in time.
• 44:44
  Tim Draper: Oh, no question I think you're dead on people have to do in cold calling is it's a personal connection. And if as soon as you start thinking about it that way, it changes your whole attitude. Then you realize all I'm doing is I'm stepping up somebody's giving them an opportunity if they say no, no big deal, but you get a chance to meet on
• 45:10
  Randall Kaplan: my first job paid job. I worked for a company called mural stone construction.
• 45:13
  Randall Kaplan: It was a summer job. 16 years old. I sat in a office with six people we had a phonebook and we went through the phonebook cold calling people. Hi, I'm Randy from rural stone construction.
• 45:27
  Randall Kaplan: Are you interested in some aluminum siding today? And we've made 200 calls a day and you have to be on for every single call sort of like raising money.
• 45:39
  Randall Kaplan: You know, you're meeting with 20 venture capitalists and you had two weeks yeah beyond for every single meeting. But you're a little fatigued if your 200 200 call it at the end of the day and I remember I had one sale of I think $70,000. And I remember getting a check for something like $1,800 Oh my gosh, this is amazing thing ever. It really is the greatest thing ever. It's really helped my career and some of the things I've been able to do. Let's talk about internships. And I want to talk about the importance of a building block to our success.
• 46:15
  Randall Kaplan: And before we get your views on this, I want to take a minute to give a little background here on my program. I've had an internship program at my venture capital firm jump investors, for the last nearly 20 years. It's a teaching internship we have prominent and very successful speakers each week who share their stories or speakers are entrepreneurs and leaders in the field of finance, investment banking, money management, entertainment, and the world of professional sports stories are so inspiring. We've got some super fun things. When you're Tony Shea said come on out to Zappos, I flew all of them out there to Las Vegas and credibly gave us a tour you talk about an amazing learning experience from one of the leaders in terms of customer service and how they do things. It was just life changing. For many of the interns, I spent 60 to 90 minutes a day with our interns and I teach them about basics of starting a company each phase of building a company financing hiring term sheets, how you have to fire people sometimes which is traumatic, and I keep it extremely real. I share my experiences and my mistakes with them. I really focused on mistakes, because I'm a big believer that we learn more from our mistakes than our successes.
• 47:27
  Randall Kaplan: And we spend time teaching the intangibles. Don't be late.
• 47:31
  Randall Kaplan: Don't be a minute late be the first one and the last one out.
• 47:35
  Randall Kaplan: Have a smile when you come to work every day. And of course the value of hard work and it's become super popular, and somewhat of a thing, we get 1000 applications now every year we do an interview 150 to 250. We hire lead interns some of the best interns from the previous summer, they do all of the hiring. They Greenlight every single person, I'm not involved in the process, I get the stack of resumes, before they come from the summer. Our first one is coming next week. And our interns Learn more in our 12 week program to prepare them how to succeed in the real world than they do during four years of college. And I stay in touch with many of them. And a very large percentage of my interns tell me that my teaching and the lessons have made a huge difference in their lives. And that's my goal. I want to make a profound difference in the lives of other people and I'm super proud that it has. So internships. Hugely important to me. I love mentoring people, I spend around 15% of my time on a daily basis, mentoring people, but let's talk about your internships. You interned at Hewlett Packard, when you were at Stanford, I want to know what it did for you. And then I also want to know, as a follow up, how to potential interns get jobs that amazing firms like yours, you probably get 1000 applications for one or two interns for the whole summer.
• 48:59
  Tim Draper: Yeah, we're actually thinking about expanding that because interns now are all virtual. And we can we can handle a lot more of them if they aren't all in the office.
• 49:12
  Tim Draper: And so we I think I'd like to embrace that and give it a shot.
• 49:18
  Tim Draper: Maybe I can learn from you. The the internships that I had. I had an internship at Schlumberger, oil down and Lt Ray Venezuela. And, and then most of my other summers were just working summers, but then I also I guess this was sort of an internship between business school years, where I was the assistant to the president of Apollo computer. And I learned a lot from that. So yeah, I think it's an important thing to do. I think it's great that you're doing it and giving young people attention, so that they can kind of you can guide them in their lives. They get a lot out of that. And it's a great thing to do.
• 50:07
  Randall Kaplan: It's fun to help the best interns this summer. We had a woman who went to the University of Chicago, she was going after a Goldman Sachs investment banking job for next summer. As you know, that's one of the toughest summer jobs to get. And she was told it was down to one or two people David Solomon, the CEO, I know I don't know him very well. I ping them and she got the job. So that made me happy. I mean, I've known him since he was at Bear Stearns and again, we're not we're not friends, but we're friendly. And that's, that's super fun is super fun to see some of the interns now be my peers. One of my former interns was the first employee at uptake. Brad Keywell, I'm sure you know, is one of the founders of Groupon. On uptake has a multi billion dollar valuation today. And it's super fun to teach people and to see them.
• 51:00
  Randall Kaplan: See them do do very well.
• 51:03
  Tim Draper: Yeah, and, you know, our school is I mean, it costs me money to put it on. Turns out, it's earned itself back some couple of guys paid in Bitcoin back when, and oh, it's served paid for 45 years. But it also does a lot for me when I'm helping these people get going with their businesses. And I wouldn't call those internships I'd call that just like helping or mentoring. Maybe they are, but it comes back because a lot of these people tell me about other people who are starting businesses, and we should take a look at a lot of them start their own businesses. And, and so I always feel like when you do something like that, that there is a karmic effect. So I'm sure it comes back to you all the time to
• 52:04
  Randall Kaplan: the best thing that happens every year on the business front is when I get a note from them saying, I just got a job here, I just got a job there. The lessons I learned during your summer program made it happen. And that's one of the best feelings that that I can have. As a result of my mentoring, let's talk on a related front about role models.
• 52:26
  Randall Kaplan: Your dad was one of your role models. Steve Jobs was one of your role models. How important are role models? And are they an important ingredient in our search for excellence?
• 52:38
  Tim Draper: Well, you know, I'll answer it, answer it this way.
• 52:41
  Tim Draper: We funded Skype
• 52:43
  Randall Kaplan: and get into Skype when we run it again I do.
• 52:47
  Tim Draper: And in funding Skype that came from nowhere. Most of the team was in Estonia. Estonia never seen anything like a unicorn. The company grew to be with 10 or now, Skype, probably to Microsoft is worth $50 billion. And sorry, Chairman.
• 53:17
  Tim Draper: Okay, yes. Okay, so we have a hard stop. That's fine. Today, yeah. Five my time. That is nine minutes away.
• 53:27
  Randall Kaplan: Oh, shoot. Okay, I had us down for two hours. No, shoot. Okay. Can we push it back? Maybe a half an hour? Or?
• 53:37
  Randall Kaplan: No? No, this
• 53:38
  Tim Draper: is a promised I'd be judged for this. Mongolian startup world. Okay. So anyway, Skype was an extraordinary experience. Yeah, I know, you've done some amazing research. I'm happy to do this. Again, if you'd like to do it again.
• 53:57
  Randall Kaplan: I would really love to, we'll finish maybe one more topic and eight minutes.
• 54:01
  Randall Kaplan: But I like there are so many things to my want to cover. I want to go through the Bitcoin pizza, and the conference I went to and the launch of the first global venture capital fund and cetera, et cetera. Because I think it's, you have so many I mean, you're a great teacher.
• 54:20
  Randall Kaplan: I've listened to your podcast, all of your talks. I've been to a couple of Draper conferences.
• 54:24
  Randall Kaplan: So if you could, if we could do another half later on, that would be awesome.
• 54:31
  Tim Draper: Sure. So let me finish with Skype and baby. All of a sudden, that was a model that was a role model for all of us, Estonia. And since then there have been four or five can the Estonia and unicorn companies because they all saw it happen. They all knew those people. And they said, Hey, we can do that too. Same thing in China. I mean, we backed by two, it was really the first of the bat companies that got venture funding from the US. And, and he run the grew that business made it a huge success. And after that, I mean, China was a proliferation of new startups and a lot of activity. And so yeah, role modeling is a big deal. And I've made a big point to spread entrepreneurship and venture capital around the world because it does spread and once it once it takes root somewhere, it really grows and becomes a big deal.
• 55:38
  Randall Kaplan: You graduate, you work in an investment bank for a couple of years. And Alex Brown, one of the great tech firms, and then when you're 27 you start your own venture capital firm you borrowed $6 million from The FDIC invested in 40 Different companies. And then four years later, the government calls your loan. So you flew to DC to explain where all your money went. And you ask them to hang in there a bit longer, which they did. Were you absolutely terrified and thinking you're going to go down in flames at that point and tell us what happened in 1991?
• 56:12
  Tim Draper: Yeah, you know, I wasn't afraid I was more just like, so convinced that, that I was doing some really interesting stuff, that I felt like I just had to go explain it to the people at the SPI see, by the way, there were only like four people working there at that time. And now they're like 800, and they manage about the same amount of money. Anyway, they, they did, they put me on their watch list, and then they put me on their dirt list. And then the IPO market opened up, the window opened up, and we got five IPOs. And within about a month, and parametric technology was one of them, and it, you know, paid back the fund many times, I was able to pay back the loan, I was able to do it all and I went from being on the SPI C's dirt list to being on their wall as venture capitalists of the year. That was one of the most fun like transformation. But, you know, that's a lot of what work is, is keep your head down, you do it, you do it, you do it, you do it.
• 57:27
  Tim Draper: And then something good happens.
• 57:27
  Tim Draper: And then you got to do it again.
• 57:33
  Tim Draper: It's like a plateau and then a ramp, and then a plateau and then a ramp. And sometimes it's like a ramp down, and then you got to start that plateau again, and build to a ramp your life, your career, none of it will be smooth, you're gonna, you're gonna go through a lot more jobs than the average person in your parents generation did and, and you're gonna have all sorts of ups and downs. And I think when you have the downs, that's what makes you the most interesting.
• 58:09
  Tim Draper: And when you have the UPS, you have to make sure that you are sharing in your success, somehow making people feel okay, like you made it and they didn't and you go, Oh, well, hey, you know, come over, we'll have a party or come over and let's talk about what your next career is going to be or whatever, I think it's really an important thing to do.
• 58:44
  Tim Draper: When you're when you're up to really bond with people who have fallen down. And when you're down, it pays to help them out when you were up. There's a good karma that goes out when you're when you're starting things and growing things and just in your job, just a regular job, you're you're, you're gonna have days where you think oh my god, I'm getting fired. And then you're gonna have days where you're going, oh my god, I'm getting promoted. And neither one might be the case. But even if both of them are being fired is not the end of the world. I've been fired from several different position which is why I really needed to start something on my own. Not completely true, but kind of true. And, and there's nothing wrong with that. It's it's a rescaling of business, people have to lay you off for various reasons. And you have to kind of get yourself back out there and start looking for a job and make something happen or, or join a company that's getting started or any number of your your life. Your career life can take all kinds of twists and turns. But, you know, as Randall says, if you work as hard as you possibly can, and you do the best you possibly can. All sorts of opportunities start popping up for you. My sister says, make your own luck. And that really just means what it's like your work your work your work your 15 years later that you're this huge success. You're an overnight success. But it was like you laid one brick at a time there and you finally got there. So it's gonna be a fun I mean, for many of you, I know is generally a young population.
• 1:00:48
  Tim Draper: Life is fun. Fantastic. That starts when you start when you finally leave the nest. And, and it just gets better and better and better and more and more fun. And, and it'll get even better if you work hard to get there.
• 1:01:10
  Randall Kaplan: That's great advice. Okay, we'll cut it off.
• 1:01:12
  Randall Kaplan: Now I I know you have to run, I would be incredibly grateful to do one more, I have some incredible ground to cover some incredible things you've done.
• 1:01:21
  Randall Kaplan: Can I please have one more hour and ask you for that?
• 1:01:27
  Tim Draper: Yeah. So let's, let's set that up. Work it out with Karen, it might actually take a while, but we'll get a calendar.
• 1:01:36
  Randall Kaplan: Okay. Okay. All right.
• 1:01:41
  Tim Draper: This is just a tech check. It looks like the thing starts at 510. If you have one more question, we can we can fire away?
• 1:01:52
  Randall Kaplan: Sure. Let's talk about your investment strategy.
• 1:01:55
  Randall Kaplan: Over the years, you've looked at, I think over 100,000 pitches, you probably funded over 1000 companies. What's the process here? You said you don't find it worthwhile to figure out how a company could fail. Before deciding to invest? Instead, you ask yourself, What if it works.
• 1:02:09
  Randall Kaplan: And you've also funded companies with no revenue, we'll talk about Hotmail later.
• 1:02:17
  Tim Draper: But Hotmail had no revenue, no plans for revenue, I know, they're gonna know what we were gonna do. And we were burning money like crazy. So we got, the more we burned. Let's
• 1:02:31
  Randall Kaplan: talk about that one for a second. YouTube was the same way. And they sold the company for a huge amount of money. But let's talk about that one in particular. So you funded the company, you meet a severe Bhatia, and his partner to brilliant guys, what did you see? What it? Why are you finding a company with no business model? And no plan for revenue? That was churning cash?
• 1:02:54
  Tim Draper: It was a what if it works, because what happened was they came to us with an entirely different idea. And then as they were walking out the door, they said, Well, we do have this other idea. And it's free web based email. And, and we kind of looked at each other and said, and then it was like, how are you gonna make money? And and they didn't really know. But they were very explainable. They just said, We don't know. But we think this is an important thing to do. And we back down. And then they were going to buy a bunch of advertising so that people knew about web based email, and I said, Wait, wait, wait, can't you just get it out to all those people on the web?
• 1:03:40
  Tim Draper: And they said, Oh, no, that would be spam. And then I thought, well, you're giving this away for free. Can you put a little message at the bottom of the screen that says PS I love you get your free email at hotmail? And they didn't like the idea at first. And we I had to fight fight fight and finally said, Okay, we'll do it. But no, PS, I love you. To this day, I think we would have had a more peaceful and loving world if they kept it. But anyway, no PSL me, but but it spread, because it had a it was as though your customer was selling your product for you, because it just was on the bottom of everybody's email. And it's spread to 11 million users in 18 months. And the founder, Sabir Bhatia was from India. And he sent one email to his friend in India, and there were 100,000 registered Hotmail users from India in three weeks. It was a it was a really amazing transformation is a big deal.
• 1:04:44
  Tim Draper: And I actually think Hotmail was possibly the most important thing I helped with, because it allowed everyone in the world to communicate for free. And that was unheard of. Before that, it was so expensive to make a deal with somebody from another country before that, because you had to go there three times. It was 80 cents a minute for long distance calls. It was really tough to do business overseas.
• 1:05:17
  Tim Draper: And all of a sudden, it was just an email away. And that I think, has had a big impact on the world. And then Skype did the same thing in a bigger way.
• 1:05:30
  Randall Kaplan: Right? You invented viral marketing. I don't think a lot of people know that. You encourage them to put this footer on the bottom of every account and email. Should you know you were doing something huge at the time, which today people take for granted. I mean, I don't know what the value of viral marketing is today, but it's in the trillions of dollars and you invented that.
• 1:05:51
  Tim Draper: Yeah. If I knew it was kind of important, I didn't know it was this big a deal. But I know it's kind of important.
• 1:05:59
  Tim Draper: And, and, you know, the way I thought about it was like, I played chess when I was a kid.
• 1:06:03
  Tim Draper: And I thought, well, if I send it to you, and then you send it to your friends, and they send it to their friends, they send it to their friends, then it starts to grow like a virus and it grows, grows and grows. And then it's gonna go to everybody.
• 1:06:17
  Tim Draper: And then and I did it a little bit invention is the are the necessities, the mother of invention, I didn't want to spend $5 million advertising free web based email, I wanted to something better to do. And I remembered back at the Harvard Business School, there was a case on Tupperware where the women were not allowed to buy the product, unless they were also selling the product are forced to be a distribution channel for the product. And they all love the product. And so there are these Tupperware parties, and it spread. And it was the cheapest marketing ever.
• 1:07:01
  Tim Draper: And so I did kind of have that in the back of my mind thinking, you know, this is sort of like a Tupperware you know, but But thinking three or four moves ahead, realizing that it's, it can grow to the whole world and pretty fast way. That did get me pretty excited, although I had no idea that it was going to grow that fast and, and be that kind of an add that kind of an impact on the world. Great.
• 1:07:26
  Tim Draper: Well, so thank you, Randall, so much for having
• 1:07:31
  Randall Kaplan: me, Tim, thank you. You're awesome. Sorry,
• 1:07:34
  Tim Draper: I had to break but that's okay. Hopefully we'll be able to do it again soon.
• 1:07:39
  Randall Kaplan: Okay, I'll get with Karen and I appreciate you so much. Your daughter's awesome. But you already know that. So love Jessie. I'm an investor with her. I think you know that too. So.
• 1:07:52
  Tim Draper: Yeah, appreciate that.
• 1:07:54
  Randall Kaplan: And you don't have to appreciate it. She's I, our female founders. I like more than our male founders, I find that they have more to prove.
• 1:08:03
  Randall Kaplan: They work harder. I've been a huge proponent on our summer program. I've been trying to get 5050 for the last 10 years. And I at some point, I say no more male job offers let's let's get female 5050 And we can't get it.
• 1:08:23
  Randall Kaplan: No matter how hard I try. We're on 37% This summer, but I sevens
• 1:08:27
  Tim Draper: good. We have a distinct program there. For women at Draper University. We do something with Smith College and we we attract quite a few women but our highest we've ever been is 40. And overall I think we're we're about 30 So 30 sevens again. Okay, great. Gotta go.
• 1:08:49
  Randall Kaplan: Okay, thanks.
• 1:08:49
  Randall Kaplan: Bye bye.