Tim Draper: The Crypto Crusader
Governments are resistant to change, says the billionaire venture capitalist
Tim Draper has always been ahead of his time. The billionaire venture capitalist understood the potential of the internet way before the world woke up to it and made investments in companies like Hotmail, Tesla, and SpaceX. Today, he is an advocate of bitcoin and believes that Metaverse will be a place where people can be free no matter what their geographic governments say.
In an exclusive interaction with Entrepreneur India, he talks further about Web3, the future of India's startup ecosystem, and more.
The importance of decentralization
Bitcoin, Draper says, has made him understand how important decentralization was. "In Russia, one single person decided to invade Ukraine, and most of Russia doesn't want a war. But somehow this centralized control created a war. The same thing applies to China. The centralized control decided to lock down all of Shanghai and that lockdown messed up the supply chain for the entire world," he said.
He believes that it pretty much goes for almost anything. "We now have a new technology and it's this Bitcoin blockchain technology that allows the decentralization of everything, not just banking, not just finance," he said, while adding that he can't wait until he can raise a fund in Bitcoin, invest in bitcoin, have all his entrepreneurs pay their employees and suppliers in Bitcoin and have the entire ecosystem built in a walled garden so that people can be taxed automatically.
Resistance to change
Draper went on to talk about how smaller governments are embracing this change as they realize that this is an opportunity for them to go from being some of the poorest countries in the world to becoming some of the richest countries in the world. "The governments, particularly old governments, are either afraid of it or concerned about it as it changes things. It changes things for the better, but a lot of people don't like that, because they like their control," he said.
According to Draper, there are two types of people and they form two forms of government. One is government control and one is freedom. While freedom allows people to operate freely, the former has a centralized person or group of people that tells everybody what to do.
He quotes the example of South Korea and North Korea. "North Korea has complete government control and South Korea has democracy, capitalistic freedom, and free speech. There was this demilitarized zone built between the two Koreas. Today, an average South Korean makes about 460 times what the average North Korean makes. And the average South Korean is now four inches taller than the average North Korean. They're getting better nutrition, they're getting freedom, they're creating lives for themselves rather than having the government determine what their life should be," he said.
This powerful decentralization, according to Draper, is moving into other industries like insurance, and real estate and Metaverse will be a place where people can be free no matter what their geographic governments say. "Now, the good news is that as there is more freedom around the world, geographic borders become less relevant. And governments have to compete with other governments for their people. They have to compete for their businesses, the taxpayers, the entrepreneurs, and the financiers of the world. And in doing so they are going to want to encourage those people and those people will be attracted to the free countries. So, I think governments who try to lock this down, do it at their own peril. I think they will be left with people leaving their country. They will be left with no money," he said.
Draper expects major shifts in economic prosperity in the next 30 or 40 years and countries that really embrace Bitcoin, blockchain and decentralization will thrive. He draws a comparison of the current situation to some countries blocking the internet. "Those countries were left in the dust. And the US benefited big by having a government that said we want all the innovation that's happening around this internet and they opened their borders to the internet and allowed this internet to flow freely. I think that created about 40 years of prosperity for the US," he said, adding that ironically the US is now looking at laws that were set up 80 years ago in trying to regulate this new technology instead of letting it flow freely for a while.
He believes that the weakest governments are resistant to change and the strongest are encouraging change and encouraging progress. "It's interesting in our country, the progressives are not progressive at all. And the liberals are not liberal at all. They're not freedom thinking. I don't know how those words get thrown around, but they really haven't been. I think they're just weak people, who are not willing to see and embrace change. They try to hold what they perceive as power, but what they are really doing is ruining the lives of people in their country," he said.
Investments in Web3
Talking about the segments within Web3 that he and his team are looking at while making investment decisions, he said, "We are looking at all sorts of things. We are looking at new entertainment in the metaverse, we are looking at ways people can do business in the metaverse. We have new companies that have new marketplaces in the metaverse. Lots of interesting things that we're looking at. The investments we make tend to be more fundamental. So it's sort of hard for us to back one really fun game over another fun game that's in the metaverse. But if somebody's got an interesting platform for the metaverse, that's a lot more interesting to us. We like NFTs a lot and we are looking at NFTs for things beyond the art world as well. I like what NFTs can be long-term, be it medical records or driver's license."
Draper also shared how it would be interesting to watch what could happen in healthcare. "Not just healthcare records being NFTs but everything that you've done. Everything you've seen, your genetic history, the aeroplane seat you sat on, the pub you went to, it's all potentially in your NFT. It's all in your medical records and it can say if you have a headache, determine what caused that headache, a lot more easily and more accurately than a doctor can," he said.
He also predicts that we will see a time when all the drugs are going to be designed specifically for one particular person. "In that, we will be using computational biochemistry and your genetics for the diagnostics. You will plug all that in, and you will have a specific panel dedicated just to you to solve your problem. But I think the drug companies will fight it because they like being able to give everybody the same drug," he said.
Investments in India
"We have had a lot of great success with Indian entrepreneurs. We have had great entrepreneurs from India who have started companies in the US. We have had a lot of Indian companies that have just created extraordinary businesses. We work with Blume Ventures and Iron Pillar in India very closely," said Draper, when asked about his investment plans in India. He also spoke about how the TV show 'Meet the Drapers' has a lot of Indian followers.
Further, talking about the evolution of India's startup ecosystem, he said, "When I first came to India, most Indians didn't know what a startup was. So, we were funding companies in a hope that they would figure it out and use the money to grow and then hopefully get some sort of a return through a merger or maybe an Indian IPO. Well, now, Indian startups look very much like Silicon Valley startups.
"Indian startups have a very large population to test their product before they go global. And that's a real positive," he said.
He further spoke about how he admires the good work ethic in India. "At least amongst the people that I have met in India, they are willing to work from sunup to sundown and past. They are willing to do whatever it takes to make a company successful. And they don't have the fear of the bottom," he said.
He also spoke about how just like Hotmail's Sabeer Bhatia, Indian founders are good negotiators. "When I come to India, people negotiate very well. They're negotiating as tough as they possibly can," he said.
As we wrapped up the interview, Draper also shared a few lines of advice to budding entrepreneurs.
"Raise as much money as you can, don't worry about valuation, but don't spend it because this is not going to last forever. Just focus on customer delight. How do you make that customer super happy? Because the only way you are going to get venture money now is if you are already generating cash from your business. If I was an entrepreneur today, all I would be doing is analyzing why the customers are not buying my product. What will make them buy more? What will make them pay higher prices? How do I make it mission-critical? How do I delight, inspire and create magic for my customers? I think that is really the best advice I can give any entrepreneur any time."