Tim Draper on Turning Points, Customers and Risk
In a live exclusive interview for Billionaires.com, Richard C. Wilson asks Tim Draper about business turning points, investment strategy and his spirit animal.
Richard C. Wilson introduces Tim Draper for a conversation about the decisions and experiences that shaped Draper's work as an investor. Draper discusses business turning points, customer growth, investment choices and personal experiences behind the animals he identifies with.
In this video: Richard C. Wilson (Founder of the Family Office Club and Billionaires.com), Tim Draper (Founder of Draper Associates, DFJ and Draper Venture Network)
What they said
- Tim Draper on IPOs and business growth. Tim Draper says he began by borrowing from the government through the SBIC program. Later, an IPO window opened and he had five IPOs, including Parametric Technology. He says the proceeds let him repay the government and build his business. (at 2:34)
- Tim Draper on Hotmail's customer growth. Tim Draper says he came up with a message at the bottom of Hotmail's screen, and the service spread to 11 million users in 18 months. He says that experience showed him how customers can become a company's sales force. (at 3:30)
- Tim Draper on capital preservation. Tim Draper argues that family offices have already lost once they start thinking about capital preservation. He favors investing in human endeavor and people dedicated to their work, and says complicated investment strategies will lose the most money. (at 5:30)
- Tim Draper on missed seed investments. Tim Draper calls failure to act his most costly mistake. He says he passed on seed rounds at Google, Yahoo, Facebook, LinkedIn, Netflix and others after partners talked him out of them or he didn't understand them. He says fear based decisions were major mistakes, while he hasn't regretted choices made for possible opportunity even when they didn't work out. (at 11:19)
In their words
"you can have one on land and one in the air"
"and you just charge forward and you know you're not a bull you're not a bear but you're a rhino"
Why it matters if you are building or preserving great wealth
Tim Draper said scholarships at Draper University brought better talent, more entrepreneurs and more chances to invest. He also said helping limited partners first brought them back when he raised a fund. Those examples connect giving value before asking for capital with access to future founders and investors.
From Richard's exclusive Billionaires.com interviews
Lessons from Richard C. Wilson's one-on-one interviews, as published on each interview page.
- Michael Lee-Chin: Invest in what people will do next. He saw that his generation would shift from consuming to saving and investing. He chose wealth management companies over banks and insurers to avoid underwriting losses.
- Tom Rosen: Buy when the market is down. Tom bought a lot when the stock market almost collapsed and made a substantial profit. In the year that followed, oil and gas surged. So did some tech.
- Tim Draper: Teach children about money early. Give them a small allowance and have them earn and invest money in the stock market. Over time they learn to ask sharp questions about how a business works.
See the data
Frequently asked questions
What did Tim Draper say about Draper University?
Tim Draper said the school is five weeks long and has had 3,500 students from 102 countries. He said those students started about 900 companies, with five unicorns so far, and that the average graduate creates seven jobs.
What did Tim Draper suggest for teaching children about money?
Tim Draper suggested giving children a small allowance, having them earn money and letting them invest it in the stock market early. He said that over time they may start asking about a company's PE ratio, cash flow, receivables and inventory.
Sources
Quotes are copied from the video captions and checked against the transcript. Timestamps link to the moment in the video. General information only, not legal, tax or investment advice.