- Duration: 55 min
- Platform: zoom
- Source: Read.ai 01KFXQTVV9B02JEADEMZAP61WG (https://app.read.ai/analytics/meetings/01KFXQTVV9B02JEADEMZAP61WG)
Transcript
[Tim Draper]: before it goes out, so then you can take pieces and bits. [michael]: Yeah, please. We can tease it, too. We can get people hyped up about the book coming out the more that we do that. So yeah, anything you have that you want us to Read through and use, please send over. [Tim Draper]: Yeah, because the other one’s about the capitalism versus socialism. [UNKNOWN_SPEAKER]: capitalism is just way better. [michael]: Well, we can talk about that, too. I mean, that’s spicier. We can talk about that. Yeah. And very timely right now, I think. [Tim Draper]: I’m not sure I’ve got sort of a new expression that it’s the active capitalists against the lazy socialists. [michael]: That sounds right. Some people will be very mad about that, but it sounds very right to me. I think it’s right on. [Tim Draper]: Cool. [michael]: OK, well, we got some questions to go through today. Let me pull them up. But before we dive in, just want to get a sense from you on, you know, I think we’re hitting our stride with the account. So two kind of questions about that. We don’t need to necessarily get to answers to them right now, which is something for you guys to chew on. One, do we want to revisit the conversation about bringing other people at the firm into this and doing it for them as well? I know we talked to Andy a while ago, maybe there’s some other people as well. [UNKNOWN_SPEAKER]: So we can think about that. [michael]: And then the other part would be, I think in a few months we’ll be at about a year. [UNKNOWN_SPEAKER]: And so at that point, I’d wanna, we could offer a discount if we go to like an annual retainer instead of a monthly retainer or something like that. [michael]: So something to consider there. Cool. [Tim Draper]: Yeah, you could, I mean, I think I’d encourage, depending on how much it costs, I’d encourage you to go help Andy and Michelle and the whole team and anybody who wants their profile higher. I think that can only help the firm because I’ve got a high profile, but we’ve got to make sure that it doesn’t, I mean, to investors, we want to make sure it looks big from a lot of different points of view. [Tim Draper]: And we want this to be a free speech firm. A lot of heads of venture funds, they want to be the only voice out there. And I want, I want multiple voices from our firm because I mean, they have, I mean, these guys, they’re awesome. They have a lot to say. Yeah. Michelle talking about what we’ve reinvented is bio cures. Um, and, uh, Maxine talking about Bitcoin and, uh, Andy, uh, healthcare generally and investment. He’s been at it for a long time, so I think he’d be great too. [michael]: James may have an interesting point of view too. [Tim Draper]: I don’t think I’ve met James, but I would love to. [Michelle Kwok]: Yeah, I really want James to have more of a role because he definitely has things to say. [UNKNOWN_SPEAKER]: I’m on a high profile, but he may. Why don’t we just, we can check with him. [Michelle Kwok]: He was open to it. He just didn’t have time to write stuff. And he was like, if you wrote stuff for me, I would totally post it. [UNKNOWN_SPEAKER]: Yeah. [michael]: Sounds like we have a solution. [Tim Draper]: Because he would, he’d get into the AI of legal and all that stuff. You know, the other people, I don’t know if, Adam, Billy, Jesse would want this too, but I’d love to see them rise too. I was thinking of James doing legal AI, but my son Billy is a real expert in legal AI. [Tim Draper]: And Adam’s got a huge, you know, I mean, he’s, He’s got short academia, be the cockroach. I mean, that guy’s, he’s the perfect social media superstar. So all those things, you know, I would like all that to grow because as it grows, you know, Draper Associates grows, everything. [Tim Draper]: Even though they run their own firms, I think they would reflect well on us. So yeah, maybe there is something I can say, hey, this seems to be working out pretty well for me. You guys might want to take a look. I would love that. [michael]: That sounds great. We’ll put together a little proposal. I’ll send it over to you guys, and we can figure out when timing makes sense. But one thing I want to add, too, that would make this even more beneficial, it would be if we do this with other folks at the firm or whomever, what we would do is we could have everyone comment on each other’s posts, Michelle, sort of like we were doing with the interns over the summer. [UNKNOWN_SPEAKER]: Yeah. [Tim Draper]: And so that’s what I want. Yeah. It’d be great for us to like co-engage at all times. That’s another thing I don’t really have that much time for, but I try to just liking just like across boom, boom, boom. [UNKNOWN_SPEAKER]: Interesting. [michael]: You have such a big following and people are like going to be very interested in what you’re commenting on. So if you grow other voices at the firm, and expose more people to their thoughts, a great way to do it is literally just have your account and other accounts of the firm commenting on each other. And we can handle that as just part of what we would do. [Tim Draper]: So people have a limited amount of time to go to social media. [UNKNOWN_SPEAKER]: You know, hey, I got another question. [michael]: Yeah. [Tim Draper]: Is there a way that we can build the Instagram because, I mean, I post one photo on Instagram, it’s like, boom. [Tim Draper]: And I mean, without blinking, without even trying, I got like nine photos up there and I got 9,000 or something. I wonder if, you know, we can, I don’t know, do something about that. What I don’t want to do, I didn’t want to do was post, like, the photos I take, you know, here are my grandchildren, here’s my show. [UNKNOWN_SPEAKER]: Here I am with, you know, some head of state or whatever. [Tim Draper]: I don’t really have that in my, my DNA. [UNKNOWN_SPEAKER]: I don’t take a lot of those. I don’t, I don’t make it a thing. [Tim Draper]: But when we post for Twitter, there’s no reason we don’t have some photo that makes sense for what we posted. And that can be what ends up going up on Instagram. And at the same time, and, and you could just post a photo photo of, of my interviews on, you know, CNBC or whatever, it’s just like, boom, and then put it up and summarize it, and then Instagram. [UNKNOWN_SPEAKER]: And Instagram we should be sensitive to is like, I don’t know, what is it, 70% women, right? [michael]: It’s mostly women, yeah. But we have a very, very talented Instagram. And on TikTok, if you’re interested in TikTok, we have a very talented Instagram and TikTok person. [UNKNOWN_SPEAKER]: And then you guys are coordinating with Serica, right? [michael]: With whom, I’m sorry? Serica. Draper TV Draper meet the Draper and less so recently, but we we have we have connected with them about things in the past. Yeah Because every time we do something there, I mean On my show, I’m sure there are all sorts of comments I’ve made that are like could be like hey, this is what I saw is what I said Some of the things that are working really well on Instagram right now are when you take like long text style posts that would go really well on a LinkedIn or on a Twitter article or something like that, and put them underneath a short video or a short photo or carousel on Instagram, because Instagram is rewarding dwell time on text more than it used to now. So we’ve been seeing that work really well for some folks. So I can include that in sort of what I put together. Yeah, I’d like that. [Tim Draper]: I would like more on Instagram and TikTok. Yeah, of course. Cool. [michael]: The reason I thought of Serica is that we’re working with TikTok. [Tim Draper]: We might actually have a deal with them where, I mean, they are advertised already. They sponsored one of our shows, but we’re thinking of doing Meet the Draper in individual episodes that are like a minute each with each entrepreneur, where I’ll ask like a canned series of lightning around questions. [michael]: That format does does really well. I also think that there could be something to like scripted videos that we do with you to where it’s like literally just, you know, you talking to the entrepreneurs out there in the world very directly. [Tim Draper]: So I think I mean, that’s what I do every time I get interviewed. So I feel like we can do that instead of doing our own well, our own canned ones might be good. Somebody asked me a question, I can always fire. Yeah. [michael]: Yeah. So we’ll, we’ll come up with some options strategy-wise and, you know, we can talk about it and see what you like the best, but, um, I love the idea. I think it makes a lot of sense. [Tim Draper]: Yeah. Maybe it’s something we do on TikTok. Okay. [UNKNOWN_SPEAKER]: TikTok’s a better audience. [Tim Draper]: They’re 20 to 30 and that’s our sweet spot. [UNKNOWN_SPEAKER]: for finding entrepreneurs. [michael]: Oh, right, more so than Instagram. [Tim Draper]: My following on Twitter is probably better for investors. Yeah, I would say so. [Michelle Kwok]: Yeah, I wanted to buy those Ray-Ban Meta-glasses to make TikTok videos and make those day-in-the-life videos with Max. [michael]: Those glasses videos are crazy because it’s literally putting you right in the person’s shoes basically. [UNKNOWN_SPEAKER]: Yeah. [Tim Draper]: Yeah. [michael]: Cool. Okay. Well, this is exciting. Um, I’ll, I’ll send something over later this week and then we can talk about it. Um, as it, uh, as it makes sense to terrific. [Tim Draper]: Great. Yeah. [Michelle Kwok]: Maybe you can make it like dynamic. So it’s like, if you add this, these people, then this is how much would be that type of thing so that we can make decisions. [michael]: Yeah. And we’ll, we can align on what that, what that full list of folks makes sense to even, uh, be to consider too. So, um, yeah, that, that sounds good. [Michelle Kwok]: Cool. Okay. [michael]: Well, let’s get through a couple of questions here. Uh, Tim, do you have a hard stop at a No, I think I can go a little longer. Okay, cool. [Michelle Kwok]: I’m going to jump off at Cause I have to onboard our interns, but I’ll, I’ll be here till then new, new batch, new batch coming in. [michael]: Yeah. Yeah. [Michelle Kwok]: And they have a really insane project coming up that we should do social posts on, but I’ll tell you about that later. Okay. Well, we’ll get slack about that later. [michael]: That sounds good. Okay. Let’s, let’s see, what should we ask first? [michael]: Okay. What’s let’s start with this operations. What’s an operational mistake that even experienced or second-time successful founders will make that maybe first-time founders shouldn’t? [Tim Draper]: Well, second-time are usually better operationally. Second-time entrepreneurs usually make sure they’ve raised enough money. [Tim Draper]: And second-time entrepreneurs are pretty ruthless on who they hire and how carefully they hire. First-time entrepreneurs, it’s usually surround yourself with friends and that kind of thing. [Tim Draper]: First-time entrepreneurs, their biggest, it’s really interesting, I think their biggest problem is if they raise too much money because they go and they feel like they’ve got to hire everybody. They go out and hire a whole bunch of people and then they hit the wall and they wonder why that money didn’t come as easily the second time. [Tim Draper]: Second time entrepreneurs who have hit the wall realized that we got to keep it really thin until we have product market fit. And we’ve got to grow this organically. We can’t rely on the venture capital marketplace because it comes and goes. [Tim Draper]: Also, sometimes there’s a lot of interest at the beginning and a bunch of people come in and they’re all excited to invest and they all jump in. [Tim Draper]: product or the market don’t quite develop the way they think, then entrepreneurs, then the venture capitalists don’t want to invest the next time. And so that first money may be all you get and have an awareness of that, that what are you going to do if that’s all you get? [Tim Draper]: The other thing, and by the way, we fund first-time entrepreneurs a lot. [UNKNOWN_SPEAKER]: We’re very different from other venture capitalists. [Tim Draper]: They usually like serial entrepreneurs. I don’t particularly like that. I would prefer an entrepreneur makes this big their career and their first stab might actually be the one they were meant to be. [Tim Draper]: Now, and second-time entrepreneurs, if they’ve done well the first time and the second business is the same as the first one in some way, whatever, I don’t tend to want to invest. Because it’s like they’re going back, they sold their company, they’re mad they did, you know, whatever. And unless they buy back their old business, they’re trying to recreate it. But a second-time entrepreneur that’s going after something entirely different, that’s a good bet. One that’s been hugely successful the first time, And now they want to go off and do something real. Baizhu Ba, he starts out, helps build, he founds and grows Robin Hood. [UNKNOWN_SPEAKER]: And now he’s taking energy from space and sending it down to Earth. [Tim Draper]: And those are two entirely different businesses. And so both will be a good bet because that’s a superstar. [Tim Draper]: And so I think there’s something to that, that I like backing the first time entrepreneur. I know it’s riskier, but the returns can be much, much bigger. [Tim Draper]: Go back in history, Bill Gates was the first entrepreneur. [UNKNOWN_SPEAKER]: Steve Jobs was a first-time entrepreneur. [Tim Draper]: And then he went and bought back his business after it kind of failed to come back. Mark Zuckerberg, first-time entrepreneur. Larry Ellison, first-time entrepreneur. [Tim Draper]: All the trillion-dollar businesses except Elon. And he built PayPal. And that was in the money business. Then he went and he built SpaceX and that was in space. And then he bought into and took over Tesla and that was in automotive. And then he bought into and took over Twitter. He’s a special case. He’s extraordinary. [michael]: Maybe this is not super relevant to what we normally talk about, but I’m curious now that that you made that comparison. Do you think that Elon’s going to achieve his sort of stated or like implicitly stated goal of You know, achieving everything, combining these into one sort of giant conglomerate business that is all works together. You know. [Tim Draper]: It’s it’s cool when you go off. The the path. When you leave the main path and you go and you do something else and you apply that back to the main path, the path gets more extraordinary. And when I started Draper University, I started just to help entrepreneurs get started. And now it’s like this major accelerator or pre-accelerator for entrepreneurs a great source of deal flow for my venture business, a great network for the venture business, a great connector. [UNKNOWN_SPEAKER]: It’s extraordinary what it’s done for that business. [Tim Draper]: Elon, similarly, he’s got SpaceX, he’s got Tesla, he’s got the battery factory, he’s got Starlink, they’re all, and now he’s putting, he’s connecting Starlink to the cars, he’s connected. So he can take those things and he can put them all together. And they’re all gonna help each other. And then with Twitter, he’s got X, and then XAI, the Grok thing. Those two actually come together quite well. Twitter has extraordinary data. That data can be used for better and better AI. And then he can take that AI, and he can improve space. He can improve the cars, the batteries, all that stuff. So I think, yes. [Tim Draper]: synergies do exist, they take a long time, and you’ve got to have a long vision. But if you go deep into one category, and then you take a little hiatus, and you go deep into another category, then you can start thinking about how those categories might mesh. [michael]: I like it. Michelle, I know you have to jump. Do you have any questions that you want to ask make sure that we get them in this batch? [Michelle Kwok]: I liked, not a specific question, but I think anything about like the history and the first early days about building Draper and like think about, think more about, think along those lines of what was it like building in those days? How is it different from building today as a firm? [Tim Draper]: Like what did you learn back then? [Michelle Kwok]: And what do you think you’re employing now? Or how do you think like trends have changed change in VC? Where do you think things are going? I think one thing that’s also really interesting that we talked about and I see a couple times is how AI is changing the field of VC. How, oh, I think one thing that is also interesting, Tim, is like the goals that you had for our team. You wanted us to implement more AI. Like, what does that mean to you? Why do you think that’s important? Where in the next five years, where do you think that’s going? In some ways, you said that AI is going to take over a lot of our jobs. Like, what does that to you. So, something that like those contrarian takes, I think, Hoke. I know I said a lot of things there. [UNKNOWN_SPEAKER]: There are lots of questions. [Tim Draper]: Okay, well, first, haven’t I already hit on both those things? One is the history. Yeah, I was knocking on doors, looking at any new real estate development where one of the companies starting there said, started or ended with an X, or started or ended with the word software. And I just went after them, knocked on their doors, did whatever. [Michelle Kwok]: I don’t even know if we’ve talked about that. I think we talked about the general history, but not like specific stories. I think people love the specific stories. [michael]: I would agree. [Tim Draper]: I remember I knocked on the door of Intuit and the receptionist said, I’m, you know, looking to, um, That’s what we need. [UNKNOWN_SPEAKER]: Sorry. [Michelle Kwok]: I have to jump off the interns, but, um, yeah, those are the stories I think are going to be really, really good. But how can I let you take it? Yeah, let’s pull on that thread. We can even just tell that story. Thanks, Michelle. Cool. I’m going to make you the host. Sounds good. [michael]: Awesome. [UNKNOWN_SPEAKER]: Cool. [Tim Draper]: Yeah, so I was knocking on the door of Intuit, and I said, I’m a venture capital investor. And the receptionist, they were in downtown Palo was almost like with a broom, she swept me out the door saying, saying, no solicitors. And I thought, well, that’s too bad. And I kept thinking, God, but Intuit’s going to be a good one. And I don’t quite understand. But that put me off enough. So I went, I never invested in Intuit, which is too bad. I’ve gotten to know both those guys really well. In fact, they both came and spoke. They did an outstanding job at Draper University. It was fantastic. They did a whole a case study of into it. [michael]: You got looped into the Jehovah’s Witnesses. That was funny. [Tim Draper]: Yeah, I know. And I said, but I give away I invest money. I’m investing money. These guys are gonna want to know out out. [Tim Draper]: Classic. [michael]: I bet you bet that they had a good laugh about that later. Like now, you know, who knows? [Tim Draper]: I don’t even know if they know that story. But that did happen. [michael]: But that was me knocking I click, click, click. [Tim Draper]: And then as time went on, then I started, I went to all the other venture capitalists, there were about them 10 in the world. And I knocked on all their doors and I said, hey, just send me your, the deals you’re declining. Send me all your, you know, the poor, send me your poor, your hungry, your whatever. And so then all of a sudden my deal flow started to pick up. And I wanted to see it all because I wanted to see what’s out there, you know, what I needed, I need to build knowledge so that I could build judgment. And, and that helped. But it turned out that some of my best deals like parametric technology came because I just followed my nose And I asked the people at Apollo Computer, where I worked, what kind of software would be the best software to run on these machines? And they pointed me toward SPG Consulting and Polygen. And those two were two investments I made. And SPG Consulting became Parametric Technology. [michael]: this big, huge success. The PTC now, it’s called. [Tim Draper]: It’s $10 billion or $20 billion or something. [michael]: I mean, I think that’s even right there a good lesson for founders, which is, you know, if there’s a rapidly evolving market that has new needs that aren’t going to be met by, you know, whatever’s out there right now, just ask the people who are building those companies what they want to see or what they’re using and bet on those types of ideas. [Tim Draper]: Yeah. The other thing that happened to me was I borrowed money from the SBA. It was, you know, $6 against $2 million in private companies. And I hit their blacklist or their dirt, they called it a dirt list. And I had to go fly back to Washington to convince them to hang in there and not call my loan. [Tim Draper]: And that I had some amazing companies in there, but I also had a whole bunch of write-offs and they were looking and they were saying, God, this money is going to be gone, but they didn’t want to manage all the portfolios. So I, I said, no, no, you hang in there. That’s going to be okay. A couple of companies seem to be promising. And then 1991, all of a sudden, there were five IPOs from my portfolio. And I went from being on their dirt list to being the venture capitalist of the year for the SBIC program. And they put my picture on the wall in the SBA. [michael]: So you pound away long enough. [Tim Draper]: thing’s going to happen for you. [michael]: I guess they probably understood it, but I feel like a lot of people at that time probably didn’t even understand the power law in venture, right? And so you probably have some selling to do about that too. [Tim Draper]: Yeah. Well, they didn’t, yeah, certainly didn’t understand the J curve. It was, yeah. And it looked pretty bad. I remember my dad coming and looking at what I had done with a portfolio and he goes, God, what? They’re all running out of business. Wait, wait, what? [Tim Draper]: I said, hang tight. It’s going to be all right. [UNKNOWN_SPEAKER]: What gave you so much? He didn’t have any choice. [Tim Draper]: It was like, you know, that was on his side. I mean, yeah, sure. [UNKNOWN_SPEAKER]: But for your for your side, like, I feel like a lot of people in your shoes in that type of situation would have panicked, right? [michael]: What gave you the conviction that those remaining bets were not going to end up like the others? [Tim Draper]: You know, I always felt like things were going to work out. And I think that’s maybe what I look for in an entrepreneur. Do they just feel like everything’s going to work out? It’s just, are we going to get to Mars? Are we going to cure death? Are we going to… They just believe things are going to work out. I think that belief is really powerful. And I think it comes with, you know, every human spirit, if it hasn’t been broken, has that everything’s going to work out. As long as you put all the effort in and you throw everything you can into it. I always also felt like, hey, I always leave it all on the field. [Tim Draper]: It’s the best I could do. [UNKNOWN_SPEAKER]: It’s true. [Tim Draper]: Of course, now I learned that there’s more you could do. [michael]: So you leave it all on the field and then some. [Tim Draper]: I like it. [UNKNOWN_SPEAKER]: Yeah. [UNKNOWN_SPEAKER]: You got time for one more? Sure. [Tim Draper]: Oh, and AI. She asked about AI. Yes. [Tim Draper]: I’ve said this and I think it’s already in the Zeitgeist, but that, yeah, AI is going to take all the jobs of the people who don’t use AI. So by thinking about it, when my son said AI is going to take all our jobs, I thought, interesting. If AI is going to take everybody’s job, then as a venture capitalist, I better get out in front of that and go for it with AI. And now we’re way ahead. God, we’ve been doing everything in AI. We’ve been trying to do all the things that a venture capitalist does in AI, from detecting lies to understanding Understanding emotions. We have that. Understanding voice and how powerful it is and what the personality of the voice is. Having AI do all the data search so that you your diligence in AI. You understand. You can find out everything you can about the people who are running the business. You can find out everything you can about the competition in that field. All of that’s really important in AI. And then we’re using AI outwardly to help our portfolio companies so that they can go to my hotline. We want to help other people submit business plans with another AI that is where you can put your deck up there, and then we can evaluate that deck. Get it back to you without us ever touching it. We’re using AI through Proto. I have a virtual twin or digital twin that’s in a hologram that Proto, company Proto put together. [Tim Draper]: in a lot of places now. Wherever there’s a proto, they can click on me. And they can ask me as many questions. People have spent two and a half hours with this proto. And they put a little too much AI and not enough of my personality in there. And so we’re tweaking it. [Tim Draper]: Because AI kind of, equivocates a lot more than I do. And so I’m going, I’m trying to get my, you know, hard driven capitalism, freedom, trust personality into that, into that AI. [UNKNOWN_SPEAKER]: And that takes some time too. So none of it’s going to happen over Press wants to know what’s going on right now. [Tim Draper]: They aren’t thinking really that over time. This may be something that really Matters and improves. It’s like what’s going on right now? Cuz like we had bugs in the thing and the press was all over me saying wait Why did why’d you guys take it down? I’m going well their box I’m trying to find There’s one trend I wanted to ask you about. [michael]: Let me pull it up here. It’s in AI. [michael]: Where is it? Yeah. So in 2025, I Read that 40% and this is from a sub stack. I forget where they sourced it from, but it looked legit. 40% capital was raised by just 10 companies in 2025. It’s because these mega rounds like corporate VC funds and non-traditional capital putting tons into these big AI players, right? [Tim Draper]: What do you think that does to the ecosystem? Where do you think that that’s going in 2026? [michael]: Are we gonna see more like consolidation of those or how do you think about that? [Tim Draper]: The AI winners of today will not be the same AI winners a decade from now. [Tim Draper]: One or two might, but AI is going to take on all sorts of forms the way the internet took on all sorts of forms. And I get that investors are excited and jumping into AI with both feet and thinking, oh, I got to get into this. [Tim Draper]: We’ve been a lot pickier about that because we’ve seen, I mean, we were backing AI 10 years. Actually, I had a guy 20 ago that I hired two people that I hired to do AI for venture capital 20 years ago. I thought maybe we we’d get something out of it, but it did not really pan out. I gave them all my expert system I could for that period of time, and But I knew Sam Altman very well before OpenAI came out, but I was talking to him about our two different points of view on the income. What’s it called? I call it earned income, like they have to earn it, and he was giving it away. I wanted them to earn it. [Tim Draper]: What’s it called? [UNKNOWN_SPEAKER]: I [Tim Draper]: Universal. Universal. [michael]: Something in universal tax credits, that’s the thing. [Tim Draper]: No, it was a universal, universal, universal. [UNKNOWN_SPEAKER]: Yeah. [Tim Draper]: Basic income. I was thinking universal earned income could be a thing where people had to either give data or they had to do something to get that income. Because I always think everybody’s better off with a deal. But if it’s a gift, they don’t appreciate it. And it creates a culture of need. And I think that that was a bad idea. And that’s what I talked to Sam about. But I didn’t realize that it was basically in the background working on open But I probably would have donated to it and not not gotten any of the equity the way you wanted. [michael]: What did what did he say so curious what he said when you because I agree with the way you framed it like you don’t want to create a culture of you know the 90’s. [UNKNOWN_SPEAKER]: You know he was he was doing this whole thing testing the water about donating money. [Tim Draper]: to individuals in sort of Oakland or very poor parts of Oakland or very poor parts of California, where he would take a family and then donate money, give money on a regular basis and see what happened to them as an experiment. Because he felt like there was a poverty thing that they couldn’t get out of And if they got out, maybe something would happen. [Tim Draper]: And that, I don’t know whether you want to pick the winners. [michael]: I kind of would rather make it a market system. [Tim Draper]: So anyway, that was what he was working on. We were trying to come together on something, but it didn’t pan out. Interesting. [Tim Draper]: So where were we? [michael]: I think this came up because I was talking about how most of the capital, I think like more than 2x of the- Oh yeah, yeah, yeah. [Tim Draper]: So there are, investment is a weird thing because there the investors that think for themselves and then lead investments and take positions and try things. And those are the early innovators. And then there’s this group of investors that follow them quickly. And they’re taking some risk and they do quite well. And then there’s the gap. And then over the is the masses, and the masses tend to jump all together. And, and so when it crosses that, it’s a different chasm, but when it crosses that chasm, the masses jump in. And the masses are usually instinctively right. But since they all come in together, there’s a disconnect between supply and demand. Sure. [michael]: And, and so there’s a supply of money. And so that will be absorbed into all these companies. [Tim Draper]: Well, as I mentioned before, if an entrepreneur gets too much money, they often build too quickly, they hire too many people, they try to make it before there’s a good customer fit, where the customer is paying, and they feel like, well, I can just keep taking it from the investor. Well, at some point that dries up. And that’s what happened in the dot-com bubble. [michael]: It dried up. [Tim Draper]: And all of a sudden, there was nothing there. [michael]: Nothing gone. [Tim Draper]: And, and people had to sort of figure out who was actually making money from their customers. And I think we’re gonna probably see something like that in the, I don’t think it’s the near term. I think it’s in the, I think we got a big boom ahead. We’re gonna see a lot of great IPOs, we’re gonna see a lot, a lot of great things happening over the next four or five years. But, but After that, I think there will be a time when it does dry up. And as Warren Buffett or his partner says, when the water goes out, we see who wears a bathing suit. [michael]: When the tide goes out. [michael]: I think that’s a Charlie Munger quote. [Tim Draper]: Yeah. Charlie Munger. God, he was a kick. [michael]: That’s funny. Yeah, it does not bode well. If that ends up being true, I mean, a couple of years is a long time, obviously, but this plays into the whole idea of open AI being almost too early to some of this stuff and investing too much too early. [Tim Draper]: Yeah, but think of how they’re moving progress forward. I mean, I’ve been able to use AI in so many ways. [michael]: will continue to be that. [Tim Draper]: I think we’re going to, you know, the fact that they’re putting, they’re investing so heavily, is making it so that we’re able to try things that we never would have tried before. Of course. And if the, if the servers, if they didn’t have enough servers to do this, then AI would be like this theoretical, oh, yeah, well, if I could ever get on, then I could try this. But instead, by having them invest so heavily, it’s made it so that we can try things like, you know, you write, you write something down, and all of a sudden, there’s a video does, you know, I mean, you can, you can almost produce a movie without, you know, here’s, here’s kind of what I want the movie to look like, And then all of a sudden, there’s a movie. [michael]: Don’t, don’t tell Hollywood. [Tim Draper]: Hollywood knows. That’s why they were, that’s why that negotiation went on so long. The writers thing, the writers were seeing the writing, the writing on the wall. [michael]: Hey, it’s, it’s, it’s still, I feel like early rounds in that fight. That’s going to get a lot more vicious as it keeps coming up and up and up over the next couple of years. [Tim Draper]: Yeah. Spotify. Hey, what, I don’t know, some like 10% of Spotify music is now AI music? [michael]: There’s a there’s a good band. They’re not even a band. There’s a good artist on Spotify called the Velvet Sundown. They make like, oh, yeah. [UNKNOWN_SPEAKER]: Oh, it’s a fabulous song. It’s great. It’s a major hit. I loved it. Yeah. But it’s great. [Tim Draper]: Great song. Didn’t really mean anything. But you know, I mean, you think you listen to the words and you kind of go, where’s he going with this? [michael]: But they all run. [Tim Draper]: it has a feel, it has a vibe, it’s total country and western, it’s country rock, it’s fabulous. [michael]: It’s great. But you go on like this music message board and people are just like, AI slop, like this is killing real artists, like so negative about it. [Tim Draper]: It’s made by artists. I know. [UNKNOWN_SPEAKER]: Oh, by the way, okay, I got to tell you this story. [Tim Draper]: I was in an Uber, and I was stuck in traffic. And I realized that the Uber driver was the same one I had a little while ago. Oh, that’s cool. [michael]: Okay. [Tim Draper]: And I had told him about them, the sunrise, whatever. [UNKNOWN_SPEAKER]: Yeah, sure. [Tim Draper]: And I played it for him. And I said, this is the coolest thing. And it for him. Okay, so it’s like, six months later, I got the same driver. And I’m stuck in traffic. Okay, my wife, we’re stuck in traffic. Stuck. Couldn’t move two hours, whatever. And, and he reminds me that he had me before and, and that he I had told him about And then he goes, so I started playing around with it. And he played us the best music that he had created with this incredible sort of vibe of meshing two cultures and whatever. It was fabulous. [michael]: It was unbelievably fabulous. [Tim Draper]: And it kept us interested for the entire time are stuck in traffic. So yeah, that’s spreading. And so yeah, the artist now has to think, you know, now we’ve got AI, what do we do with it? Instead of, oh, no, AI, it’s gonna take my job. It’s like, no, I got to use AI. [michael]: And I got to be a better musician. [Tim Draper]: It’s just the new guitar. That’s it. Yeah. It’s the new instrument. [michael]: When that first came out, I fooled my dad with it. I was like, oh, do you ever hear these guys from back in the day when you’re grown? Back in the day. [Tim Draper]: That’s funny. Well, these are great. We got tons of stories from today. [michael]: This is going to be a great batch of content, a couple batches of content, but one quick one before you go. So I’m thinking about raising a new fund over the summer. My friend Andrew is big in like the New York tech scene. I have my connections out in SF and in New York too, and now down here in Charleston where I’m now based. But thinking about raising a fund, I’m curious if you have any advice for someone. This is my second time raising a fund, I’ve done it before, but any advice for someone? How’d the first one go? [Tim Draper]: We have some good winners. [michael]: We have some good winners, and I’ve had some good angel wins as well. [Tim Draper]: I don’t know the actual- Are the investors, have they all been paid back yet? [michael]: No, not all of them. [UNKNOWN_SPEAKER]: because venture fund. [Tim Draper]: Yeah, it’s a venture fund. [UNKNOWN_SPEAKER]: Early stage. Yeah, it was it was with Launch House. So we were investing in those are the best companies that came through Launch House and then did some investments outside of there, too. [michael]: So I have to get the full numbers. We’re doing like a data collection right now, but some have done pretty well. [Tim Draper]: You know. [Tim Draper]: I’m going to give you the advice that Tim Ford gave me, this guy who started, created 3000 Sand Hill Road. And I said, hey, tell me about the real estate business. And he got all excited. He said, oh, real estate, it’s fantastic. [Tim Draper]: And I said, well, so should I do something? And he said, Oh, are you? No. If you want to get into the real estate business, you have to dedicate your life to it. [Tim Draper]: Same thing with the venture capital business, because you’ve got to be worldly. You’ve got to be deep. You’ve got to be shallow. You’ve got to be horizontal and vertical on every topic you can think of And you’ve got to understand the consumer. Lot of different points of view. And, and you’ve got to kind of have a futuristic vibe. And you’ve got to keep adjusting it based on everything you see around you. [Tim Draper]: And so and I think if you’re not, if you’re not, if it’s, you know, a hobby of investing, I would just invest invest in a venture fund. I would not invest in a venture fund where the people are doing that, like they are completely dedicated to it. And that’s all they live for. [michael]: Yeah. [Tim Draper]: The fact that you come at it from an angle, that’s great. But it’s got to be your entire life. [Tim Draper]: And then sure, it’s a great thing to get into. And down in South I think you’d be unique. There wouldn’t be too many of you in there. Yeah, there’s not. [michael]: I’d be an SF a lot too. [Tim Draper]: You need to figure out how you’re going to attract deal flow. Do what I did. I took the high profile approach. [Tim Draper]: Use that to build deal flow and because, you know, there are, well, there are fewer now, but there were a zillion people all saying, oh, I’m gonna be a venture capitalist. And they all raised 5 million bucks and probably, it’s probably worth a million and a half now, you know, for all of them and for most of them. And it was because Because they sort of took it on as like a grass is greener on the other side kind of thing or, you know, a hobby or whatever. [Tim Draper]: But I would say it is a fabulous thing to get into. I’ve loved my career. Now I grew up in it. I saw it from a son’s point of view. [michael]: I see it from a father’s point of view. [Tim Draper]: understand the growth of it. I understand how many people are in it now, how incredibly competitive it is. [Tim Draper]: And, and I have evolved my thinking when I started out, I, you know, I could have funded every software company I ever met. And I would have been probably more successful, or at least as successful as I have now. But today I see a new form of AI company and I think, wow, that’s really cool. But when I do my diligence, I realize there are 500 of them. [michael]: And they’ve all been funded by one venture capitalist or another. [Tim Draper]: And you’re kind of going, wait, what? [Tim Draper]: Something that was called venture fratricide in the past. [Tim Draper]: But what’s interesting now is the venture businesses. [Tim Draper]: It’s like we had to, they ate something, you know, there, it’s a snake that usually eats rats and, and it ate a possum or a dog or something. And, and that thing’s got to get through the body. [Tim Draper]: Yeah, no, for I mean, there were, I don’t know how many venture firms that raised more than $10 billion, but there are quite a few. And they have not done well. [Tim Draper]: And they all had little seed groups. And it went not just deep, but it went wide too. There were, I think it was like 10,000 new venture funds that were all started in what, 2019 to 2022 in that range or something like that. And they have not done well. [michael]: Thankfully ours is ours has done pretty well. Again, I don’t know the real numbers because I left the firm, uh, like two years ago or something, but, um, we have a bunch of big winners. I was one of the first outside checks into figure robotics company. [Tim Draper]: Um, so while there’s as well, so. [michael]: And I have our newsletter, which goes out to, you know, 65,000 founders every week. So there’s like a unique source of deal flow there. So I feel pretty confident on that side of it. But I think a big test will be like, you know, are those same investors interested in backing me again, basically. So the first thing to figure out. [Tim Draper]: Yeah, you got to go to your base first. Yeah. [michael]: Well, look, man, I appreciate it. Nice talking with you. [Tim Draper]: I’ll talk to you soon. [michael]: Yeah. Let me know. You’ve come up with here. Yep. We will. All right. See you soon. Bye.