Tim Draper Founder Draper Associates, DFJ & Draper Venture Network on Covid19 Crisis for Startups

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PEMO (00:02):

So wonderful to talk to you again, I’m wondering how you’re weathering this crisis?


Well, it’s a great opportunity for people to think a reset and some of our entrepreneurs are doing incredibly well in this crisis and some are really suffering. The ones that are doing very well and really run most of their business remotely anyway. And some are creating products that were sort of curiosities for a while. But now they have the ability to go mainstream. So like people we’re starting to use VR, people were starting to use remote education because they, the schools were closed. They’re starting to use remote healthcare because the hospitals were closed. And then they’re starting to open up and try Bitcoin wallets and Bitcoin cash, wallets, paizos wallets and whatever because they’re because they’re saying, well, wait, you know first of all, what is all this about?

TIM (01:18):

They want to try it out. But the other part is that they’re saying, well, wait, if they’re going to print $9 trillion and shove that into the economy, then the dollars I have are going to be worth about 30% less. So I should move to another currency and one that’s more steady and, and will probably increase in value over time. And that’s where people are starting use some of those cryptocurrencies. And then it’s been very difficult for, for companies that are required to have large groups of people banding together. I’m sure that WeWork is having difficulty. I’m sure that I know Airbnb is having difficulty. And so that’s a, that’s a new thing that we’re all having to deal with. And then I’ve noticed people, you know, after two, for the first two weeks, this was kind of a vacation for everybody, but now, but now it’s, we’re six months in or something five months in and it’s it’s starting to really wear on people’s psyche.

TIM (02:33):

I’m noticing that you were late. People are starting to drift. I think the pizza and pajamas is starting to set in and it’s just time. I forced myself every morning to get dressed up and go to work. And then I closed the door. I kissed my wife, goodbye. I closed the door and I’m all dressed up right now. I gotta go on a regular day at work, but I know some of the people I work with are having real emotional difficulties. They live alone sort of trapped there. This is not healthy. I mean, it’s not healthy in an obvious way, but it’s also really not healthy to be trapped in place. So you know, I think we should take the hit, rip off the rip off the mask, go out there, live your life. And I’m sure that there are a million people going, how would he ever say that? But I think it’s, I think otherwise you’re going to watch the slow, steady degrading of humanity.

TIM (03:49):

Yeah. I have an attorney friend who told me that people have committed suicide and just because of the self isolation and he’s having to deal with some of the cases. So it’s just very sad and I agree, difficult time for everyone. How are you managing current investments and are you managing to invest in your investments? How are you doing that?

TIM (04:17):

So we, we were lucky, very few of our companies had had too much difficulty because most of them were remote the ones that are they’re building hardware or transportation or whatever. Those are having more difficulty because they’re not allowed to work together. And that is that’s a painful thing if you’re trying to put a very complex piece of hardware together, but, but I think we’ve been able to at Draper associates, we’ve been able to pull our heads out of it and write checks. We’ve been very active during this time. Yeah, we’re finding that the series a companies are coming to us at, at seed pricing because they they’re realizing that they’re not many people are out there writing checks right now. And then going into August where partners all take a vacation. I think it’s going to be even tougher for entrepreneurs to get their money. And so fortunately, you know, well, the rest of the venture business sleeps were as active as we’ve ever been.

PEMO (05:38):

Good work, Tim that’s fantastic news. What do you think of the takeaways from the current crisis? I know other VCs have told me their sort of insights because it’s almost like an enforced retreat. Do you have, you’ve managed to think of what you could get out of this, what learning?

TIM (05:59):

Yeah. Well, clearly are a company that we have in China. That’s a psychology company where they, I think they’re going to do very well. What did I take out of it? I I take out of it a combination of things. Yes. The virus is real, but the group think is the most dangerous thing we’ve ever had in humanity. It’s, it is dystopian group. Think, I, I think we have an opportunity right now to be either utopian or dystopian where the utopian view is, Hey, we’re global, we’re open. We’re all in this together. We’re transparent. We’re we’re the borders are meaning less and less. Let’s let’s have free trade around the world. Let’s have free markets around the world. Let’s let this thing go. And then there are these governments, some governments that are saying the dystopian word, which is, we’re telling you what to do, wear a mask, turn around three times, wash your hands, do your, you know, maybe it’s all good.

TIM (07:14):

Maybe it’s all healthy for us. It’s a good idea. Maybe it’s not, maybe it isn’t. And w what if they’re telling us do something that is going to wipe out humanity, because the next one’s going to be bigger and we won’t have built up our herd immunity. I it’s weird playing with mother nature here, and I’m not sure it’s going to be so healthy. And what’s worse is it allows these dictators to start feeling like they can tell everybody what to do. And they’re all of our freedoms have been taken away. And that’s the beginning of the end. That’s horrible. So this fix this reset that we’ve got, we can either go back, become global build, build on that globalism build on the decentralized world. Or we can retreat back into being tribal with leaders who tell us all what to do, and we just follow their orders. I I mean, boy, a lot of people have fought for freedom in this country, in the U S and I know they have in other parts of the world and many, many times, and I, I hate to be letting them down by, by forcing people in place and forcing this kind of activity where certain kinds of businesses have to be shut down and other other businesses get to live. It’s not healthy. So time to time to free up.

PEMO (08:52):

Yeah. Well, that’s a really interesting perspective, Tim and you’re always reliable in being able to think independently. Would you be able to give me your overview?

TIM (09:06):

Probably one of the big problems is that I am thinking independently and people look at it and go, Oh, no, he’s thinking independently, because they’re all thinking, whatever they saw in the news that day, it’s like shiny object. Let’s just follow it. And whatever they told me in the news, that’s the way I’m supposed to think that is not healthy. It’s not healthy. It’s not certainly not helping be politically because it forces people into a box politically. And we really need to be able to, to work on issues, not work on, you know, which box we fit into. This is, yeah, this is so, yeah, when people say, be safe to me, it drives me crazy. I say, be brave, go out there, be scape. That’s just nasty. You’re being mean to me. I want to live my life.

PEMO (10:07):

Good on you. It’s an inspiration. So I guess how do you think investment’s going to look in the next

TIM (10:14):

Year or two years because of what’s happened already? Well, you’re going to see, you’re going to see a lot of interesting information coming out, say July 20th ish, because that’s when earnings reports are going to come out and those are, these reports are gonna say, wow, it was a really great quarter for Amazon and zoom. But for a lot of these businesses, we were expecting a lot. We didn’t get anything. And that could be that could be tough on the public markets. And so if you’re thinking of boy, what do I do with my money? I think the public markets are as dangerous, a place to put it as you could possibly imagine right now with PE ratios at, at absolute all time highs. I’ve never even in the.com boom, I have not seen PE ratios on companies like this ever this high.

TIM (11:15):

In fact, sometimes they’re not even in either, they’re not even making any money. So I’d say to put more money into the stock market is probably not a good idea, but money into private companies might work because you’ll get the next cycle to put money into bonds. You know, where do you get? You get a 0% bond rating, but money into real estate. I think residential real estate, nice residential real estate might start creeping up. Commercial real estate is going to have a very difficult time. Cause you know, people are saying, you know, half the people are saying, I like working from home. The other half of the people are saying, I gotta get outta here. And so, so that would mean that real estate commercial real estate is the supply is twice what it needs to be. That’s not good for the price of real estate.

TIM (12:15):

And then Bitcoin is a great place to put it. I mean, it’s like the new gold because you know, that, that as it spreads, it will increase in value. And I think we’re all gonna be benefiting from that anybody who owns any Bitcoin is going to benefit a lot from that. And also, you know, the reason Bitcoin was a big hit in Argentina and Nigeria. And some of those countries is their own currencies were unstable. They were their politicians were printing money. And so they, they, they had huge inflation. Well, we just printed $9 trillion in the U S and that is flooding the economy. That’s, I mean, there are only just to give you an idea of how big $9 trillion is. There are only $86 trillion worth of currency in the world. Floating around today. Trillion is like more than 10%.

TIM (13:25):

So it is a huge number. And so we’re, I’m guessing we’re going to probably experience some serious inflation and people will look at dollars as hot potatoes to try to get rid of them. And people start looking at Bitcoin is something to hold on to just the way, you know, during inflationary times before people tried to buy commodities, anything they could, that was a physical object. They tried to buy during those times because then the money, the next day would be worth less and the price is gonna go up and that’s what they do and Nigeria and Argentina. Wow.

PEMO (14:13):

Well, and that’s great news about Bitcoin and obviously cryptocurrencies and blockchain. I’ve been,

TIM (14:22):

Yeah. You know, there’s something, something interesting. That’s I think just about to happen. Only one in 14 Bitcoin while it’s owned by a woman and and women do about 80% of the shopping. And if you put those two things together, as soon as women realize that they can save two and a half to 4%, every time they swipe a credit card, they are going to move to Bitcoin so fast. And if they’re sitting there decide to him and it’s easy to do now, it was never easy before and tend to grow as for the community. They’re always looking out for the best of the community. Well, Bitcoin’s going to be much better for the community. And then some, some currency that’s tied to some government entity. So we’re gonna, we’re gonna see a big flow of women buying moving their money to Bitcoin and starting to shop with it. And Bitcoin cash is so easy to use now. It’s really crazy, but Bitcoin is easy to use too. If if you’re shopping with Bitcoin, you want to use open node.

PEMO (15:44):

That’s, what’s so exciting because I’ve been supporting that community for quite a few years. And it’s just great to hear that this could be really a great kickstart for it.

TIM (15:57):

Oh yeah. I think this has been a kickstart and anybody who thinks at all about the future is sending will get me out of dollars and get me into Bitcoin.

PEMO (16:09):

Yeah. Yeah. That’s great. Well, that’s a great note to finish on Tim. You’re always a delight to interview. Thank you so much for your time. Apologies again for being late. And I really appreciate your contribution and I’m sure the listeners will too. Thank you.

TIM (16:26):

Great. Well, please send me a link. I’ll read the word. Thank you so much.

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Pemo Theodore

Pemo Theodore is a Media Publisher & Event Producer and a great people connector.. She is Founder/CEO Silicon Valley TV which has served the San Francisco Bay Area for 11 years! She has produced Silicon Valley Events for Investors & Startups for 9 years. Pemo loves to video interview venture capitalists & founders to engage the human behind the success stories.. She has been Executive Producer of FinTech Silicon Valley for 5 years, organizing twice monthly FinTech talks & panels in San Francisco & Palo Alto. She believes in learning through a great discussion with experts in the domains. Pemo has a talent to bring the right people together and is an incredible networker. Pemo's events have been seen as supporting Venture Capitalists & Angels in sourcing great deal flow from startups who attend her events. Many founders have received funding through meeting investors at her events. Her favored medium is audio & visual media and she has built up a great body of work of podcasts & videos of panels & interviews in Silicon Valley.startup ecosystem.

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Written by Pemo Theodore