Why did Draper, a century-old venture capital family in Silicon Valley, choose All in Blockchain?

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Interestingly, Bill was an early investor in Skype, and Tim also participated in a round of financing before Skype was acquired. Tim participated in the early purchase of Bitcoin, and then Adam will be all in the blockchain industry led by Bitcoin. Time is like a reincarnation, passing the baton of venture capital to the next generation, and the venture capital business of the Draper family has entered the fourth generation of inheritance.

"I think Bitcoin will hit $250,000 in 2022, believe it. Others may think you're crazy, but trust me, it's happening and it's going to be awesome!" April 2018, Tim Draper at wrote on twitter.

However, these are not enough to let you know a real Tim Draper. You may only know about Tim’s romantic relationship with Bitcoin, but you don’t know that Tim comes from a family of venture capitalists. His grandfather once served as the deputy secretary of the US Army and later became a pioneer of venture capital in the United States. Tim is the third generation of venture capitalists in the family. He started investing in 1985 and founded DFJ, investing in more than 600 start-ups around the world.

Tim's grandfather, William Henry Draper Jr., was born in New York, USA in 1894 and died just after Christmas in 1974. He lived in an era of the most drastic changes in human history. He experienced World War I, World War II and the post-war reconstruction of World War II, and achieved excellent military, political and economic achievements. The most famous of these is that he was sent to Berlin after World War II, where he served as Director of the Economics Department of the German Allied Forces Control Council from 1945 to 1947, fully supporting and responsible for the reconstruction of Germany and the Marshall Plan. From 1947 to 1949, Officer William served as Undersecretary of the United States Army.

William Henry Draper Jr.

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William is not only a well-known soldier and politician, but to some extent, he is also a pioneer of American venture capital. In August 1959, together with the founder of the RAND Corporation and another retired Air Force general, he established the first West Coast venture capital firm Draper, Gaither and Anderson in California (this is of course the first venture capital firm in Silicon Valley. company). Several fundamental elements of today's multi-trillion dollar global venture capital industry - partnership structure, GP/LP distribution of profits, focus on profits - can be traced back to this firm. Although the firm has only been around for seven years, it has left a substantial legacy, established practices that could become industry standards, and launched the careers of several young men who would go on to play key roles in the venture capital industry. .

Among these young people is Tim's father, William Henry Draper III, known as Bill. (The name William Henry Draper III is particularly confusing with William Henry Draper Jr. Readers may remember his name as Bill.)

In 1959, Bill went to his father's venture capital firm Draper, Gaither and Anderson as an assistant. Three years later, he left his father's firm to co-found the venture capital firm Draper & Johnson Investment Company with close friends. After another three years, the two parted ways, and Draper launched his own firm, Sutter Hill Ventures, which has found success.

Sutter Hill remains, by far, one of the largest venture capital firms in the country. During his two decades as a senior partner at Sutter Hill, Bill helped organize and finance hundreds of high-tech manufacturing companies, including NVIDIA, Skype, Youku, and more. Bill has also become one of the iconic figures in the history of venture capital.

Perhaps inspired by his father's political and business connections, Bill served as president and chairman of the Export-Import Bank of the United States from 1981 to 1986. In 1986, Bill became the head of the United Nations Development Programme, the world's largest source of multilateral development grant assistance. But in the end Bill still chose to return to the venture capital world, focusing on venture capital in India, Europe and Asia.

Now we can finally talk about the protagonist of the article, Bill's son Tim.

Tim's grandfather was a pioneer of venture capital, and Tim's father is the figure who carried forward venture capital. The time has turned to Tim, but Tim didn't expect to inherit his father's business at first, but wanted to become an entrepreneur.

In 1972, Tim studied at Phillips Academy, a private high school in the ten-school alliance. After graduating from high school, he did not choose Yale University like the students of the traditional Phillips Academy, but chose Stanford University, which is closer to home. In order not to follow the old path of his father and grandfather, Tim chose to major in electrical engineering. After college, Tim chose Hewlett-Packard, a Fortune 500 company ranked 120, to work in marketing and sales. During his two years at HP, Tim believed that his marketing ability had reached the ceiling, so he left HP and went to Harvard to study for an MBA.

After discussing with his father William and after some careful consideration, Tim decided to enter the venture capital circle, took over his father's SBIC and established Draper Associates. After going round and round, Tim finally returned to the family tradition. But the venture capital world at this time is different from the era in which his parents lived.

02 Silicon Valley does not believe in the shadow of parents

In the middle and late 20th century when information was blocked, the political resources of Tim's grandfather and father provided a great boost to his investment career. For example, Tim's father, Bill, said in an interview that his experience in politics made his investments more "visionary".

But in the era of Tim Draper, venture capital is no longer a family workshop, it can be done simply by contacts and handshakes. Silicon Valley no longer respects family heritage, Old Money is no longer welcome here, and inherited money is not respected.

Draper Associates also received many doubts at the beginning of its establishment. But fate is so magical. Tim wanted to be an entrepreneur rather than a venture capitalist at the beginning, so he made a lot of troubles that seemed unnecessary to the outside world, but it was these troubles that gave him fresh inspiration to find and organize successful start-ups , so that he fought back all the doubters with the proceeds many years later.

In 1985, Tim took over his father's SBIC (Small Business Investment Company), and mortgaged SBIC worth 2 million US dollars to SBA (US Federal Small Business Administration) for a loan of 6 million US dollars for investment. Tim invested 6 million in PMTC (Parametric Technology Corporation), the world's first computer semi-automatic programming company. Until 1988, PMTC still did not have much improvement. As a result, the SBA placed Tim on a watch list and demanded immediate loan repayment. After negotiating with the SBA, Tim was able to defer loan repayments for a year. In 1989, PMTC went public, becoming the most successful IPO case of the year and PMTC successfully changed the traditional mechanical CAD industry.

The success of PMTC has taught Tim that investment requires patience and companies that disrupt traditional industries deserve longer patience and companies that are number one in the industry are more worthy of investment. "For a product, once the number of user installations of the pioneer reaches a cross-border critical point and positive feedback is formed, it will be difficult for subsequent competitors to surpass the pioneer." Tim explained why the industry's first company is more worthy of investment.

Since then, Tim's company has created a number of firsts in the venture capital industry, realizing a leap from 0 to 1 for the venture capital industry. The peak of Tim's reputation is the creation of viral marketing (whether it was created is controversial) and applied to Email. (His marketing experience at HP no doubt inspired him.)

After Tim invested in Hotmail, he suggested that employees write "PS: I love you . Get your free e-mail at Hotmail" after the email, and users only need to click to join Hotmail and become a member. This strategy allowed Hotmail to grow from zero to 18 million users in 18 months, even before the Internet was popularized. More than ten years later, it took 16 months for Twitter to go from 0 to 10 million users, 13 months for Instagram to go from 0 to 12 million, and 7 months for WeChat to go from 0 to 15 million.

Since then, most of the successful projects Tim has invested in can be summed up in two words: change and creation.

Overture created the business model of paid search; Skype changed the way people communicate; Tesla changed the auto industry; SpaceX created recyclable rockets; Uber changed the traditional taxi industry. These are all projects that Tim has invested in, and these projects are also unprecedented.

In 2011, when Tim first heard about Bitcoin, he bought $250,000 at a price of about $6 each and deposited it in Mt. Gox. Tim thinks Bitcoin is creative. In 2014, Mt.Gox was stolen, and all the bitcoins held by Tim were lost. At this time, Tim thought that Bitcoin was about to end, but the price only dropped by 10-15%. Tim is keenly aware: Bitcoin is not creative but subversive, Bitcoin will change the world, people need Bitcoin, and Bitcoin is worth investing more money in.

In 2014, the U.S. Marshals Service seized 144,336 bitcoins from the Silk Road drug market and put them up for auction. Tim acquired another 40,000 for about $600 each, and became a Bitcoin whale by the end of the year.

Of course, the projects that Tim failed to invest in can also be summarized by change and creation.

Tim is willing to pay for a disruptive business and accept the high risks it brings. "I don't think there are many real venture capitalists, and Tim is a real venture capitalist." Many investors and CEOs have commented in this way.

03 Personal heroism

Tim is an investor full of personal heroism, and his judgment on individuals takes precedence over enterprises. Under Tim's lobbying, SBA was able to delay the repayment of the loan, so that Tim's first investment could be delayed to a successful IPO and he gained a lot. This makes Tim believe that the role of people is very important to the company, and even determines life and death. Tim believes that looking for a project is also looking for a person. Only when the person is right can the project succeed. Father Bill, who has been to more than 100 developing countries and met with more than 50 heads of state, also keeps telling Tim with the examples of China's Deng Xiaoping and India's Indira Gandhi: top leaders can play a huge role.

"When I decided to do venture capital, I knew what I was doing. I chose this industry because I could work with incredibly bright and passionate entrepreneurs who wanted to change the world, and I It can help many different types of companies start their businesses." Tim once recalled.

Clearly, Tim carried this philosophy deeply into the venture capital firm DFJ he founded in 1985. Until now, DFJ's slogan is still "a dreamer who invests in creating the future." The emergence of such subversive concepts as blockchain and digital currency has undoubtedly inspired Tim's great enthusiasm. This enthusiasm not only expresses Since he bought a large amount of Bitcoin in the early days, Tim personally and DFJ have also made multiple investments in the blockchain.

Among them, Tim himself invested in blockchain projects including Korbit, OKCoin, Factom, Bancor, Tezos, etc. Although DFJ itself only participated in Coinbase's E-round financing in 2018, the Draper Dragon Fund (Draper Dragon, the predecessor of Dingding Innovation), which was established in cooperation with Silicon Valley Dragon Venture Capital, has conducted a very extensive blockchain Industrial Distribution. The following is a list of investments organized by carbon chain value:

We have no way of knowing whether DFJ's own cautiousness on blockchain investment is related to Tim's departure. With such a desire for visionaries and heroes, Tim can no longer be content with just scouting for talent. In 2013, Tim decided to quit DFJ, which he had struggled for many years, and turn his focus to cultivating more talents, so he opened the Draper University of Heroes.

As an early investor in Tesla and SpaceX, Elon Musk is undoubtedly Iron Man in Tim's mind. But what Tim wants is not just to have an Iron Man, but to own the entire Marvel is Tim's goal. Hero Academy is what Tim built to achieve this goal.

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04 Adam Draper: The Fourth Generation of Investors Emerges

Time never stops. In a blink of an eye, Tim, who was born in 1958, is already 61 years old. His father is over 90, and his grandfather passed away in the 1970s, but the family tradition of venture capitalists has not faded.

Tim Draper has four children. Some of them chose to enter the media, and some followed their father's path to enter marketing, and the only one who chose to enter venture capital was his son Adam Draper.

After Adam graduated from college in 2009, he founded Xpert Financial to invest in secondary market private securities. Three years later, Adam left Xpert Financial, founded Boost VC, and officially entered the venture capital circle.

Boost VC is mainly involved in investing in the VR industry and the blockchain industry, and participated in Coinbase's seed round financing at the beginning of its establishment. Announced in March 2014 to invest in 100 Bitcoin startups over the next 3 years, this commitment was confirmed in 2018. Adam publicly stated that he is very optimistic about the Bitcoin blockchain and has invested all his assets in it.

[1].Tim Draper.https://en.wikipedia.org/wiki/Tim_Draper

[2].Tim Draper Linkedin.https://www.linkedin.com/in/timothydraper/

[3].Can VCs Be Bred? Meet The New Generation In Silicon Valley’s Draper Dynasty.https://www.fastcompany.com/1839299/can-vcs-be-bred-meet-new-generation-silicon-valleys-draper-dynasty

[4].The History of Viral Marketing – How Hotmail Became Hot.https://tishiasavestime.com/the-history-of-viral-marketing-how-hotmail-became-hot/

[5].Billionaire Tim Draper Stands By Bullish $250,000 Bitcoin Price Target For 2022.

https://www.ccn.com/billionaire-tim-draper-stands-by-bullish-250000-bitcoin-price-target-for-2022/

[6].'He was like a hyena going after her:' Theranos investor Tim Draper blames the company's downfall on an investigative journalist.https://www.businessinsider.com/tim-draper-blames-john-carreyrou-theranos-downfall-2018-5

Interestingly, Bill was an early investor in Skype, and Tim also participated in a round of financing before Skype was acquired. Tim participated in the early purchase of Bitcoin, and then Adam will be all in the blockchain industry led by Bitcoin. Time is like a reincarnation, passing the baton of venture capital to the next generation, and the venture capital business of the Draper family has entered the fourth generation of inheritance.

[8].Tim Draper & His Draper University of Heroes.https://siliconvalleytalk.com/news/view/7345/Tim_Draper_-_His_Draper_University_of_Heroes

[9].Tim Draper details Six Californias plan.https://www.smdailyjournal.com/news/local/tim-draper-details-six-californias-plan/article_7371cd95-9167-5dcf-ad57-b91a1e442adb.html

[10].Adam Draper: Investors Don’t Want to Hear the Word Bitcoin.https://www.coindesk.com/adam-draper-investors-bitcoin-blockchain