05 Jun Tim Draper: Can raise VC and evangelize about blockchain, can’t rap
Noted VC Tim Draper spoke bullishly about bitcoin and blockchain at the TNW 2018 conference in Amsterdam recently. Draper was inspiring and engaging as always and we’ve got highlights following.
But, spoiler alert. Let’s just say his Notorious Timmy D rap performance at the end of his presentation is not a threat to Kanye West or Eminem.
Draper on ICOs and cryptocurrency
Wearing his trademark bitcoin tie, Draper was ebullient about cryptocurrency as usual.
“When people come to me with an ICO, I’m looking for a few things. One is, what happens after the ICO? Is there a marketplace for your coin? Have you created a real network? Is there going to be a network? Do people care? Because the way I look at an ICO, it’s like a kickstarter for a societal transformation.”
“The people who buy these coins, they are paying you in effect a kickstarter for your societal transformation to happen. They wanted to happen. So, it’s gotta feel like a movement.”
Draper on blockchain
Draper is excited about blockchain’s potential.
“Now if you’re talking about the blockchain, itself, what the blockchain is really powerful for is securing data. Because, once you start securing data really well, all sorts of things can happen. On the blockchain, if you can secure that data, then you can do all sorts of things with that data.
It can be like a perfect ledger, so you don’t need accountants. It can be a smart contract, so you don’t need lawyers. It can be like you put those things together with a little bit of artificial intelligence and it could be like the perfect bureaucrat and you don’t need government.”
What’s blockchain look like in 10 years?
Bloomberg’s Justina Lee asked Draper what would be a best use case scenario for blockchain in 10 years?
“The world is going to be very different in 10 years. So, what does the blockchain have to do with it in 10 years? For one thing, it’s going to store all of your medical records and you’re gonna be able to control that,” Draper said.
He followed up saying blockchain is also going to keep track of all the currency in the world. “There’s no reason for a bank anymore. Or banks have to reinvent themselves. There’s no reason for investment banks anymore. [Laughs.] No reason for venture capitalists anymore. You’ll see me sort of dissolve.
Draper continued, “The entrepreneur and money are going to be better connected. And the organization is going to be more decentralized. People will operate in places all over.”
The government of blockchain
Draper then expounded on his theories of blockchain impact on government. He said there are two parts of government – the terrestrial part of government like your police force, your firemen and maybe the guy who decides who gets to build what building where.
“But then there’s this whole part of government that looks right now like it’s wasted because it’s virtual. It’s all the safety things. It’s your medical insurance, your health benefits and your safety net, your welfare system. And it’s pension system in old age and your unemployment insurance. All of that can be virtual. So why does that need to be tied to one landmass when you can have it be virtual?” he asked.
“I’m the third virtual resident of Estonia. You guys are near Estonia. You could become a virtual resident too,” he said. According to Draper, the Estonian government has already figured out people don’t have to be tied to their landmass to become citizens of their country.
Draper describes a conversation with the Prime Minister of Malta. “I said how many Maltese are there? He said I don’t know, about half a million. I said there could be like a billion virtual Maltese. I’ve been going around to all the Prime Ministers I can and telling them this so that the going to compete for us. They’re going to create better pensions and healthcare insurance. They’re going to have to compete because they have to compete across borders.”
He foresees a world where virtual governments could provide your pension in bitcoin and government is all decentralized.
What does Draper look for in blockchain investments?
“The blockchain. If it’s nothing else, it’s fair, honest and consistent. And incorruptible,” says Draper.
Lee asked Draper what his team is looking for when teams come to him with blockchain pitches.
“A couple of questions I’ll ask. Put them in your head. Are you going after an industry that is providing bad service at a high cost? So, like venture capital or banking or insurance or real estate or cable or whatever. Or the one that’s providing the worst service at the highest cost – government? I’m glad you’re starting to catch on here,” Draper said.
If you’re going after government with technology, it’s a huge opportunity, he says.
“So, the idea that currency would be tied to a government while it’s land-based when there is a currency that’s global or even like more astro-global – you can use bitcoin on Mars. You can use bitcoin anywhere. But no, you cannot use euros on Mars. And they’re tied to political forces in those political forces can take away your money and you don’t think so? Because it hasn’t happened to you?”
He recounted talking with his Argentinian friend Sebastian Serrano who told to him, “My fortune’s been taken away from me three times and I’ve only been alive for 30 years.”
What’s the future for VCs in a blockchain world?
Lee asked Draper what ICOs mean for the future of VCs?
“Great question. ICOs are already half of the market. It’s like, if VCs are hardware and Kickstarter is creating something so that you can jump ahead, then I think that VCs are kind of out of business. But if VCs do hardware and software and other things like vertical takeoff and landing vehicles, and save the planet things and whatever else, then it’s pretty likely there will still be room for both.”
Draper said entrepreneurs need to think very carefully about their ICOs and digital coins that they create. “They are really two different things in that the coin has to have been well thought through. Otherwise, a lot of these coins are going to fall out of business because people hadn’t really thought about after the ICO, then what do I do?”
He said entrepreneurs need to create a marketplace where somebody will buy a coin after the ICO. “That’s a really important question and it seems fundamental but nine out of 10 of the ICOs that come into me haven’t thought about that question.”
Great VC, not so great rapper
When Lee asked how blockchain going to change the world at 18:17 in the presentation, Draper reached for his smartphone notes and started his bitcoin and blockchain “rap.”
“I am a Bitcoin hustle…I am a blockchain bustle…Get your hustle going, flex your crypto muscle, yaaay!”
We give Draper an “A” for enthusiasm, entertainment, message and venture capital smarts. But as a rapper, we’ll just say it was a lot of fun Tim but you’ll have to work harder on bustin’ some new rhymes and moves for the next conference.
You can watch the rest of Notorious Timmy D’s rap performance in the video below at 18:17 or watch the entire TNW 2018 interview.