Tim Draper

As a managing director of venture capital powerhouse Draper Fisher Jurvetson, Tim Draper helped launch Hotmail, Skype, and more than 500 other technology firms over the past 25 years. His firm manages over six billion dollars of investor assets, and his own personal fortune has measured in the range of a billion dollars.*

But Draper is equally proud of painting lobsters, starring in a Nickelodeon show, and developing his private island in Africa that is “much cooler than Richard Branson’s.” With these pastimes, Tim doesn’t seem to be your typical venture capitalist, but after sitting down to talk with him, I discovered that he may fit the profile even better than he fits in his infamous bunny suit.

The Ideas
From Submarines to Viral Marketing

“Entrepreneurship is about passion and persistence,” Tim tells me as he leans back in a leather chair in a conference room in DFJ’s offices on the iconic Sand Hill Road in Palo Alto. “It’s about drive and determination, having an idea in your head that you just can’t let go of.” The wall behind him is covered with framed IPO notices of a couple dozen companies, with financial details in fine print. It’s the room of an accountant or actuary.

But Tim looks like anything but an uptight number cruncher. He’s got a big goofy grin on his face, framed by an unruly mop of black hair under which his eyebrows leap like a pair of exploding caterpillars, his suit offset by a rumpled red tie covered in cartoon kids. He resembles a friendly but eccentric schoolmaster, which happens to be the role he played on the Nickelodeon show his sister produced, The Naked Brothers Band, featuring his nephews as young music idols.

He’s played the role of educator in real life as well, creating the charitable Bizworld Foundation to teach business to kids in grammar school and junior high. It began when his eight-year-old daughter asked Draper to explain what he did for a living. In response, Tim came to school and turned her classroom into a business incubator for friendship bracelets. He led the kids in practical workshops in manufacturing, marketing, and financing their accessories. “And it turns out some of those kids who had been labeled ADD were absolute stars in the Bizworld environment.” Tim paused, philosophical for a moment. “Interesting…”

Perhaps success as a venture capitalist depends on a healthy dose of ADD. “I wanted to be an entrepreneur myself, but just had too many ideas,” says Tim of the time he was graduating with his MBA from Harvard. As he was developing a business plan for digital music, he also began studying the potential for holographic videos. At the same time he wanted to launch private stock markets, he became entranced with the concept of mass producing personal submarines, an idea he thankfully abandoned because he “didn’t want to disturb all those sea creatures.”

What he did decide on was that, like his father and his grandfather before him, he would become a venture capitalist, enabling him to curate a dozen or ten dozen different concepts at the same time. He would be able to indulge his passion for technology (learned as an electronic engineering major at Stanford), with the persistence of new ideas created by himself and those around him. The most famous of these ideas was his concept of “viral marketing” which helped turn Hotmail from an obscure free email service to a worldwide phenomenon as the customers did his marketing for him by forwarding the program to their friends.

Since then Tim has launched a virtual viral market of venture capital through the DFJ Global Network, with offices in thirty cities around the world, providing him a nearly endless source of new ideas to challenge the status quo. He says he doesn’t directly manage the companies he’s helped fund, but rather serves the roll of a ringmaster, connecting the manufacturers to suppliers, financiers to founders, and the market to a worldwide big top circus of new ideas, be it the China-focused search engine of Baidu, or the Estonian-Israeli partnership that created Skype.

His Background
Deep Roots in Silicon Valley

Although Tim Draper has traveled through more than 70 countries tracking down that next great idea, his roots, his home, and his business remain in Silicon Valley. “My grandfather started the first venture capital company here when Silicon Valley was pretty much all apricot orchards and prune trees.” William Draper Jr. came to what was to become Silicon Valley in 1958 after he had helped lead the Marshall Plan for redevelopment in Germany and Japan after World War II, rising to the rank of Brigadier General and Undersecretary of the Army. He brought one of his deputy generals with him to found what he quaintly called a “finance firm” in northern California. His son, William Draper III, worked in the family business, then branched out to found the industry-changing private equity firm, Sutter Hill Ventures in Palo Alto 1965.

Tim Draper says that following in his father’s and his grandfather’s footsteps in venture capital “was the last thing I wanted to do.” But after graduating from business school, and spending a year in investment banking, Tim decided that he had to pursue his passion for new business ideas back to Silicon Valley, and start a venture capital firm of his own.

As Tim’s business grew, so did his family. His “very understanding wife” helped him raise four kids in the same area where Tim witnessed the birth of Silicon Valley. And the family tradition continues: one of Tim’s daughters, Jesse, currently hosts an online business talk show called “Valley Girl,” interviewing famous CEOS, while one of his sons, Adam, is co-founder and VP of Business development for Xpert Financial, a Silicon Valley company that is pursuing a very similar private stock market idea Tim had back in his Harvard days, as the proud father sits on the company board.

So as a fourth generation of Drapers pursues the Silicon Valley dream, I asked Tim if the area is keeping its competitive edge, given the technology innovations taking place in highly educated, more inexpensive locations in India and China. “Silicon Valley is still an engine for jobs growth for California and for the U.S.,” he answered, adding that while the physical business supply chain is no longer quite as focused in the area, the supply chain of ideas, innovators, and change agents remain. But so do some challenges, with education, government budget problems, and over-regulation topping his list. “One of the great things about having fifty states is that governments need to compete to attract and support business,” Tim says, “Hopefully it will force them to innovate as well,” adding with a smile, “Maybe we should have more than fifty states.”

The Future Looks Green

To see what the future of business in Silicon Valley holds, take a quick scan down the list of Tim’s DFJ-funded ventures. You’ll see over forty “green” or “clean technology” businesses, focused on everything from solar power, to electric cars, waste management and clean coal. Draper gives credit to much of the firm’s success in this area to Raj Alturu, DFJ’s Managing Director who led the firm into investing in this area almost ten years ago, before the practice became fashionable in the media.

In fact, Tim says once a business idea percolates down to the consumer level, you may be looking at a bubble-type cycle of hype, as seen in the dot com boom and bust. “I see some of the same guys, literally the same ones coming to my office with get-rich-quick schemes for social media or green technology that were in my office ten years ago with their copycat dot com schemes.” Still, with the wisdom gained from reviewing thousands of business plans and funding hundreds of businesses, Tim and his team look to separate the pretenders from the contenders. Tim cites a couple DFJ-funded social media companies where he sits on the board as exciting to him: Meebo, a social media integration platform, and Socialtext, an enterprise-focused social media software company.

Outside the Office
Captain America vs. the Cape Buffalo

Between reviewing business plans from entrepreneurs, and meeting his investors to raise capital or deliver updates, Tim manages an amazingly diverse schedule. He speaks at business conferences, events and corporate launch parties worldwide in his own inimitable fashion, dressing up like Batman or a space man, once singing as he performed a video strip-tease, posing for a business journal in a spandex Captain America outfit, and for another in a bunny costume for reasons yet undiscovered. His wife introduced him to painting as a hobby, and he’s quite proud of a series of lobster portraits that hang in space of honor in his home.

An avid athlete, he skis on holiday, and still tries to make his regular 6AM basketball games with friends, though he says these days he’s abandoned jumping for “just shoving people around.” His sports interest sparked his personal investment in an independent professional baseball league, a challenge he says, to the “status-quo monopoly of Major League Baseball.”

Tim travels in rarified circles outside of work. He enjoyed visiting Neckar Island, Richard Branson’s private playground in the British Virgin Islands, and hanging with his fellow business leader. Draper had such a good time, he decided he simply must have an island of his own. So while flying in a private jet over Lake Tanganyika after an African safari, Tim spotted a pretty looking island to buy.

Typical to Draper’s venture capital due diligence, he worked with an expert local entrepreneur to qualify, close, and develop the property, now called Lupita Island. Tim bought a boat from “Bob” Mugabe, the dictator of Zimbabwe to use in the lake, had it trucked hundreds of miles only to find it was too big to fit through a highway tunnel. It had to be sawed in half and reassembled at the lake. For entertainment, Tim flies over the lake in his personal helicopter—and jumps in from about fifty feet. “The only rule for me and my friends there, is that there are no rules!”

And like Branson’s island, Tim rents Lupita out as an island retreat for couples or groups who want to “chill out” after a safari, for a cool $2,000 per room for the night. But mind the buffalo when you get to the mainland: Tim talks of the time he had to “juke out” a big-horned, two-thousand-pound angry Cape Buffalo that had chased him toward a tree during a walking tour. As a reminder, Tim has the mounted head of a “distant relative” of that buffalo by his office.

Continuing to enjoy both his business and his free time, Draper doesn’t see an end to his adventures any time soon. The businesses will change, the technologies evolve, but his passion and persistence will remain for the ideas and innovators that continue to “overthrow the status quo.”