Tim Draper Re-invents the Business School

by francine Hardaway on February 13, 2014

On stage with Tony Perkins to kick off this year’s Venture Summit Silicon Valley, Tim Draper welcomed a crowd of investors and entrepreneurs to his brand new Draper University, the home of a series of six-week programs to speed up the pace of disruptive innovation in Silicon Valley. Draper plans to disrupt entrepreneurship education.


Who is Tim Draper? Well, Draper’s father invented the limited partnership method of raising venture capital, which gave birth to the modern venture capital industry.


As an aspiring venture capitalist and the son of a VC, Draper grew up in an astoundingly different Menlo Park forty years ago, and had to go east to school and work at an investment bank before coming home to take over the family “empire,” Draper Fisher Jurvetson. He had no way to learn the business without going away to work elsewhere in financial services. Unfortunately, when he came back he knew a lot about equity funding, and not much about which companies to back.


He took over the  small business investment companyt his dad had set up, which at the time  had $2 million worth of   private company investment. To grow it, he look out a loan. The SBA loaned him $6 million on the $ 2 million  valuation and overlooked the fact that he had no investment experience.


Draper was 28 and knew nothing, but he was excited by the responsibility of managing money. He went out to interview everyone he could to try to come to some form of judgment, and started by taking all the deals no one else wanted. His first seven investments included six failures and Parametric Technology, a huge east coast software company. That was enough to get him going.


He then went on to invest in his friend Tony Perkins’ Upside Magazine, which revolutionized the field of technology media. (Tony himself later went on to create Red Herring.)


Tim says he backs entrepreneurs who want to delight the customer, and he invested in bigger and bigger deals, culminating in Hotmail, Baidu, and Skype.


Hotmail he found exciting because the internet was new, and people were trying to figure out what to do with it. The Hotmail founders came up with web-based email, but then Tim Draper came up with the idea to sign every email with “P.S., please get your free email at Hotmail.” The founders fought him, but he eventually wore them down. and the service scaled to 11 million users in six months. (One of the founders sent an email to India and within weeks there were 100,000 users in India, though there weren’t even 100,000 computers in India at the time.) Hotmail later sold to Microsoft.


Draper found the Skype team by looking at a technology called Kazaa, an illegal sharing service the Skype founders had also invented. But when they told him about Skype, he funded that. instead  It was another service that grew quickly.


Enter Draper’s friend Tony Perkins again.  By this time Tony had founded AlwaysOn, and he made Skype Company of the Year at his Innovation Summit in 2005.  Unable to attend to pick up his award because of a Skype board meeting in Estonia, he couldn’t figure out how to be in two places at once.  Nicholas Zennstrom solved that by choosing that occasion to throw the switch on Skype video for their presentation at the AO Innovation Summit.


Surprisingly,  it worked well.  Only later did Draper find out that to ensure its successful launch, Skype had to shut down all of its other 100,000 simultaneous users.

Draper now says he’s trying, with his new “university,” to shorten the time frame for entrepreneurship. He believes he is building a path to a new way of educating, in which the person who learns by doing, rather than by going to college, can be encouraged. Draper Heroes are those unique individuals who have a special spark and are willing to learn in a new way, and his modular programs can be experienced both online and in person.

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