the innovation economy: VC Tim Draper

Silicon Valley-based VC Tim Draper was interviewed on venturing and heroes. Draper is a 3rd generation venture capitalist and grandson of the founder of California’s first VC firm. His firm Draper Fisher Jurvetson (DFJ) has funded a range of technology firms including Baidu, Overture and Tesla Motors. He is founder of the Draper University Of Heroes where heroes take a daily oath and required reading includes Ayn Rand and Donald Trump. (Incidentally, Trump’s own academy, Trump University, has just been named in a lawsuit for effectively being a for-profit academic ruse. Draper, whose firm oversees around a $7 billion portfolio defended the cost of attendance in his own academy as being particularly less than Stanford University.)

Discussion considers the state of U.S. venture capital and whether American innovation is dying in Silicon Valley or beyond. Fair questions challenging Draper’s assumptions on venturing are posed, if unanswered, particularly starting at 34:43. Draper’s replies can sound in analytical malpractice both for invoking and damning identical approaches to problem-solving. Examples include the following:

  • Draper offers without provocation that “socialism doesn’t work” though later concedes that national safety nets in general (single-payer health care systems, e.g.) can facilitate venturing by freeing risk-averse workers to leave “cushy” jobs to launch ventures.
  • In reversal, Draper suggests lures of conventional employer-sponsored health insurance are ineffective at preventing venturers from launching start-ups because of  abundant venture capital and other funding.
  • Reversing again Draper concedes the discussion at large and his ultimate complaint that venturing isn’t happening at a maximum rate because of risk aversion in would-be venturists, to the effect of his own launching of Draper University.
  • Draper curiously frames “taxes” as a resource for “people who are having troubles” vs. any resource for private enterprise via direct subsidies, federal infusions unavailable in the capital markets, industry write-downs, health research, infrastructure, or national defense.
  • Draper condemns large government for stifling entrepreneurship though claims start-ups are burdened by the power of big business with “cushy” government ties to thwart competition.
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