Tim Draper: “Everybody Wants to Leave California”
Tim Draper on Blockchain adoption, regulations in US and China, and why he wants to leave California.
Cointelegraph had a chance to talk to Tim Draper, American venture capital investor and businessman, founder of Draper University for entrepreneurs as well as Draper Associates, a VC firm that invested in Tesla, Skype, Baidu, and many other companies.
Tim Draper has been involved in different crypto projects, from the purchase of seized Bitcoins from the Silk Road marketplace website in 2014 to advocating Tezos in 2017.
He shared his thoughts with Cointelegraph on Blockchain adoption, regulations in the US and China, and why he wants to leave California.
Who needs Blockchain integration the most?
Government needs it the most. No question. Worst service, biggest industry, highest cost. Government is clearly people. The size of an industry tends to be the number of people involved. Government is affecting the most people and it is providing the worst service at the highest cost. And the Blockchain can remedy that by creating a whole virtual layer of governance.
That could be the beginning of where governments have to compete for us so that their services increase, improve and the costs go down. Your taxes will go down, and your education, and your health care and whatever – it will go up, it will be better.
But other industries that are going to benefit, anything that’s tied to data or the individual, so identity will be very important because anybody who’s affected by data is going to have a much improved situation because that data will be on the Blockchain, permanently there, tied to each individual. And once that’s the case that can help with all sorts of other industries: whether it’s healthcare, or commerce, or improve retail experience – it could be any number of different things that could be helped just because they will have better data on you.
How to push adoption further?
We, who are in the industry, are pushing as hard and fast as we possibly can. And it’s just that there are all these uncertainties, created by the governments that are run by the grandparents of the people who are creating this new industry. And they don’t get it. It is very frustrating for the people who are creating the industry.
So you have these regulators who are 70-80 years old and they are the ones telling these twenty-year olds what they should be doing. But they’re the same people who have given them huge education debt, poor education, not appropriate for their work life. And now they’re trying to tell them not to do something. That is actually creating a whole new economy.
I mean if I’m a millennial, I’m deeply in debt, I have an education that’s not appropriate to the jobs that I have to go find – I’m kind of lost. But there’s this big opportunity all of a sudden. There’s Bitcoin, there’s crypto, there’s a whole new world out there. That hasn’t been destroyed by the regulators. Now the regulators are coming in, they’re making it very difficult on people.
But any country that gets highly regulated gets poorer, more poverty. And any country that’s free – gets richer. And I think the US is trying to figure this out.
How do different countries handle crypto regulations?
I know Japan has figured out. Make it free – make us rich. Japan thinks I have to control and regulate. I mean, China says I’ve got to control and regulate and they’re going to create a bunch of poverty. And it usually takes twenty years by that time they have moved on. But they are ruining the lives of many people by putting in too many controls, or too many restrictions, or too many regulations.
So when you see the FDA or the SEC or FASB – any of these big institutional regulators come in heavy-handed. They are destroying the potential for growth and wealth in their country.
You ask the question about what is keeping this from happening. It’s the uncertainty created
by all of these regulators. That is slowing down progress; it is not allowing enough of creativity to flourish. And they’re in competition with all the other countries and regulators of the world. And so the lighter touch – the more likely you and I are to move to those countries, or to work with those countries, or to be a part of those countries.
On ICO regulation in the US
My advice to the SEC is go ahead – regulate them all. But make it a one-page document that anyone can fill out. Don’t make it so that these two girls and a dog have to go hire a million dollars worth of legal work to just get approved. It makes no sense. Just have them go ahead and register, so you have the data that you need. But then let them go and then if they start affecting too many people they become a problem then go ahead and come in and say: “Okay, now you have to go our next level of regulation” or something else.
But ease in. Let’s let these things flourish. Who knows, what creativity is going to come out of these ICOs.
When the Internet came along the governments were trying to shut it down. And all of a sudden think of what’s happened with the Internet: all our lives are so much fuller and more interesting, and more dynamic. And I remember I’d spend hours waiting for somebody to come pick me up when my car broke down. Now if your car breaks down – you leave it on the side of the road. You go boom, I got an Uber – it all happens so quickly, that never would have happened if the Internet hadn’t happened. So this is and if we hadn’t let the Internet go, let it be free, the freer – the richer. Freedom equals prosperity, regulation equals poverty.
On businesses moving away from the US
Everybody wants to leave California. Anybody in business wants to leave California. Because even though the weather’s awesome and their friends are probably here – all of the incentives are to leave.
That’s why I want to flee California. I want a fresh start. And also to leave the US but that’s different set of incentives.
The taxes are higher here, the services are worse, educations worse, the roads are poor. You go to Texas – they have no personal income tax, they have great roads, they have a free government encouraging innovation. You need that.
New York, they have the problem that California does. They are over regulated, they’re on top of each other, they don’t let anybody do anything without filling out forms to do it.
But it’s a good thing about the States because they have to now compete for us, used to be pretty much all the states were competing and felt that way and they worked hard to provide good service to you. When was the last time, a bureaucrat said to you “What can I do to make your life better? How can I improve your business environment? How can I improve?”
They used to do that 25 years ago, I walked into a government office with my father and they said, “How do I improve your business environment? How do I make your home life better? How can I improve your child’s education?” That was the attitude that government had and that’s why my father has such great feelings about the government. And why and the reason I don’t – is because I saw that switch. Like all of a sudden it went from ‘what can I do’ for you to ‘what are you going to do for me’.
It was about 20 years ago. 20 years ago all of a sudden it was like – “Have you filled out form 12 CB? I’m sorry, oh, and I think you have to talk to this regulator too. Because I don’t think we’re going to allow you to have a party there!”
On Chinese policy of “yes” Blockchain, “no” crypto
China’s old government under Wen Jiabao was free. They said: a few of you will get rich first – let’s create a harmonious environment, let’s grow, let’s have free markets. That was awesome and it created 40 years of prosperity. And China is like one of the most advanced countries in the world now.
Well now they have the opposite. They have a control freak government, or at least the guy at the top and that permeates the government. They’re not letting money out, they’re not letting people use crypto, they’re not letting people use Bitcoin to pay.
And what that does is – it pushes out all the best entrepreneurs, pushes them to wherever. And it creates more poverty there because all of those people then are constrained. If you’re constrained – you’re poorer. If they say you can’t move – you’re going to starve. And that’s pretty much what too much regulation will do for you. And so that’s China.
Well, it makes no sense. I mean if you’re going to run something on the Blockchain, you’re going to need Bitcoin to do it. If you’re going to do something in Bitcoin – it’s using the Blockchain. These are intertwined.
Now, there are some other Blockchains being created, which is great. Competitive Blockchains. I’m a believer. And, you know, having competition because I as a consumer end up with the better service. But somehow trying to separate those and say oh we’re gonna allow all the technology in, we’re just not going to let you use it. What are they thinking? They’re basically saying: yeah, go keep creating stuff – we’re not going to let you use it and we’re not going to let you have money leave our country.
So where’s the benefit for an entrepreneur there? That’s why they’re all buying houses in Palo Alto. All the Chinese are saying: well, let’s get out of there. Or they’re moving to Japan where they’re welcome. All the young people are moving to Japan. They’re saying: “Well, wow, this government accepts Bitcoin as a national currency! I want to be a part of that!”
On projects in Kazakhstan
I talked to the Prime Minister of Kazakhstan. And I told him about Estonia and all of these interesting virtual governance thing that can happen. And I said that Kazakh means free. It should be free country. You want this to be free because you’ll end up with a wealthier, more prosperous country.
And, why not have a certain number of Kazakhs, but then a billion virtual Kazakhs. And have them all be a part of your world and compete with all those virtual countries for them.
And he was all for it. So I thought that was going to happen. Now, some lower down regulator has now tried to heavily regulate crypto and that it’s a proposal. It’s not law. And hopefully he’ll just be slapped down and, you know, sent on his merry way. He’s like the old world regulator, who doesn’t get that you’ve got to have a very light touch when you’re regulating an ICO.
It should not be the equivalent of an IPO. An IPO affects hundreds of thousands of people. The companies are worth tens of billions of dollars. An ICO is usually, you know, two girls and a dog.
It’s not like we have to protect everybody from themselves. It’s just people getting going.
On Edward Snowden criticizing Bitcoin’s Blockchain for being “devastating republic”
Who is listening to him? This guy just opened up! He opened up all that information, he made it dangerous. So, wait, this is totally counter what I thought would be his philosophy, which is: we’re open, transparent, this is the way the world should be, it’s open, and transparent, and decentralized, and whatever… Bitcoins perfect for that. So he’s, I don’t know, why you even listening to that guy?
Do we listen to the guy who runs the biggest bank in the world? When he says, we shouldn’t use Bitcoin – well why listen to that? Because the guy is realizing that people are taking pieces 1 percent, 2 percent, 5 percent of their money out of his bank and putting it into crypto. So he’s totally disinterested, and he is very nervous that he’s going to lose all those customers. And he will. Over time he will.
It just feels like crypto generally will replace all fiat. Because it’s just better currency and all the best engineers in the world are working on that. They’re not working on how to improve services for the dollar.
Crypto vs fiat
It is a hundred trillion dollar market. So that means, that we have a long way to go in a crypto market. We’re now in the hundreds of billions, it’s like it’s got a thousand times on what it is now to go.
Bitcoin vs other cryptocurrencies
I like competition. I think it’s great. I think Bitcoin is clearly the leader. And it will be the standard by which all the other currencies will have to compete. It’ll be the equivalent of Microsoft. But it could end up being Yahoo for search, you know, where Google came in and got a bigger share. So things can happen! But, when you have that front position and whenever there’s a new technology you add it to that currency.
It’s very likely that Bitcoin will be the largest and biggest currency because they have a network effect. It grows as the network grows.
On universal cryptocurrency and price volatility
I like the idea that they’ll all have to compete with each other. And I like the idea that they’ll all be tradable into each other. And, you know, and now they’re tradable into fiat too. But I think that’ll be less important over time, I think more important – more companies like you can get a Kentucky Fried Bitcoin bucket, which is only available to be paid for in Bitcoin in Canada. And then there are all these houses and yachts and whatever – that are all only available in Bitcoin,you can’t pay dollars for them. I think more and more that’ll happen. And we’ll be in a position where people laugh at you if you try to pay fiat currency for your coffee.
Whenever I hear this volatility question, I think, one Bitcoin is still just worth one Bitcoin. It is very stable. All these other currencies, these fiat currencies, there are volatile against it. Falling away. Over time.
And so, when they say volatility, I think they are panicking: they go up, they go down. One Bitcoin is still one Bitcoin and it will continue to be. And so I think, I am not really thinking that it is volatilizing, I am thinking that it is Bitcoin and it should be spent, as you need to spend it.
This interview was conducted at the Global Blockchain Forum, in Santa Clara, US, in collaboration with Cointelegraph news editor, Olivia Capozzalo.
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