Troy Carter and Tim Draper talk controversial investments, Bitcoin, Theranos, and cross-pollination with Justin Bieber
For episode 606 of “This Week in Startups,” Jason has an investors fireside with Tim Draper of DFJ and Draper Associates and Troy Carter of Atom Factory. During their hour-long discussion, Tim uses his years of experience to analyze the current startup landscape and predict the future of investing. Troy might be a newbie compared to Tim, but his unique background in the music industry allows him to draw some hilarious parallels between unicorn CEOs and former clients like Lady Gaga. Here are the pair’s five most interesting points.
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1. Be picky about investments
Early into the episode, Jason asks Tim what the explosive startup growth means for the ecosystem. “It does come in waves, and we are in the middle of one of those waves,” he says. “It’s times like this when we have to be very good at not only filtering but understanding competitive dynamics.” Tim encourages his peers to be choosy about companies, and target the ones who are true rarities in their industry.
2. But don’t be scared of gutsy companies
Troy and Tim might be selective, but neither shies away from a bold idea. Troy says the two companies in his portfolio he’s most excited about are uBeam and Tuition.io, which are both built on pretty daring ideas (wireless charging technology and student debt management). Tim is also quick to defend his involvement in Theranos. Despite the controversy surrounding the medical tech venture, Tim has stuck by it from the beginning and maintains it will be “one of the great companies of the world.”
3. Startup founders need courage and paranoia to succeed
Jason asks both Troy and Tim what traits they think today’s entrepreneurs are missing. After working with so many kids at his school, Draper University, Tim believes courage is key, but he also worries about founders who are too hung up on trends. “What I avoid now is people who catch the latest fashion,” he says. “Because that fashion will come and go. I’m kind of looking for someone who never really cared about whether they had a soul patch.” Meanwhile, Troy thinks a “healthy dose of paranoia” is important in any entrepreneur.
4. Transparency is the way of the future
As a long-time investor, Tim has seen the landscape change over and over again. So what does he think investments will look like in five or ten years? The big change Tim predicts is transparency. He thinks VC funding could be done completely through BitCoin and that even the government will become more virtual. Useless residual checks that cost more to mail than they’re worth will also become obsolete.
5. If you’ve worked with pop divas, you can handle any startup CEO
Jason points out that most great startup founders are difficult people, and asks Troy if he sees that a lot. As a veteran manager of musicians, Troy couldn’t stop laughing. Apparently, he’d rather work with a demanding unicorn CEO any day. “You’re not getting the two o’clock in the morning phone calls bailing people out of jail, having to beg someone to get on a flight or sober up,” Troy jokes. “It’s not even close.”
Key Timestamps
3:24–6:57: Tim Draper explains why he went the startup route and the thinking behind Draper University.
7:03–9:56: Troy Carter reveals how Atom Factory empowers artists and entrepreneurs.
12:05–15:35: Tim Draper thinks we’re in the middle of a startup boom and that investors have to get pickier.
15:36–18:30: Troy Carter explains how he picks companies for his portfolio, and why he thinks startups are broken on the back-end.
18:31–21:42: Tim Draper also thinks the system is broken, but that liquidity in markets and government regulation is improving.
23:53–26:50: Troy Carter says good startups are getting turned down because the benchmarks keep getting raised.
26:52–29:53: Troy Carter breaks down his own syndicate.
29:55–33:57: Tim Draper predicts what investing could look like in a few years. Hint: BitCoin is involved.
Tweet: What will startup investments look like in the future? @TimDraper thinks @Bitcoin will be a big player
34:02–37:46: Troy Carter talks about the two most promising companies in his portfolio: uBeam and Tuition.io.
38:15–42:32: Tim Draper answers an audience question about working with non-transparent investors.
45:03–47:13: Troy Carter thinks today’s entrepreneurs are missing a healthy dose of paranoia.
47:14–49:31: Tim Draper believes too many founders are concerned with being trendy.
49:32–50:35: Troy Carter compares difficult entrepreneurs to demanding pop stars.
50:38–52:51: Tim Draper thinks people are misjudging Theranos.
52:53–55:00: Tim Draper explains the press backlash over Theranos, and the secrecy surrounding the company.
— Kristin Hunt, TWiST archivist
