Billionaire Investor Tim Draper: “Irresponsible” for Apple & Meta NOT to Hold BTC

SpaceX has always been quote a thing. Elon's really extraordinary. And I think that the ones who are not holding Bitcoin, the Apple, I think Facebook, [music] if I'm the head of a treasury and I'm looking at the ridiculous amount of government spending that's been going on for the last 10 [music] years and the possibility of hyperinflation or crazy high interest rates, I would hold at least 4 weeks worth of Bitcoin on my balance sheet. Hello and welcome back to the Bitcoin Magazine podcast. I'm your host, Spencer Nichols, and today we are joined by the one and only Tim Draper, Bitcoin investor first and foremost. However, he's also an esteemed venture capitalist with investments in firms like SpaceX, Tesla, Twitch, Skype, BYU, as well as Bitcoin native firms Arc Labs and Open Node. Tim, welcome to the show. How are you doing today? >> Terrific. Great. Yeah, we've I think we made 50 Bitcoin investments in different um companies, maybe four uh because we have a Bitcoin FI organization. It's an accelerator for Bitcoin companies. Uh so that's another thing we've been doing around your environment. >> Amazing. Yeah, I look forward to getting into that. And I think uh a place that I think is really crescent to start with is kind of just talking about the innovation climate in the United States. I know you've spoken towards the idea of decentralizing everything in particular. I know you've written about decentralizing kind of the um the impetus of of science in our society talking about how centralization can lead to kind of a slowdown in innovation. I think this is top of mind for people right now as we see you know these frontier AI labs kind of you know what some are calling kind of a a regulatory capture type strategy others are calling a prudent means of slowing down the deployments of a AI in society. Um but I think first and foremost I want to understand how you are digesting everything that's happening right now just in the innovation climate broadly. >> Yeah I think things do innovate faster in a decentralized world. So um when um a leader um decides to be socialist they they control everything and then uh we all have to sort of walk the walk and talk the talk. uh but if you have a capitalist society uh it's decentralized and uh innovation can happen from anywhere and actually it it isn't just relevant for individual leaders of countries. It's also uh relevant for individual leaders of large companies because in a large company if you have centralized control then and centralized decision-m then you are really only uh reliant on the creativity of the person at the top. um maybe with a few of their adviserss, but there are there might be hundreds of thousands of people with interesting ideas for how to improve the organization and they are muted in a centralized environment. So I recommend that every organization be decentralized. science in particular has become much more centralized around um the biggest uh grants from government, the um Nobel Prize winners, they all seem to know each other. So I actually think that there are some major changes that could happen out there uh in the world if we decentralize some of the monopolies and all the agopies that we have. And do you find that the current trend of artificial intelligence is becoming a centralizing force or a decentralizing force um centralizing in that you know you have these frontier labs amassing tons of capital kind of getting their own brain trust together in their you know their walled gardens and then decentralizing in that you know we're now democratizing access to research and things like non-coders being able to code uh people engaging in data science that couldn't before. You know what is that um overarching trend looking like to you? It's an interesting question, but I think um it's still in decentralized mode because it's so new now. There there's a centralization of a lot of the capital that's gone in. Uh the biggest uh AI companies are are uh grabbing most of the capital, but the innovations are happening throughout. We're we're seeing entrepreneurs in every single walk of life applying uh artificial intelligence to their own business and we're doing it ourselves in in at Traer Associates. So um I I do think that it's it's great when there's a new technology because it does tend to challenge those icons that are uh too centralized. So I would say what AI is doing is challenging the centralization of control of search um in one way and and it has become decentralized. there are more than one. You know, Google really dominated all of search and um maybe BU in China, but um the uh now there are lots of different choices. Uh you can go to Grock, you can go to Perplexity, you can go to Open AI, you can go to uh any number of different um AI uh providers. And as a consumer, you've got a lot of good choices. So, I'm I'm actually pretty excited about what AI is going to potentially do. And that's just around search. I also think that it's going to take many of these centralized control uh industries and challenge them and uh get them to start thinking in new ways. And so, you know, anything big, big big pharma, big banks, big well, big banks have been challenged by Bitcoin. Uh big uh big accounting, uh big law, uh those have all become a little bit more monopoly and oligopoly uh centralized in their decisionmaking. and in government too. Uh and now with AI, you can do more things. And so you can um like AI can do a better job of defending you from a lawsuit than any lawyer in the world. Uh it can go out and find so many more things in the in the history. it can find all the different cases and everything else that you need and it can do a better job. In accounting, same thing. A lot of accounting is now being done by a and um and as in a bureaucracy AI can solve a lot of what a bureaucrat's doing. And it's actually good timing because I know because they put so many regulations down that the bureaucrats are overwhelmed. And this is a big opportunity to decentralize that and open it up. And um and I also think that um just in general we're all better off when we have more choices and uh AI is allowing us more choices. um you know, cryptocurrency allows you a wide variety of choices, whereas we're kind of centralized around the dollar. And uh and it's interesting as long as the government spends too much money, Bitcoin becomes more attractive because the um government is if it um it if they spend a lot of money then they either inflate or they raise interest rates. they raise interest rates, you could have a cataclysmic bank failure, series of bank failures, in which case Bitcoin is a a great safe harbor. And uh and if you have hyperinflation, then they lose faith in the dollar and then Bitcoin's a you know better alternative. So I actually think that that's very uh promising for Bitcoin and and for all of us. I think when you have more liquidity in the marketplace uh because of a more of more confidence and a uh a faster opportunity, faster way of transacting, you benefit bigger. Uh so I think that that is uh and and society becomes wealthy. uh you know just the internet created many many more contracts and many more deals around the world and it brought about two billion people out of poverty. I think uh Bitcoin could uh have the potential to bring the other two billion. >> Yeah. hearing you say that I'm what is brought to mind for me is that uh you know I think broadly we're seeing you know uh faster and faster cycles of innovation um and also seeing kind of this underlying trend of decentralization. I'm reminded of something that Bali Swini Vasan has said kind of this thesis of kind of a pendulum swinging towards centralization and decentralization and it it does seem as though we could very much be on that pendulum swing towards decentralization. So I want to understand what kind of framework you're you're working with there as you think about the the timing and pace of this transition and the form. >> Well, I used to wear this tie to promote Bitcoin so people would uh would recognize that it was an alternative and it was very exciting and we were going to have a a decentralized open, transparent faster more liquid uh currency. But now I'm wearing the tie just to make sure that when we have a either hyperinflation or a cataclysmic bank event that at least I've told everybody I possibly could that they should at least have six months worth of Bitcoin in their wallet and they should uh and if they're a business they ought to have about at least four weeks worth of Bitcoin in their treasure. And if they're a government, they should have they should be buying Bitcoin um as a hedge against either if they're relying on the dollar or their own currency, but it's also a great security. It's a great hedge against possible cataclysmic events. You know when the my dad gave me million dollar bill when I was um about 10 years old million dollars? What can I do with it? He said nothing. And I said what do you mean? He said he said that's a million Confederate dollars. the Confederates lost the war and everybody wanted Union dollars at it because the Unions won the war and uh so there was hyperinflation in the in the Confederate dollar and that hyperinflation meant that people were trying to unload it too too quickly super quickly. So there had no eventually had no value when a million dollars worth of Confederate money was even worth a dollar of Union money. I actually think that the that's the same thing that could potentially happen with the dollar to Bitcoin if a bank goes out of business or we have hyperinflation. And the only way I mean I think okay there's sort of three paths. One is the government stops spending. Odds of that are very low. Number two, the government uh keeps interest rates low and we have inflation that turns into hyperinflation. That's fairly likely. And then the third is the the government increases interest rates to damp down inflation and that creates a whipssaw effect. much of what h much of how it happened with Silicon Valley Bank and the banks start going under and then there's a run on the banks and people are looking for some uh store of value and they go way under [music] >> [music] [music] >> where we sit in the current macroeconomic environment. How are you kind of making sense of the headlines around the yield curve against our our ballooning debt? You know, we have the oil market putting inflation pressure on things. you know, how are you making sense of the world? And I think the fog of war is uh, you know, not an easy one to make your way through, but you know, love to hear how you're thinking about that. >> You know, I'm I'm a free market open border guy. Um, on the other hand, if you have a government that is uh restrictive or socialist or too regulatory, uh, you might need sort of a centralized government to refree yourself and I think that's kind of what's happened. You know, I think the world you were talking about the pendulum when the internet popped in to the world. Uh the geographic borders became uh much more open. Uh the the borders dissolved. Uh our businesses thrived. A lot of people came out of poverty. Uh we had a a great global economy was working very well. But then uh fear set in during the pandemic and when you have fear there's contraction and that's when people become nationalistic. Uh so I think uh we have now put up all sorts of new restricted borders and uh and uh the wars are happening. When the borders are open, uh they usually everybody's best interest is not to be open. But when borders are closed, then people are are thinking, you know, what are you doing over there? More suspicions. It's a weird pendulum. In some ways, it's becoming more centralized. But the world is a marketplace of governments and the freer the government, the more attractive it is for the people. I think we do have to go through a little bit of a pendulum swing. I would like it to as soon as possible swing back to freedom, open borders, um a capitalistic society, free market, free speech, because I think we all really benefit from that. When you don't have those freedoms, there's a contraction in people's thinking. they um you know, all you have to do is travel to a socialist country and you realize that they are restrictive in what they're allowed to think. And when that's the case, you know, it it hurts an economy, but but me being in the venture business, uh it it makes me run away because I I run to the places where there is more freedom because then if there's more freedom, then they can think more about what could potentially happen in the world. Um, but if they're all socialists, they they all have to think the same thing or else u or else the government comes and slaps them down. And so freedom really does decentralize us and makes us more effective. And I actually think there will be a day when I mean most of governance doesn't need to be landbased. So one day governance will be just a service and we will pay for it. It'll be very much like inflation and people will provide governance you know 11 miles offshore or up in space something doesn't really have to be tied to a border. And that became pretty clear you know as the um internet economy was booming. But then some of the politicians were feeling irrelevant and I think they decided that they wanted to get back into control over the people. But the more control they have over people uh the less um the people can innovate and the slower the economy grows. So, I don't know whether that answers your question at all, but it's kind of a stream of consciousness of what I'm seeing out there right now. Now, longer term, I do believe that we will have competitive governance, which means that governments will have to compete for us and they will be accountable to us around the world. And um the most attractive ones will attract the the best businesses and the most people and the best brain power and um most innovators, the most entrepreneurs, best teachers, all of that will be attracted to the best governments. Um and the the bad governments, the ones who impose restrictions and regulations and taxes on people, uh people will leave those uh and they will fall under their own weight. >> Yeah. I I do think that what you're describing sounds to me kind of like a red queen dynamic where you essentially have these organizations, governments that are stuck in a paradigm where the solution to their problems, the solution to their solvency is capital controls, increased taxation, um essentially clamping down on the freedoms that their constituents have. Um yet that actually exacerbates the problems that they themselves face. And what that really requires is there to be a new mode of organization. And when I see something like Bitcoin, I see that as having great promise to kind of escape this race to the bottom. Um, and as you mentioned, it's going to hopefully create a free market for governance in the world. I spend a lot of time thinking about what that change from what we see today to a more free marketsoriented society, you know, fermented by Bitcoin looks like. Um, you know, how far are we away from governments really taking Bitcoin seriously? Well, the decentralization thing, I mean, I don't know why we don't vote on our phones. I mean, that is completely ridiculous. It's more secure. It's it makes sure that you, you know, it's one one per one. And if you were to vote, then we could create more of a liquid democracy. I mean we could experiment with other types of governments but there will be innovative you know in Estonia they had this amazing president and amazing prime minister who understood technology and they they introduced technology into their governance and they have actually done extraordinary things for such a small country. But I I do think Bitcoin has shown the way toward decentralization. The um the idea of using smart contracts, decentralized autonomous organizations, all of those things now can branch off from Bitcoin and it just may take the dying off of a generation before uh we see the light here. And I guess one of the things that I'm also thinking about is like what does the integration of Bitcoin in society look like? I know on the payment side, you've backed many Bitcoin payments companies um really try to drive that infrastructure forward. Um I think many in kind of like the popular Bitcoin discourse right now are looking at kind of like Wall Street as the adoption mechanism per se. Um you know, integration into financial products. Um but really on the payment side, you know, what are you seeing out there right now? And do you think we're ready to um you know, use Bitcoin and mass? Uh and I know you've kind of said, you know, in crisis, Bitcoin is there. It's an escape hatch. It's an option. Um but are we where are we at on the payments timeline to have that infrastructure in place? And what needs to be done? >> Yeah, it's got to be um pretty easy to uh transact in Bitcoin. uh the there's been a little bit of a um what is it dichotomy that you um I mean if we're bitcoiners we want to transaction transact in bitcoin but if we're true bitcoiners we just want to accumulate bitcoin so [laughter] so there are I mean there are very few bitcoiners that are holders holders that um are really spending it at retail and that's why the retailers don't accept it because they they're saying it's not a big piece of our revenue. I think it's going to be two more cycles uh two more havingings before we start actually um operating Bitcoin. So, one's coming in about 9 months and another one's coming in four years and then so I guess if I were to pick a time when the retailers realize that, hey, this saves me money. Um, I'd rather hold Bitcoin than dollars, whatever. I think it's probably about four years and nine months away. And as we look into the future, how does the next, you know, the end of this epoch look to you? Um, I know you've kind of reiterated this like $250,000 price target. Um, but, you know, what what gets us there? Is that just the hodlers that are around now just continuing to stack? Is that new entrance in the marketplace? Um, you know, to your mind, what's going to drive us there? Um, and what again, what does that timeline look like? Well, you're going to have a havinging coming and when there's a I mean it's like you know if you cut all the oil production in half the price would go. Um so if you're thinking about what's the price of Bitcoin and when's it going to go and hit a high number it's when the supply gets cut in half and that uh is coming in about nine months. But I but if it's if the other hodlers are anything like me, I have no intention of like buying things with Bitcoin when I can buy them with dollars now. Um because I would much, you know, as a financial person, I would much rather hold the Bitcoin. But there will be a moment when the retailers first say we accept Bitcoin. A lot of them have already done that. And then there will be a moment where they say, "Oh, we only accept Bitcoin." Uh, and hopefully by then I'll be able to invest Bitcoin. You know, I I'm looking for a world when I can uh raise a fund all in Bitcoin, invest it all in Bitcoin, and have my entrepreneurs pay all their employees and suppliers all in Bitcoin. Because then if it's all on the blockchain, all the accounting, all the auditing, all the bookkeeping, it's all done. Doesn't have to we don't have to go through all those uh intermediary professionals to um to get all that done. The taxes are all paid. Everything happens automatically. So uh I'm looking forward to that because that will really simplify the financial world and make it more available to more people. >> Kind of want to double click on this like Bitcoinbased venture capital model that um, you said that you yourself would like to engage in. Um, you know, you one of your um, early investments uh, SpaceX um, you know, is still holding Bitcoin on its balance sheet. you know, with your portfolio companies and founders that you talk to, what has the conversation been like when you bring up Bitcoin to them? Are they receptive to it? Um, you know, and SpaceX is kind of honestly an odd exception. Like they're a huge company and do hold Bitcoin, but they're um one of the few that is not, you know, a Bitcoin native firm doing so. >> I mean, they're forward thinking. Uh, clearly SpaceX has always been forward thinking. Elon's really extraordinary. Um, and I think that um, the ones who are not holding Bitcoin, the Apple, I think Facebook, they should all at least, if I'm the head of a treasury and I'm looking at the ridiculous amount of government spending that's been going on for the last 10 years and the possibility of hyperinflation or crazy high interest rates, I would hold at least four weeks worth of Bitcoin on my balance sheet because for one thing, if you're a board member of a public company and you don't own Bitcoin and a bank goes under that holds all your cash, you are personally liable for two to four weeks of employee compensation. Imagine being Apple. You got all your money is tied up in dollars and it's a huge amount, crazy amounts of dollars and you you aren't holding any Bitcoin. That's irresponsible in a time like now where you don't see an end to government spending. and uh and what that does is it inflates your the dollar and or it means that the interest rates are going to go up. So, it's one of those two things and both of them um put your dollars at risk. >> Tim, I know as we we come up on time here, I want to give you an opportunity just to share um any other things that you're working on or firms or sectors that you found particularly compelling. I know we've discussed generally speaking AI in Bitcoin. Um but you know what else out there are you seeing that you think uh the market doesn't quite appreciate yet or that you'd like to bang the drum on? >> Well, I just talk about my business. I'm a venture capitalist uh with Draper Associates and I uh run u Draper University which is an accelerator of sorts and um and I um have a show called Meet the Drapers. Now there are 300 million people who it reaches. Uh we get about 10 million who watch each episode. So that's very exciting and we watch a get to see a lot of uh a lot of interesting entrepreneurs from all around the world. Um, and um, you know, as a venture capitalist, uh, I'm looking at all the things Bitcoin is definitely one. That whole Bitcoin economy is one. Uh, everything AI now touches, each industry AI touches is one that we're looking at helping fund uh, startups around. And, uh, space and transportation have become a real theme for us. bio cures rather than chemotherapies or in addition to um and using AI for um computational biochemistry. I think those are powerful. Um I'm very interested in anybody doing anything new in education because I think where education is falling on its head because it's been so centralized. transformational companies that are creating new either better ways of governing or ways to support existing governments. Um those are interesting format too. So uh yeah and most entrepreneurs who really blow me away are the ones who come to me with something entirely new. So thank you very much. >> Thank you Tim. Have a good one.