Legendary Investor Who First Spotted Tesla Shares His Secrets

Founding partner of venture capital firms Draper Associates and DFJ, Tim Draper, joins Rebecca Jarvis on Real Biz with Rebecca Jarvis.
3:00 | 08/25/16

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Transcript for Legendary Investor Who First Spotted Tesla Shares His Secrets
Any time you see high cost and service that's an opportunity I'm looking for. As a start so the answer okay so the one that's the real. Big opportunities in Kenya now. Is government. That's where we get the worst service for the highest. I. One thing catches your about it for an hour as somebody who has seeded and number of very well. Is the industry. Currently. Managed. Where the consumer is getting bad service. Prize. That's a big Toppert. Deserves a big opportunity. And how the entrepreneur is approaching is very important. Do they have some new technology to bring this year or is it to some. Idea and then. You say. Can they turn that into a business. You know as an entrepreneur you need to put as much of your effort in to design your business model now. As you did in designing product there's. And so getting that business model right and then. And then when I finally meet with them. Just. Enthusiasm for his chest. And I usually ask him. Do it's if he reactions were from home. There are. It's that. Old agency you see people back a way to. Test. There. And and then Tuesday. You know why are you doing it they say I want him money. Parliament Yuma equivalents. And human. That's not enough. You know they have to have a passion for doing just. The company owns org or did it all wrong and then this is such a great vision and it. It has to happen and I had this is what I've dedicated my life to in his own. And it's get it it's gonna work. And nobody's gonna stop. Think about your view on goes we're going to Mars. And then 95%. Population but he's crazy. The other 5% of the people go. We just hours. When you look at previous downturns companies like Google eBay they came up in part as a result of the downturn the last downturn. Helped give birth to the air B&Bs in the movers of the world. What do you bearden and that is why. Happens when there's a downturn or or a crisis. Lot of people lose their jobs it is tragic. And then some of the people who lose their jobs say. I'm gonna starts and there's a better way I think there's a better way I work for this company for ten years. And I'm looking and saying they were going in the wrong direction anyway. I've got to battle and then they come to venture capitalists like Draper says it's and they say hey I've got an idea. And this is what I'm thinking of doing and if I get excited about it then we find them where do you see the next round of big ideas what what industry are you focusing. I look back at oh. Companies a very successful form it. And those are sky. Oh on Tesla those companies all took on industries where. Customers were getting really bad service. At really high prices so where you hear that hi Spencer okay government. That's where we get the worst service for the highest so how would one changed back. You can actually. Run a much more fair and an efficient and positive government. If you. If you think about all the new technologies that happened and applied goes to government. I could easily see using block chain where you need fairness I. Also have been exploring. Its the having. A basic. Income for. Every human. Everybody gets 151000 dollars a year. From the taxpayers. And then the next 151000 dollars they earn free of charge. And then after that they some tax and then he goes from there and what that does is it. It eliminates yours all the things all the problems that we have around welfare and around Social Security around. Unemployment. And even minimum wage all those problems. Pretty much go away 30000 dollars a year maybe 4050. My I don't know the number is but it is some amount. Where. Everybody's on the same platform so that you're not tainted if you're getting welfare as everybody. And you don't feel like. You can't go work. Because you might lose your welfare. Because you're encouraged to oh. You're very happy when Bill Gates is making a lot of money because then there's more money that can go into this tax base that can help. Raise that minimum. And so the hiring. X is going you're in in this sort of vision of the future is if the tax revenue base goes up and everybody makes a little more in their paycheck from the government run in this. Asia and everybody's incentive is to improve GDP people who work for government. Should not be there increases in patient not be tied the CPI but should be tied to GDP growth. Kind of like this mean I'm the end of the hour with there shareholder tied. I talked to a little bit about the current state of investing the current state of the tax base do you feel. There's a vote. No I don't and as long as you guys are still asking me if there's a bubble there's no. We have a long ago how much are off you know there was the markets come off and and I've noticed fewer angels and less enthusiasm. From angels. And fewer entrepreneurs hours. But those entrepreneurs power you. Really crave it and why do you think there has been this decline in funding especially from the angels we do have a liquidity for we have a serious liquidity problem because. In order to take the company public. And making a successful public offering. You really have to beat him ten billion dollar. Size company. There are very few house. There are many many more that are hundred million to ten billion dollar market range. And those companies. Have no equipment. I think you said recently you wouldn't think companies should pursue that IPO. It that they should essentially right not contemplate that and red state and private. Stay private because you can you can run your business more flexible but in all ordered to stay private you need some sort of liquidity. And if you and there are these new technologies that are really awesome potentially world liquidity. And those are he shares electoral pictures capture pictures work well. Bitcoin in the blocked and heard him tickets could potentially. Have a very liquid market. Where where people can. Easily buy and sell and trade. Say you're ultimately they need to transfer agent you don't need the lawyer don't need the account you can just make the trip. And it is and it will simplify. The the system the ability for companies to stay private but entry. But what you're saying is you want a place for any one to go no matter how much money they have. Where they can go and trade in the private company stock so that one could own. A little girl or a snap chat today without having to be a specialized venture capitalist or hedge fund that has special access to it I'm saying. Sure that would be great. But. Our government is trying to protect anyone from doing that and the per the protections are killing. Had you had companies you've seen in Atlanta this thing because of that yeah eight. An easier way for people to courage years. In Prague. And maybe it's just private companies are cute to be worth. Have you had companies that you seated. That have gone out of business as a result of that yes they died on the vine because they couldn't go public. Well it was too expensive and they were trying to go public and there were wasting million dollars a year and then the public markets we'll turn it turns out. And then they were stock. And it's had it happened to nine of our portfolio companies high during the period. And these were companies that we're going rate. How is artificial intelligence going to change. All the things that we. Well. Yes we agree is 21. Win and are there would be. Self driving cars. Of the first one. And that was. Were years. To three years from yeah. Victims. Winners in narco. Hours. Questions what suddenly. The artificial intelligence does a better job and better safety record debts there on time faster everything works better. When and you operated. Throughs. So what ultimately. I think self driving cars in the first. Opportunity I think robots that are coming I think that's exciting thing. Shouldn't have jobs especially in service being worried. Here where that's C that's where I think the basic. Import. We're more familiar with this kind of changeover in the silicon now there are one country and world. Where. Where people are in start ups and they fail and then ago okay now what. And I do. You're talking about a highly educated. Group who has lots of opportunity is whether they are the opportunities they want is apt question but there are a lot of opportunities. Verse as part of the labor force that might not necessarily have. Beyond a high school education. Or even a college degree might not have the skills that for the jobs that are available how do you retrain that part of the work. Port city it's introducing. Even junior's speech you're talking about a static education system where you have a static. Degrees and it's that. I actually believe that education has to be a dynamic thing it Draper university we've we've. Decided that we really wanted to change the way education works I created a school that focused on turning. Ordinary people with a special spark. Into great entrepreneur starting this year in September. We have a master's program we start them with political hero training where they go through the paces but by the end of it they will be very comfortable on their sale and elegant and totally succeed. They'll end up being a part of one of two tracks one of the tracks will be OK I've been through your program and I'm gonna stir my business now. The other track OP. OK I've been through your program I want to start my business later but I need to get a job now. The one track when they go up and start a business is going to have a business plan competition. These students are going to be allowed to power systems and I'm putting a million dollars the other track to go get a job. We can place them in one. 600 companies what we've decided is that we're changing all of education always we're getting rid of this board scores in the grades as a way of getting in were thinking more whip. Where's the spark in this person to did in editor remembers have to have an X-Factor. You have to have something that's a little bit special. You have to have a passion for one thing or or a passion to see the entire world I'd just decided I had to start a new school. Where the a creditors. Would normally put me an old box. And I have to be like all the other schools but I felt like no that those Americans that I want. A school that. Breaks all of those. Standards and changes the way people work we've learned a couple of really interest things one is. Team based learning. Is everything. I mean after all we all work in teams once we get out right. But when our hands in those school. We all are working in the and we work toward that day in the A means did you he didn't make any mistakes. And and I think we'll witness saying we want our students to make mistakes we want our students to go out and fly a kite during a but others aren't so that we get so that they hate that there aren't. They learn electricity. There are a lot of two oh lead. Moldy bread to the poor people in the hospitals they get better you know I mean. Those were mistakes right had a cell and electricity. Reese's peanut butter cups. They were all mistakes. And so we want mistakes that happen I think people need to think in terms of change because change is happening faster faster but we all have to adapt faster faster faster. Our education system. Should be a changing moving thing. Some people. Get it and then they kind of get the basics and then they start to move. And they go okay that's happened this can happen and so that. Draper university we say we don't teach history we teach future. And so we get people thinking and anticipating. What might be the next thing happens.

This transcript has been automatically generated and may not be 100% accurate.

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