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VC Tim Draper On Bitcoin, Going Public And Hong Kong's Startup Community

Jan 7 2014, 8:26pm CST | by

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VC Tim Draper On Bitcoin, Going Public And Hong Kong's Startup Community
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VC Tim Draper On Bitcoin, Going Public And Hong Kong's Startup Community

If you have even the most minimal exposure to the venture capital industry then Tim Draper is a man who needs no introduction. He’s the “Draper” in the storied VC firm Draper Fisher Jurvetson . He’s invested in companies like Hotmail, Skype, and Baidu. And he is the captain of the world cheerleading team for entrepreneurs and free markets, even going so far as to serenade students, startups, and business groups with his personal rendition of The Riskmaster . I recently had the opportunity to interview Draper in Hong Kong as part of the StartMeUp Hong Kong Venture Forum , an event organized by InvestHK , the Hong Kong government’s arm dedicated to promoting entrepreneurship and investment in Hong Kong. Here’s what he had to say.

Joshua Steimle: Why does Hong Kong need start-ups?

Tim Draper: You don’t want any state or country to get complacent. A lot of people start living a pretty nice life, and Hong Kong is a very nice life, and because they’ve had these amazing free markets the economy has just been fantastic here in Hong Kong for many, many years. And it’s because there were a lot of entrepreneurs here and they came and they built their businesses and they grew their families and they made great things happen here. They did manufacturing, they did all those things. Now I have always believed that competition is really good for society and monopolies are bad for society. Groups that get lazy or complacent are bad for society and they become ripe for the picking for entrepreneurs. So I just wouldn’t want Hong Kong to ever get complacent and I think there’s a big opportunity for Hong Kong to avoid that by bringing in entrepreneurs. I think these things that InvestHK are doing with this StartMeUp HK are great things and all these incubators that we’ve seen I think are also great things to encourage more entrepreneurship and then the sky is the limit. You just need one or two and the economy can grow on a steep ramp.

Steimle: What do you think Hong Kong can learn from Silicon Valley?

Draper: Sure, you want to learn from the Valley. Silicon Valley still is probably the best place to start a business. That’s why I set up Draper University of Heroes there. But I would say the best way to look at startups in Hong Kong is look at how they’re done in all these other parts and figure out how to do it better. I don’t think you want to try to emulate the Valley. I think there are some amazing things that have happened in the Valley because all of the great laws that were set up there 50 years ago. You probably wouldn’t want to emulate the laws of the last five or ten years because that is a disaster and so it makes it harder to be a great entrepreneur if you don’t have the right laws in place. If I’m Hong Kong first of all I would have more business plan competitions. They help everything. You create a lot of business plan competitions with real teeth in them. You’ve got to have people willing to put money into the winners. There is something great about those business plan competitions. They become magnets for all the crazy ideas that are out there. And then they also are attractions for people who might be good angel investors or venture investors to come and take a look and figure out whether to invest some money in a Hong Kong company. And without somehow aggregating the best businesses there isn’t enough of an attraction for a venture capitalist to come here. Some of these incubators are a really good start to attract entrepreneurs to Hong Kong and money to Hong Kong.

Steimle: If you were king of Hong Kong for a day and you could do anything you wanted to attract entrepreneurs and investment to Hong Kong, are there any improvements you would make?

Draper: If I were king the first thing I would do would be to give up my throne. And the reason I would do that is I think the greatest leaders in the world are the ones who have given up power. By giving up power you push power down to the local level and then they learn by example and they push power down to the local level and then everybody is better off. So that’s what I would do.

I would also compete very hard for the great businesses, the entrepreneurs and the venture capitalists and the money of the world to come to my country because I believe that all the countries are in competition. Now that we’re much more mobile, communications is very easy around borders, we can choose which country we want to be a part of. So as king, after giving up my throne, I would encourage my country to be as attractive as possible for entrepreneurs, venture capital money and business. But it’s hard to change or see how I would change Hong Kong because Hong Kong is probably the freest market in the world. It’s one of the top three business environments of the world. I think they’re the second or third best country to do business in. So they’re doing the right thing. Somehow they’re doing things very right. But I wouldn’t to get complacent. I would just say hey let’s try new things. I think that’s probably the thing that governments do the least and should do much more is change things. Keep changing. Keep trying new things. A lot of what governments do right now could be done by computer. And I would, well, if I had a day to change things I would deregulate as much as I could in as short a time as possible and I would put a 20 year sunset on every law so that 20 years from now people would have to create new laws. Then I would say that every government employee gets their increase in pay based on GDP growth and not CPI. So there are some ideas.

Steimle: Some Jeffersonian ideas there.

Draper: Well, it’s a new concept of the competitive country. I would have the districts here in Hong Kong be able to compete for citizens. And maybe the citizens wouldn’t have to move to do it. Maybe it’s not geographic. I do think that we can get to a more and more virtual government and I think that could be quite powerful. The other thing I would do is I would start accepting Bitcoin for everything. I would push it forward as fast and aggressively as possible so that the people of the world would look at Hong Kong and say “Look at what they’re doing. Look at what kind of progress they are making or trying to make.” And just by putting your stake in the ground and saying “Hey, we’re going to try this,” the rest of the world is going to look and go “Whoa, maybe we should try new things too.”

Steimle: How can investors help grow an entrepreneurial community, perhaps beyond just investing?

Draper: Well the best thing an investor can do – well what I did was I started Draper University of Heroes and we have several incubators around it and we built our own ecosystem there. In general investors can gather around and start investing. That’s the best thing they can do. Start investing. They invest in a couple of startups and some of them start to do well, they start to spread the word and it becomes a virtuous cycle. So investors should invest. Then they should also collaborate. It’s interesting. We have very much a coopetitive environment in the Silicon Valley amongst venture capitalists. We are very friendly because we often need each other to support companies that are growing and need more money but at the same time we want to compete because we want the institutional investors to recognize our talents are investors. It’s kind of a nice environment. So I would encourage coopetition amongst the investors here in Hong Kong, and I think they can do quite a bit that way.

And then the more you can standardize the better. So you standardize the deals. You standardize a way to get them incorporated. You standardize a way for them to get the word out about their business. The more standardization the more the investors, not just the ones who get it started but the ones who are on the periphery who might want to get involved, the more confidence they will have because once you know what the legal document says you are much more willing to risk your capital. If it’s sort of a foreign legal document you have to learn it all over again.

Steimle: What do you think are the unique selling points of Hong Kong for entrepreneurs?

Draper: Well if you’re an entrepreneur and you start in Hong Kong you have much lower taxes. It’s very easy to get visas here. It’s very easy to incorporate. You are very close to China and China is an enormous market. If you want to take your company public at some point, the Hong Kong exchanges are very liquid and are not heavily regulated and so you’re not going to get caught in a big mess of regulation when you want to take your company public. Going public turns out to be very expensive in the United States. So it can be easier to go public here than in other countries. I think there’s some great reasons to start here.

Steimle: Are there any unique challenges entrepreneurs face in Hong Kong?

Draper: Well in the Silicon Valley we have a real culture of entrepreneurship where people build their networks and they see somebody doing one thing and then they say “Oh hey, maybe I can incorporate that into what I’m doing.” And they all benefit from seeing each other’s businesses. Coming to Hong Kong entrepreneurs are somewhat isolated, there aren’t as many startups here, and they may not get to see all the other things that are going on in the entrepreneurial world. And without seeing those things right in front of you it’s a little bit harder. You can remedy that by getting more and more entrepreneurs here in Hong Kong so that they have something like what happens in the Silicon Valley. I would say that would be the biggest drawback is not having exposure to all of that creativity that is going on. But I think that’s going to be fixed if the environment here starts to really pick up.

Joshua Steimle is a Hong Kong based entrepreneur writing about startups, entrepreneurship, and online marketing. Connect with him at: 
Google+  | @donloper  | Facebook  | Linkedin />

Source: Forbes


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