If Tim Draper had his way, today Californians would be voting on whether to split their state into three new ones: Northern California, Southern California, and just California. And the high-profile Silicon Valley venture capitalist—an early investor in Hotmail, Skype, and Tesla—thinks the measure would have won.
Though Cal 3 had enough signatures to qualify for the ballot, the California Supreme Court in July unanimously decided to remove the measure. Draper, who contends that the Golden State is too big to function effectively, spent $1.2 million on the initiative (chump change compared to the $5.2 million he shelled out promoting a failed 2014 plan to split California into six states). “Whether you agree or not with this initiative, this is not the way democracies are supposed to work,” he told the Los Angeles Times after the court’s decision. “This kind of corruption is what happens in Third World countries.”
Draper, 60, is known for his bold—some would say nutty—ideas. Like the time, in September 2014, that he predicted the price of bitcoin would hit $10,000 in three years. (Bitcoin was worth $413 at the time.) He was absolutely right on that one, and expects to be proven correct again with his most recent forecast: that bitcoin’s price will hit a whopping $250,000 by the year 2022. Given his business track record, perhaps you should listen to him.
BREAKER met up with Draper at last week’s World Crypto Con in Las Vegas to discuss the promise of bitcoin, his foiled vision for California, and why he believes—contrary to what you see on the news—“the future’s gonna be awesome.”
You did an event with your son Adam, a fellow VC, here at World Crypto Con this morning. How did that go?
It was great. My son’s got great vision. His vision is similar to mine, although he looks at us as a bunch of people sitting on a rock flying through space. And he got us all thinking, “What is our significance?” [The talk] was mostly about how bitcoin is globalizing us, just as the internet did.
What is your view on us hurtling through space on a rock?
We’re hurtling through. We’re doing great. Oh, absolutely. Yeah, humanity is making really good progress. But I think the next generation will do even better because we’re going to move from fiefdoms, like tribalism, where everybody’s tied to some land mass, to a time when we are all one world. Some of our governments will still be tied to land, but most of our governance will be virtual. The land-based government will provide those land-based services—like safety—and possibly we’ll pay taxes based on how often we’re in a certain place. But things like healthcare insurance and your pension, Social Security, or welfare, that can all be done virtually and doesn’t really need to be tied to any landmass.
"Someday you might not have to go to the DMV anymore because you get your driver’s license from some country that has not been invented yet and doesn’t even have a landmass."
So I can get my health insurance from Scandinavia or someplace like that.
Right, and you might get your pension from somewhere else, and you might not have to go to the DMV anymore because you get your driver’s license from some country that has not been invented yet and doesn’t even have a landmass.
And how does cryptocurrency play into this?
Cryptocurrency is finally a currency that pervades all countries. Now we’ve got a currency that’s global, decentralized, open, completely transparent, and keeps a perfect record. As soon as we can use bitcoin for all the other things that we use dollars for, why would we ever go back to political currency?
Do you think that bitcoin will be the replacement currency, or could it conceivably be another cryptocurrency?
Oh, it could be many. I suspect that if you’re running a retail store, the first cryptocurrency you’re gonna use is going to be bitcoin, but over time maybe there will be a better one. I like bitcoin because it’s completely opensource. Unlike with Ethereum, someone can’t just decide, “Hey, we’re going to print three percent more this year.” With bitcoin, we know there are 21 million [coins], that’s it. But I do like other cryptocurrencies for what they bring to the table.
The bitcoin white paper turned 10 yesterday [October 31]. How did you celebrate?
I mostly celebrated by going with my grandchildren trick-or-treating.
You weren’t thinking about bitcoin?
I thought, “Is this a celebration?” I thought, “Do you celebrate every 10 years and say, ‘Hey, this is great,’ or do you say, ‘We’ve got a long way to go, we’ve got to keep going’?” I tend not to be a celebrator. I tend to be more like, “Okay, we’ve come to here. Now what?”
What’s the answer to the “Now what?” question.
A lot of things have to happen with bitcoin. All the software needs to be written so that I can go with my smartphone and I can pay for Starbucks with my bitcoin. I want to make it so that it’s very easy to invest with my bitcoin. I want to be able to set up a fund—I’m in the venture capital business—that’s all bitcoin, and I want the underlying companies to pay their suppliers and employees in bitcoin. I want that because that can all happen without any accounting, and we can build in smart contracts for my investors, so that when one of the companies gets bought I can hit a button and it can immediately go into all their bitcoin wallets.
Earlier this year, you made a prediction that bitcoin’s price is going to hit $250,000 by the year 2022. That’s pretty bold.
I was pretty bold when it was sliding to $180 and I said that it was going to be $10,000 by the end of 2017. And I was—boom!—dead on. It was almost three years to the day between when I interviewed with Fox [Business] and when I celebrated the $10,000. We had an event two or three months later. It was called the Block (Chain) Party. We blocked off the whole block around Draper University, and we had a huge event.
So you can celebrate.
And that’s the kind of thing I’ll celebrate—successes, rather than something time-based.
"I’m assuming within the next year or so, we’re going to make it so that everyone can just, with their cell phone, buy a cup of coffee with bitcoin."
How did you come up with the $250,000 figure?
I figured that’s like five percent of all currency in the world. I’m assuming within the next year or so, we’re going to make it so that everyone can just, with their cell phone, buy a cup of coffee with bitcoin. And then Coinbase will be an account that can do all the crypto-to-political currency trades. I call it “political currency” because it’s really run by political forces. They’re doing it for their own good in general, and then sometimes that’s to the detriment of the people inside their country. Certainly in Argentina and Nigeria it’s been that way. Hopefully, the new Argentinian president [Mauricio Macri] will fix that. I’ve had some time with him.
What did you tell the Argentine president?
I told him that this is a new world, and he should make bitcoin a national currency the way Japan did. He and his chief of staff looked at each other and said, “Have we gotten too old for this?” [Laughs.] Because it was a new world for him. It was an eye-opening thing. And to his credit, he was openminded enough to listen.
Do you think they’ll make it a national currency?
I think they should. I think it’s a great idea for a country like that because they’ve had this long history of bad currency problems, and all of a sudden they can go, “Here’s a national currency that’s solid and backed by a hundred thousand miners around the world. And you know what it is.” That would be a major breakthrough for the country, and it would attract a bunch of entrepreneurs.
I don’t know if you’re betting man, but how much would you be willing to wager that bitcoin is going to hit $250,000 by 2022?
Well, I’m already a wagerer. I’m already big in bitcoin. And as this starts to happen, I’m going to be moving my money from political currency to cryptocurrency, because I just think it’s better currency. So as soon as all that software is built… This is a better way of managing currency. And the world will recognize that, and we’re all going to be better off.
Does it ever occur to you that bitcoin might just evaporate?
Not really. Is electricity going to evaporate? Is compute power going to evaporate? Technology always sticks in people’s minds. It gets better and better and better and drives the world forward. It’s like, is the internet going to evaporate?
I meant that people are concerned that bitcoin might be worthless someday. Does that ever occur to you?
No, because I think a new technology sticks with us. There may be a better technology that comes and takes market share, but in the last six months, bitcoin’s market share has increased because all the other currencies are looked at like, “God, why would I ever deal with this?” However, there are a lot of really nice currencies with really good technologies, and I back them. I’m not putting it all in bitcoin. It’s definitely better currency then what I’ve got. I’ve got a bunch of dollars and maybe some Singapore something and maybe a little yen and some renminbi, but I would much rather have that all in crypto. But I can’t live my life just in crypto yet.
When do you think you’ll be able live your life just in crypto?
A year or two. Why would I use anything else if I can go around with just my phone, I can drop all my credit cards? I can use my phone, and I can just go and buy my coffee, get a burger. I can certainly buy a house now.
One or two years from now seems very soon for someone to just be using bitcoin.
Well, look back two years. Bitcoin was like $20, I don’t know. You go back two years, all sorts of things were different. It’s funny. People often hear the news, and they think that’s the way it is, so that’s the way it must always be. But if you look back 50 years, we were lucky if we had indoor plumbing.
Well, we’re still waiting for our jetpacks, for instance.
Yeah, right. And that was what 1950 when you first saw the first jetpack and that huge accident? So that’s 1950. New science like that does take a while. And now we’ve backed one—my son has backed two—jetpack companies. They needed better electronics so the jetpacks would be safe enough for people. Anybody can have a jetpack today—it’s just not very safe to fly one.
"Everybody’s obsessed with the price of bitcoin. I’m obsessed with what awesome stuff it does for the world. I just think, 'God, this is awesome!'"
Describing you as a bitcoin maximalist seems like understatement.
I don’t know. There are people who have made bigger predictions. Wences Casares said a million dollars a bitcoin. Everybody’s obsessed with the price. I’m obsessed with what awesome stuff it does for the world. I just think, “God, this is awesome!” You’ve got a currency now that is frictionless, global, you can take it down anywhere.
Back in 2014 you successfully bid on tens of thousands of bitcoin that had been seized by the U.S. Marshals Service in the Silk Road case. Lyn Ulbricht, the mother of Silk Road operator Ross Ulbricht, is speaking here at the convention. What is your take on Ross’s case?
Free Ross, baby! We need that guy in the economy. That’s all there is to it. He is clearly one of the great entrepreneurs in the world. He did break the law and should serve something. I’m not sure jail is the best thing for our society. The jailers, the prison guard unions, want more jails and more people in them, and that’s not doing our society much good. You ever lock your dog up in a cage? It breaks your heart. We’re locking up a ton of people, and this guy is, you can tell, a true spirit of the world. He should be pardoned, he should get out of jail, he should maybe be extradited—move him to another country.
Election day is coming up. You recently backed a proposal to split California into three states, which qualified to be on the ballot. But in July, the California Supreme Court nixed that.
Yeah, what’s that about? The [California] Supreme Court said it might be disruptive. Well, yeah, because the state’s incredibly poorly run. If you went from first to 47th in education, and first to 50th as a place to do business, and with the best weather in the world, first to 50th as the worst place in quality of life, wouldn’t it be about time to throw the bums out?
And in this was a big opportunity to divide the state in three, and they’d all have to compete in this new world. Think of all the cool things those three states could be doing. They could be the first blockchain governments. They could transform education. We could go very quickly from 50th to the first three. And they would have to compete for citizens because with the three Californias I gave each a coastline, and most of the people want to live near the coast. So you could move up and down the coastline if you felt like your education system wasn’t good enough. But the “bunions”—the bureaucratic unions who dominate the state—sued me so that the Supreme Court would do this. And they orchestrated it so that I had no time to respond, so that it would never hit the ballot.
If it were to appear on the ballot on November 6, what do you think the result would be?
The polling was eight percent in favor when we got started. And then it was 12 percent in favor. And at that point, everybody just says nothing. Then it was 17 percent in favor. And then it was 27 percent in favor, with 35 percent undecided. And so they looked and they said, “This is too dangerous. It would be a Brexit.” And it looked like that was going to happen. Oh yeah, absolutely. The momentum was clear.
Does it bother you that some people view the idea of splitting California as a joke or a crackpot idea?
That’s typical in New York. Although they should probably think about splitting New York into at least two.
When you say New York, do you mean the media?
Everybody I talked to in New York has that feeling, so there must have been some writeup in the New York Times. But it was a crackpot theory just the way my backing Hotmail was a crackpot theory. Some service that we were going to give away for free—no one had ever done that before in the history of the world. It was a crackpot theory for me to be the first Silicon Valley investor to invest in China. I have been a crackpot for the entrepreneur, and entrepreneurism has spread throughout the world.
While we’re talking about quote-unquote crackpot theories are there any other bold predictions you have for the future of bitcoin that people might view as crackpot now?
No, I only make one prediction at a time and mine is the $250,000 per bitcoin. But I look at it a different way: One bitcoin is worth one bitcoin. All the other currencies are going to be very volatile, and they’ll fall away against it.
So the future is bright for bitcoin.
The future’s bright for all of us. I think society is going to improve in a huge way. Just as it has for the last 50 years.
In this very politically divided time, many people are feeling the exact opposite—that things are not getting better, that things are getting more divisive and worse and more violent.
Well, you’re listening to the press. By the way, “more violent” is not true. There were a lot more murders per capita 50 years ago than there are now.
"Hillary and Trump are both flawed human beings. And actually both probably brilliant. But all we see is what the media lets us see. And so we either get very angry or we’re very in love."
But a lot of people have a bleak view of what’s coming.
A lot of people may feel very strongly about their political beliefs, but their political beliefs are usually tied to an individual—is it for Trump or is it for Hillary? If you were a conservative Republican and Hillary decided to cut taxes and lower government [spending] as a percentage of GDP and started privatizing government services, a lot of those staunch Republicans would be still angry at Hillary. And I think if Trump were to do the things that the liberal Democrats wanted or he became very successful, they would still say he’s awful. That, I think, is driven by the press. The press is loving the battle.
[Clinton and Trump] are both flawed human beings. And actually both probably brilliant. But all we see is what the media lets us see. And so we either get very angry or we’re very in love. I was once a Republican, then I became a Democrat, and then I became a “decline to state” because I do see through this thing that you’re trying to bring up, this divisiveness. I don’t see a divisiveness on the street with everyday people. No, they’re actually all very rational.
So you’re saying the future is brighter than I think.
Oh, the future’s gonna be awesome. God, all these things are so much better. Look back into the past before you start fearing the future. You know, 50 years ago, you’re lucky if you got indoor plumbing or electricity, or you probably didn’t have a car. The most impoverished Americans probably have a car and two televisions and probably have a smartphone, which is richer than the richest people in 1950, ’60.
The future is incredibly bright. We’re going to be flying around on those jetpacks. Well, it may not be a jetpack, but we will be zipping around a lot easier than we are now.
This interview has been edited and condensed. Photo courtesy Tim Draper.