Veteran venture capitalist Tim Draper weighs in on the AI bubble and four huge opportunities he missed
Backing odds-defying tech startups has been a winning strategy for Silicon Valley venture capitalist Tim Draper.
You know them as Facebook, Google, Netflix and LinkedIn. Tim Draper calls them the ones that got away.
Tim Draper is a third-generation Silicon Valley venture capitalist and founder of Draper Fisher Jurvetson, Draper University and Draper Associates. A Stanford University electrical-engineering graduate with an MBA from Harvard Business School, he founded Draper Associates in 1985. He's since been a backer of more than 60 "unicorns" at the seed stage, including Tesla $(TSLA)$, SpaceX $(SPCX)$, Twitch, Coinbase Global (COIN), Robinhood (HOOD) and Baidu $(BIDU)$.
In this recent interview, edited for length and clarity, Draper shares how he identifies ideas that seem impossible, where he sees the next wave of AI opportunity, whether AI stocks are in a bubble and why he refuses to make a bear case - for anything.
MarketWatch: How do you identify a brilliant idea before anyone else sees it, and what gives you the conviction to write the check?
Draper: I like being the one willing to take a chance on someone who cannot convince a normal venture capitalist to fund them. There is something about people who have a vision of the future so extraordinary that it scares off most investors. I am just not scared off.
With SpaceX, the first few rockets blew up on the launch pad after we invested. It did not look good for a while. But once [founder] Elon [Musk] got one of those things off the ground, it transformed an industry. Space had been dominated by governments that thought no one else could launch a rocket. Elon recognized he could launch one for 1/200th of what the government charges. And once he said we are going to Mars, every great engineer in the world wanted to work for him. On the way to Mars, Starlink happened, and now servers are going into space.
Extraordinary things happen when you are trying something extraordinary. We have a company called Colossal that set out to bring back the woolly mammoth. On the way there, they hatched a chicken without an egg, brought back dire wolves and produced breakthrough healthcare discoveries. That is the pattern. Aim at something that seems impossible, and remarkable things happen along the way.
MarketWatch: What idea today that seems impossible but you are betting on it anyway?
Draper: We are doing a lot in biocures. Some companies are working on reversing aging - they can potentially take cells out of your body, revert them to a nascent state and put them back in. That sounds wild, but on the way there, they will probably cure liver cancer. Other groups are working on cloning body parts - essentially spare parts for humans. I think all sorts of extraordinary things will happen on the way to those goals.
In robotics, I think that on the way to building a conscious robot, we will get robots that do very specific things extremely well. If I am building a fast-food robot, I do not want a humanoid. I want a robot that can flip 15 burgers at a time. So, we will get a lot of useful, specialized robots before we get to the science fiction version.
'I always ask people: Would you rather live 150 years ago or 150 years from now?' Tim Draper
MarketWatch: What separates the hits from the misses?
Draper: The misses are usually failures to fund. Everything that became a major success, we had a shot. They met with us. With Facebook (META), I was actually in a bidding war and got outbid by someone I knew, someone who was on a board with me. I was asking her what she thought of the deal. Turns out she was the one I was bidding against.
With Google $(GOOG)$ $(GOOGL)$, we had six search engines in our portfolio, and my partners said six was enough. Turns out six was not enough.
Netflix $(NFLX)$ I can blame entirely on myself. [Netflix co-founder] Reed Hastings is brilliant, but I thought streaming would arrive in about 18 months. Why sell DVDs through the mail? That did not make sense to me. I was wrong. LinkedIn $(MSFT)$, too. That one is on me completely.
But here is something encouraging: We have backed three "trinicorns" - trillion-dollar businesses. I have been the first, or among the first, venture-capital investor in three trillion-dollar companies. We call them trinicorns because a unicorn is a billion-dollar company, a rhino is a fat unicorn worth $10 billion, and a trinicorn is a flying rhino.
MarketWatch: What will be the next great AI company?
Draper: I am going by experience. Going into 2000, the internet companies that were going to be the big successes were Netscape and AOL. Kana was worth $10 billion and went to zero. When the market crashed, marketing budgets disappeared, and Kana made all its money from internet-company marketing budgets.
Google was burning money and dealing with the Melissa virus. Amazon (AMZN) could not get people to put their credit cards on the internet. Those two became monster successes. Then Apple $(AAPL)$ took advantage of the internet, and then Facebook and Twitter.
I think all the current AI companies are real. OpenAI has the biggest market share. Anthropic is grabbing the corporate world. And then there are specialized ones. Consensus going deep into science and medicine, others going deep into legal. Those niches are probably safe from the larger AGIs.
MarketWatch: Does AI's moment now resemble the late 1990s dot-com boom and bust?
Draper: We are early in the IPO process [for AI companies]. The market caps are about 100 times as big as [in] the internet era, but I think we are in the equivalent of 1998. The general population has not yet bought into any of these companies. SpaceX was the one that excited everybody. Now the other IPOs will follow. At some point there will be too many, and the market will not be able to stomach them. But, for now, the boom is just beginning.
The top of the internet boom was March 2000. If that pattern holds, we have a couple of years left in this run. And as long as people are making money, the market just rises and rises.
Venture capitalist Tim Draper: "I am an optimist."
MarketWatch: Could you make the bear case for AI investing?
Draper: You have got the wrong guy for that. I am an optimist. I created a song with AI that made a woman cry on her birthday. I have written many songs, and none of them ever made anyone cry. AI is amazing. Sure, things can go wrong - it happens all the time. But humans adapt. When you have a new technology like this, use it.
'The optimists are the ones who make everything happen. Pessimists just try to live in the past.' Tim Draper
MarketWatch: Why are so many people resistant to AI?
Draper: I always ask people: Would you rather live 150 years ago or 150 years from now? If you go back 150 years, there is no indoor plumbing, no electricity and no air travel. You are lucky if you have a horse. Even if you live in a palace, it is cold.
The optimists are the ones who make everything happen. Pessimists try to live in the past. The more freedom and trust a country has, the more progress happens. The U.S. has had that for years and has progressed at an extraordinary rate. The best leaders set a clear vision and then trust their people. The worst try to control everything. [President John F.] Kennedy said we are going to the moon, and everyone said that was crazy. They got there, and along the way the transistor was invented.
'We are going to have a bitcoin economy, and most people will not even notice it happened.'
MarketWatch: What else in the financial markets right now are investors underestimating?
Draper: Bitcoin (BTCUSD). Every industry goes through what I call the Draper IS curve - it starts flat, does a little cursive "I" shape, spikes, then crashes. Nobody pays attention. Then the S-curve of mass adoption grows bigger than anyone imagined.
The internet peaked in 2000, crashed, and the engineers kept working. Then remarkable things happened, and the industry became far bigger than anyone imagined. If you had bought all the internet stocks at the peak of the hype, you would have done incredibly well. Eventually.
Bitcoin went through its I-curve in 2017, came down, and all the engineers kept working. We are going to have a bitcoin economy, and most people will not even notice it happened, except for the moment when they will be screaming to get their dollars out and into bitcoin.
Michael Sincere is a financial writer and editor and the author of several books, including "Understanding Stocks," "Understanding Options" and "Help Your Child Build Wealth."
-Michael Sincere
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July 16, 2026 09:37 ET (13:37 GMT)
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