Tim Draper's event on marketing bitcoin offered few answers, and no Tim Draper

By Dan Raile , written on July 11, 2014

From The News Desk

Tim Draper is a mainstay of the Silicon Valley upper crust, a third generation VC in a culture that tends to revere successful tech investors as its proper intellectuals and propehts. Last week, Draper was revealed as the winning bidder in an auction of Bitcoin seized by Tommy Lee Jones and the boys over at the US Marshal’s Service from the Dread Pirate Roberts. The hoard obtained is valued at roughly $19 million, though the amount of Draper’s winning bid remains unknown.

Pando was on hand when Draper held a press event to announce his bid winning, and it was so much fun we decided to come back this week for the latest installment of the monthly Bitcoin panel hosted at Draper’s Hero City, an accelerator/co-working campus in downtown San Mateo, directly across the street from Draper University of Heroes, the entrepreneurship school (or, “school”) that Draper established in 2012.

The seminar series is titled “the State of Crypto,” and given Draper’s recent big buy and his longstanding plans to divide California into six separate states, I had high hopes going in that I was about to bear witness to some bold declarations about the future, untethered to droll common-consensus reality.

It being my first visit to the site, I was only encouraged in these hopes by the ostentation and small-town majesty of Draper University of Heroes’ tower, festooned with colorful banners and the words “Draper University” wrapping around the facade a hundred feet above the pavement in man-sized, illuminated, capital letters. In the reception area at Hero City there sits an eviscerated half of a Tesla, complete with two wheels and functioning headlamps, that has been converted into a desk/workspace. There are (non-functional) phone booths scattered throughout the premises, and some innovative chairs in the glass-walled conference rooms overlooking the main floor.

In addition to my quest for insight into the future of Bitcoin, I added a second line of investigation, namely whether the man behind this showy brick-and-mortar display of self-esteem is:

A) an eccentric billionaire (as he was referred to by a University employee I chatted with)

B) a “free-spirited venture capitalist, aka 'The Riskmaster'” (as appears in the University press materials), or

C) a first-rate, pretentious asshat (as common sense seems to suggest)?

I came armed with this quote by Thomas Piketty (being a bit of a pretentious asshat myself):

“Growth can create new forms of inequality: for example fortunes can be amassed very quickly in new sectors of economic activity. At the same time, however, growth makes inequalities of wealth inherited from the past less apparent, so that inherited wealth becomes less decisive.”
My intuition told me that Draper was a man at the crux of these two sentences, and I wanted to get a better sense of what that position looks like in 2014 Silicon Valley. Tim Draper’s father and his father’s father were both successful venture capitalists during earlier iterations of SV entrepreneurial eruption, and now his son Adam has taken up the family business as well, founding Boost VC, an accelerator headquartered at Hero City whose mission statement reads: “Conviction is profitable. Idols are mentors. Teams become family. Ideas change the world.” Boost plans to accelerate 100 Bitcoin companies by 2017. Adam Draper has been credited for convincing his dad that bitcoin is “a really big deal.” He also dreams of owning an Iron Man suit.

Unfortunately, neither Draper was in attendance on Wednesday night. The crowd of roughly thirty people was split pretty equally along familiar, generational lines – 20-something crypto-entrepreneurs and paternalistic investors who would nurture them.

The panel discussion itself was focused on bitcoin branding and marketing. It consisted of two marketing types who admitted during the Q & A portion that they really didn’t understand bitcoin and had almost no experience with it. Still, they had plenty of advice.

To overcome bitcoin’s “image problem” and encourage widespread adoption, would-be bitcoin heros should look into offering risk-free trials, avail themselves of the broadcast media rule of thumb of explaining things to mainstream audiences “in a way they can truly understand”, or roughly an 8th grade level. For inspiration, they should watch Steve Jobs’ keynote speeches. And, of course, they should use social media to get the word out. For example: “What if everyone here posted about their bitcoin activity to their Facebook and Twitter friends and followers? Imagine that. Any movement has to start somewhere.”

The Q&A and obligatory mingle session that followed the panel discussion was a bit headier.

Among my favorite slices of conversation were the provocatively styled comments of one perspective bitcoin investor who heralded the long-awaited dawn of an “American Renaissance”, and predicted that he would create a billion-dollar bitcoin company in the next 1000 days, and insisted that he “had a use case that will blow your mind, but I’m not going to say what it is.”

But all told, the event was short on the sorts of mind-blowing visions for the future that I’d hoped for. There was some reheated talk about global finance and dissatisfaction with the underlying principles of fiat currency, but little of it rose to meet the level of conversation current in the bitcoin sub-Reddit.

In spite of this, or because of it, the event did a fair job of representing the “State of Crypto.” A room filled with people who are building and funding companies around this emergent techno-currency, drawn from their code-holes and conference rooms to hear real-world marketing advice delivered by people who fundamentally lack an understanding of the space.

Cryptocurrencies in general, and especially bitcoin, are novel, arcane technologies and many are catching up trying to wrap their heads around it. But more importantly, anyone with a truly powerful idea for making a business of it is playing extremely close to the chest, unwilling to risk sharing their vision in a crowd of hungry competitors.

It’s early days for bitcoin, but I'm not sure I agree that bitcoin has an “image problem.” Sure, the Silk Road publicity has tied early awareness and coverage to nefarious drugs and weapons marketplaces, but the situation is not all that different than the way porn and online sex attended the mass adoption of the Internet twenty years ago. Bitcoin has a great brand, with its “founding-father” enigma, brash libertarian cred, and voracious early adopter community.

That brand might not lend itself to well-worn marketing know-how, because its utility is not well demonstrated by the opportunity to earn rewards and get a cup of coffee or tickets to a sporting event. But that doesn't mean bitcoin doesn't inspire passion, as the froth anointing the corners of mouths in Wednesday’s crowd proved.

[Image via sofamax]