Over 200 people filled the 9th floor of the New York Athletic Club on October 21, to hear Tim Draper, managing director of Draper Fisher Jurvetson Associates. The popular Silicon Valley venture capitalist was scheduled to speak on a topic entitled "From the Valley to the Alley! Why a California VC Firm Wants to Set Up Shop Here." "Here," referred to New York City, where Draper's firm is planning to expand by creating a network affiliate office.

Tim Draper has over 14 years of experience in technology-focused venture capital and worked at Hewlett-Packard and Alex. Brown & Sons before forming his own company in 1985. Today, Draper Fisher Jurvetson Associates manages nearly a billion dollars in its funds. The firm's six funds include over 150 portfolio investments, a third of which are Internet related.

In his introduction, Draper announced a change in the title of the discussion. He had renamed his speech "Equity, God, Darwinism and the American Dream as it applies to New York City."

"My grandfather was the first venture capitalist on the West Coast," Draper announced to the audience. Draper's father was also a venture capitalist pioneer in Silicon Valley. Draper made a brief allusion to his possibly genetic predisposition to venture capitalism. His point: he had seen Silicon Valley develop from the beginning. As he considered replicating this West Coast model he began to consider "what was it that happened in Silicon Valley?" Draper essentially concluded that four major factors had contributed to the success of Silicon Valley.

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• First, there were companies which successfully pursued innovative, sometimes risky ideas. Draper cited Intel and Yahoo as two examples of companies that provided "a great model for success."

• Second, Draper cited the Churchill Club as a networking arena where people could discuss and share ideas. According to the club's charter, "the purpose of the Churchill Club is to provide Silicon Valley with a nonpartisan forum for the exchange of ideas on timely issues, particularly those in which business and politics converge."

• Third, Draper explained how Upside Magazine served as the community's "town crier," publicizing the important issues, events, and successes of Silicon Valley.

• Finally, Draper described corporations, which interacted in competitive and cooperative ways. These companies, in Draper's view, helped to prod each other through competition and aid each other through open communication.

~ Is the model replicable?

The important question for the New Yorkers in the audience was whether or not the Silicon Valley model was replicable. "Obviously," Draper said, "it is." In the press kit for the event, Draper is quoted as saying "We're branching out to New York not only to share in the explosion of activity in Silicon Alley, but also to harvest deals in Long Island, Princeton, New Haven, Poughkeepsie, as well as to cement relationships with other venture investors and strategic corporate partners."

Draper, sure in his belief that Silicon Alley can repeat the success of Silicon Valley, spent little time belaboring the issue for curious attendees. The venture business, he explained, "is a very local business." Silicon Alley, in Draper's opinion, has already developed some aspects of the Silicon Valley model in place (successful companies to serve as models and forums for gathering). His firm's expansion speaks volumes about his belief.

The great equalizer

Not everyone should be pleased about the steady expansion of the Internet economy - not, at least, according to Draper's predictions. The venture capitalist believes that certain existing professionals and services will become extinct because of the Internet. Those on Draper's most endangered list include: intermediaries (replaced by online stores and cyber-auctions), information brokers (rendered obsolete by the availability of free information online), lawyers, bureaucrats and accountants (replaced by easy access to published laws and the creation of intelligent forms), and broadcasting (useless to a generation of proactive learners who surf to get news instead of sitting back and listening.) As an intermediary who brings investors and companies together, Draper admitted that he was in danger of extinction himself!

~ "The Web," according to Draper, "is the great equalizer." He believes the web will allow companies to enter markets that are difficult to enter in traditional ways. He stated that the world economy is $10 trillion dollars, but that number does not include countries with "bad governments." Through the Internet, Draper believes business will be conducted easily, without government interference or instability factors.

In a clever chart comparing the Internet to major world religions, Draper illustrated the phenomenal growth of the web. Some of the world's major religions (Daoism, Judaism, Christianity and Islam) had compounded annual growth rates (of members) ranging between .34% and 4.12%. The Internet has accumulated 200,000,000 "followers" in 7 years. "That's a compounded annual growth rate of 1,434.13%!" Draper exclaimed. (No word about the Moonies.)

Other positive results of the Internet, according to Draper, include "a more perfect market," with better information and "more people participating in it"; information costs that will "approach zero" as the internet provides access to most information for free; more communication between individuals in different companies, different countries, or different occupations. According to Draper, "six degrees of separation have become one."

"The Internet," Draper explained, "started out as a very technical business?it started out just techies for techies [and developed] to where anybody can participate. So we've moved from a technology world to a market world."

What next?

When asked what he thought would be the next "hot new thing," Draper said he was extremely interested in e-money. He also said he was interested in "going postal." He described the U.S. Post Office as "an antiquated delivery system" and he sees a "strong opportunity" for a business to compete there.

~ Closing with a very optimistic, self-written song (sung to the tune of New York, New York), Draper demonstrated his fearlessness as he crooned into the microphone. "Start spreading the bucks," he began, "I'm joining today." His voice continued to rise, and he belted out the last stanza: "if we can leave no doubt/IPO take it out/We'll all get rich/The In-Ter-Net." Who knew venture capital could be so entertaining?

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