Michael Arrington, Tim Draper and the Dawn of the Age of Crypto
The reinvention of Michael Arrington
As most of us recall, newly minted crypto fund manager Michael Arrington was the founder and editor of TechCrunch. During the second wave of the Internet, Michael and his team successfully snarked and barked, hustled online ads, produced industry events, and eventually reigned king of technology business media. Seeking to cash in a little on the insider knowledge he picked up covering private companies and their investors, Arrington sold TechCrunch to AOL in 2010 and raised a $20 million early stage VC fund of which $8 million came from AOL, and much of the rest from a group of Silicon Valley heavyweights including angel king Ron Conway and Marc Andreessen.
To stay in the middle of the mix, Arrington remained editor of TechCrunch until being unceremoniously run out of AOL by his new boss, Arianna Huffington, on the grounds of perceived ‘conflict of interest.’ (Hey Travis, does this sound familiar?) It’s good for powerful investors to remember that the most valuable companies in Silicon Valley are built, over the long run, by their original founders (think, Jobs, Bezos, Zuck, Page & Brin, Larry Ellison, Gates, Dell, Andy Grove, and Dave Packard).
Spinning forward, Arrington raised a new fund at the end of last year he not so immodestly crowned Arrington XRP Capital. (Michael, you and Drape have inspired me. I am starting a new fund call ‘Perkins, Perkins & Perkins,’ ;). Arrington, and his two partners Heather Harde (former TechCrunch CEO) and Geoffrey Arone (former Chief Scientist for Experian), describe the fund as ‘a digital asset management firm in blockchain-based capital markets.’
Arrington’s fund earns the ‘XRP’ in its name by being denominated in the cryptocurrency XRP, a rival to bitcoin that is closely tied to the software company Ripple. This is significant in that their investors who buy shares of the fund will receive distributions in XRP rather than dollars or euros. Arrington told Fortune last November that the fund would invest primarily in digital assets, including ICOs. Arrington says he chose to denominate the fund in XRP (currently the third most valuable cryptocurrency behind Bitcoin and Ethereum), in part because he likes the financial infrastructure that Ripple has built up around it. He said the fund will also invest, to a lesser extent, in the equity of crypto-related and blockchain startups. Amazingly, since it’s founding, Arrington XRP Capital looks like they have already invested in over 30 super interesting projects. Our favorites include Storecoin, Blockstack, Mobilecoin and Bloom.
Michael Arrington is an authentic entrepreneur, and we are honored to have the opportunity to catch up on his fund’s progress and see how much they are sticking to their original vision at our upcoming Cryptonite Salon.
Bitcoin hustler Tim Draper
In the first two waves of the Internet, Tim Draper was a pioneering venture capitalist. He founded Draper Fisher Jurvetson (DFJ)in 1985, with his other two cofounders John Fisher and Steve Jurvetson, who then was a twenty-something super geek and recent grad out of Stanford. Between its early stage fund and its growth fund, DFJ has raised over $5 billion in capital and backed 27 companies that have each achieved more than $1 billion in realized value through an IPO or successful acquisitions. DFJ’s investments include Baidu (Nasdaq: BIDU), Box (NYSE: BOX), Cylance, Nervana (Intel), Planet, Redfin (Nasdaq: RDFN), Ring (Amazon), Skype, SolarCity (Nasdaq: SCTY), SpaceX, Tesla Motors (Nasdaq: TSLA), Twilio (NYSE: TWLO), Twitter (NYSE: TWTR), Tumblr (Yahoo!), Unity, Yammer (Microsoft), and Zoox.
In 2016, Tim broke with his old firm (since renamed simply DFJ). While he remains DFJ’s largest limited partner investor, Draper is now putting his wood behind the family fund, Draper Associates. Co-managed by Draper’s youngest son Billy, Draper Associates added to its coffers by raising $190 million to bolster the family early stage fund in 2016. Draper also proudly advertises himself as the ‘Headmaster’ of Draper University (where we held our first Cryptonite Salon), which offers highly-screened aspiring entrepreneurs from all over the planet a highly innovative curriculum that fosters entrepreneurial skills and immerses them in the Silicon Valley venture-backed ecosystem. Guest lecturers include Elon Musk, Google Chairman, Eric Schmidt, and Zappos founder & CEO Tony Hsieh.
By the second wave of the Internet, Draper was running with the top-tier venture pack. But then in October 2009, ‘Satoshi Nakamoto’ published the bitcoin whitepaper, and Draper suddenly found that by completely unforeseen circumstances, he had navigated into his perfect storm. The combination of his innate libertarian instincts and his passion to invest in new, self-empowering projects, had converged into a seemingly viable new venture world order. On June 27, 2014, Draper bought 30,000 bitcoins which had been seized by the US Marshals service and auctioned to the public for $17 million. That holding, in addition to his previous purchases of bitcoin, are reportedly worth north of $300 million today. Only Draper’s $500,000 early investment in Skype in 2005 for 10 percent of the company (which ultimately sold to eBay for $4.1B) represented a higher return. In addition to his bitcoin holdings, Draper has invested in over 40 crypto deals, and Draper University offers blockchain workshops for both aspiring crypto entrepreneurs, as well as corporate executives. If Draper’s bold recent prediction that bitcoin will break $250,000 by 2022 comes true, Draper will be perched comfortably next to Satoshi as the second most wealthy person on the planet.
Draper is so excited about crypto he wrote his own rap song—‘Bitcoin Hustler.’
Amy, Bruno and Valery….