Among venture capitalists, Tim Draper made his name as an early investor in companies like Skype, Hotmail, and Baidu — but thanks to Kevin Roose's recent New York Magazine article, he's getting a reputation as a teacher as well. The piece takes a look at Draper's University of Heroes, an unusually named course devoted to training would-be founders in the art of the startup. Students are given copies of The Fountainhead on admittance, take group go-kart outings and, in one particularly vivid scene, chant in unison, "my brand, my network and my reputation are paramount!" In other words, it's the cult of the startup at its most intense.
"My brand, my network, and my reputation are paramount!"
But while it's easy to write off the University of Heroes as zany self-congratulation, there's also reason to be concerned for the students. First off, the University of Heroes isn't a university. It's not even a school. Instead of an accredited degree, students will graduate with only a superhero costume and Draper's blessing. And unlike many founder training programs, Draper focuses on building up students self-confidence rather than teaching them skills that might be useful in negotiating with business partners. That's in his best interests too; the school doubles as a feeder for his son's accelerator, Boost VC, located just across the street. For five percent of your company, Boost will give you ten to fifteen thousand dollars and office space. They might be able to do better elsewhere, but once students have signed on with Draper for the course, they'll be much less likely to.
"He cuts deals hard."
As a result, it's tempting to see the aggressively twee surroundings as part of Draper's own marketing pitch. As Roose himself notes, "Hypnotism is a good metaphor for what’s happening at Draper U." And since Draper himself is likely to be the first person doing business with the new graduates, it's in his interest to keep them hypnotized. In contrast, Draper has made his name as a cutthroat negotiator. As one fellow VC described him in his pre-Heroes days, "He cuts his deals hard, he tirelessly promotes them, and he walks right on the border of pissing off their acquirers to get the very best price."
The same goes for Draper's tuition plan, which lets students in for either a flat $9,500 or "a small percentage of future earnings." It sounds whimsical, the kind of out-of-the-box thinking you'd expect from a startup school. But on closer inspection, the deal looks worse and worse. An American with a bachelor's degree will average $2.1 million in earnings over their lifetime — and that's before you account for the high-value skillset that tech entrepreneurs often bring to the table. If the "small percentage" is any higher than half a percent, it's a ripoff. Roose is quick to say that only one student took Draper up on the deal — but that's one person who likely got a raw deal.
It's a harsh reminder that venture capital is still a business, no matter how many superhero costumes get involved along the way. Don't let the go-karts fool you.