The Daily Telegraph Wednesday 7 August 2019 *** 33Deal maker: Simon Cook, chief executive
of listed venture capital firm Draper EspritThe Silicon
Valley oddballs
obsessed with
fixing the world
B
y the standards of the
Californian tech industry,
it wasn’t that weird a party.
There was Jack Dorsey,
chief executive of Twitter,
sitting in the dining room.
And there was Mark Zuckerberg, chief
executive of Facebook and the party’s
host, placing on the table a goat that he
had slaughtered with his own hands.
“He kills it with a laser gun and then
the knife,” Dorsey recalls. “I’m like:
‘What else are we having?’ [He says:]
‘Salad.’” That was the year Zuckerberg
pledged only to eat animals that he had
killed himself. And while knifing goats
might be among the stranger things
the youthful Facebook founder has
done, it is not the strangest behaviour
you’ll find in Silicon Valley.
In the past two decades, workers in
the sunny strip of land between San
Francisco and San Jose have earned a
reputation for eccentricity. There are
spiritual retreats, questionable
self-enhancing drug regimes and
frankly worrying diets, to say nothing
of the quest for eternal life.
But where do these habits come
from? And why are techies so uniquely
obsessed with them?
“It’s extremely deeply rooted. not
only in Silicon Valley but in American
culture,” says Jan English-Lueck,
author of Cultures@SiliconValley, an
anthropological study of the tech
industry. “[The idea that] everything
around you is a problem that needs to
be solved.”
Sure enough, what all these
preoccupations share is a fixation with
problem-solving. Here, then, are six of
Silicon Valley’s eccentric tribes.Biohackers
Valley workers have used everything
from implanted microchips to infrared
lights to try to “hack” themselves intoSpace nerds
Show us a nerdy kid with dreams of
interplanetary conquest, and we’ll
show you a potential future Silicon
Valley billionaire. Both Elon Musk and
Jeff Bezos have grand plans to move
humanity into space, either as a means
to escape a ruined Earth or as a way to
extract resources necessary to
continue our survival here. Why the
moguls are interested seems obvious.
Who wouldn’t want to go down in
history as a titan of space, responsible
for humanity’s rise to the stars?Doomsday preppers
Just in case humanity never makes it
to space, Silicon Valley’s wealthiest
citizens have a backup plan: hide. Last
year, New Zealand announced it
would ban foreigners from buying
most types of home because a plague
of millionaires and billionaires
building doomsday bolt-holes was
driving up property prices. Many of
these “preppers” come from the tech
industry – and the list of events they
are prepping for is long.
Of course this obsession can only
really be fully indulged by the
super-rich. But many people in the
Valley have made at least some
preparations. After all, this is
California, where the next big
earthquake, forest fire or tsunami
could strike at any moment – and
where the state government has issued
official guidelines on how to build a
“go bag” of survival essentials.Humanity’s saviours
Listen to any tech billionaire talk
about their mission and you would be
forgiven for believing that their goals
are purely altruistic. Mark Zuckerberg
wants to bring people together
through connection, Uber wants to
reshape the city and end pollution, and
Elon Musk is ending the emissions
crisis. This is good business, and a
good way to head off bad PR. How
better to rise above critique than to
tell your critics that they are getting in
the way of you saving the world?Adrenalin junkies
Like many rich people, tech workers
indulge in some pretty intense
hobbies: paragliding, wingsuiting,
rock climbing, recreational drug-
taking and, of course, going to
Burning Man festival.
But for software engineers there is
something deeper going on than just
having money to burn. Prof English-
Lueck suggests that intense
experiences can be a crucial part of
staying sane. In fact, she says, this
sense of disconnection reminds her of
conversations she has had with
shamans – religious figures found in
many tribal societies who use drugs
and music to enter into a trance in
order to contact the spirit world.
“They are out of their body,” she says.
“They are in the code. They are in this
alternate reality. And to get back to
THOMAS BROOME AND ANAÏS DE BUSSCHER FOR THE TELEGRAPHtheir body takes some work.”a state of deeper consciousness. “You
never want to forget that Silicon Valley
is in California, and profoundly
influenced by the hippies,” says Chuck
Darrah, chairman of the department of
anthropology at San Jose State
University.
The most famous example is Jack
Dorsey. He walks five miles to work
three days a week; alternates between
saunas and ice baths in the evenings;
works at a standing desk under
near-infrared light and fasts from
Friday until Sunday. He goes on
Vipassana meditation retreats: not a
“calming, relaxing detox” but
“extremely painful and demanding
physical and mental work” with no
reading, music, meat or even eye
contact allowed.
However, the true king of
“biohacking” must be Serge Faguet.
He wears hearing aids despite having
perfect hearing and takes 60 pills a
day, including oestrogen blockers.Transhumanists
What do you get the super-powerful
tech billionaire who has everything?
The one thing he can’t guarantee – a
longer life. If you want control, ageing
and having to die is the hardest
problem. And Silicon Valley, as always,
is looking for a solution.
The biggest effort is coming from
Google, which founded its secretive
longevity project, Calico, in 2013. The
brainchild of co-founders Larry Page
and Sergey Brin, it has produced little
public output since, so we don’t yet
know if Google has come up with the
solution to eternal life yet.
So what are the ways that we know
techies are trying to hack death? The
most well-known is cryonics, the
practice of freezing the body of a
recently deceased person in the hope
of reviving them in the future.
Another, more recent development
is the phenomenon of blood
transfusions. A handful of companies
have claimed that for people in their
30s or older, receiving doses of blood
from much younger people can fight
the ageing process.Technology Intelligence
‘We give investors chance to
get in early on next Barclays’
T
aking risky bets on technology
start-ups isn’t for everyone.
Problems at Woodford’s Equity
Income Fund led to soul-searching
over whether retail investors should
get involved in potentially volatile
venture capital-style deals.
But offering ordinary investors the
chance to profit from the next
potential billion pound company is
something Simon Cook, boss of one of
Europe’s few listed venture capital
firms Draper Esprit, has been working
hard on for years. The venture capital
fund, listed in London and Dublin, has
around $1.5bn (£1.23bn) of assets
under management. While investors
can back venture capital trusts, they
can also take a slice of its shares in the
hope one of its big start-up bets makes
billions, boosting its valuation.
While that may seem like a distant
prospect, Cook claims the upside can
be huge. Tim Draper, the investment
guru who founded Draper Fisher
Jurvetson in 1985, gave the firm its
name when it launched as the
European arm of his fund. The Silicon
Valley luminary is known for some
hugely successful venture deals. “Tim
bought 27pc of Baidu for $8m,” says
Cook. “That is now a $20bn return.”
The company will be hoping some
of its latest investments, focused on
the UK and Europe, could go some
way towards repeating that success.
In the UK, Draper Esprit has
invested in TransferWise, a payments
firm recently valued at $3.5bn, and
Revolut, the fast-growing fintech. It
also holds stakes in N26, a German
challenger bank that recently hit a
valuation of $3.5bn, and Romania’s
UiPath, a maker of workplace software
that has been valued at $7bn.
Such deals are all largely illiquid
investments that leave plenty of work
at Draper to secure long-term returns
for investors. It puts about 30pc of its
capital to smaller, early stage deals- arguably those with the most risk
attached if things go wrong. The
remaining 70pc is in later stage growth
rounds, about 15 firms including the
likes of Graphcore and TransferWise.
Ensuring steady gains keeps the
firm disciplined. Draper recently sold
down its holding in TransferWise after
the stake doubled, netting £15.3m.
Having helped found Draper Esprit
in 2007, out of the global franchise,
Cook argues it has aimed to offset the
risk with this style of investing. “If you
invest in Draper Esprit we are going to
do good, solid investing. Over the last
few years we have easily beaten 20pc
returns.” The fast-talking 50-year-old
says the pitch offers investors the
chance of significant returns. “If you
hold our stock we are hoping that
Bristol’s Graphcore becomes the next
Arm. Or N26 or Revolut become the
next Barclays.” Despite several up
rounds improving the value of its
portfolio – its primary portfolio
increased by 144pc last year to £594m- its share price has been static the
past 12 months. Analysts, however,
sound a positive note. “Every time
they make a sale, then you can start to
believe the valuations,” says Jefferies’
Ken Rumph. “They have had a good
record in terms of recycling the cash.”
While Draper made its name by
allowing ordinary investors access to
stocks that could surge in value, the
trade in pre-float stocks has not been
without scrutiny. Open-ended funds
investing in start-ups where investors
can buy and sell stocks at will have
been questioned. While Neil
Woodford’s Equity Income Fund also
targeted start-up stage firms such as
BenevolentAI for potential gains, once
investors began to sell a lack of
liquidity led to a fire sale. Until late
2018, Woodford held a stake in Draper,
having backed it in its pre-public days.
Draper seems to be eyeing growthin all corners of venture. In 2017, it
acquired a portfolio of early stage
investments from Seedcamp, the
European fund. It has since branched
out into Europe through an alliance
with Earlybird, a Berlin-based fund.
Draper listed in 2016, an unusual
move for a venture firm to open itself
up to City scrutiny. On average its
investments make £145m. Many of its
biggest bets are not yet profitable.
Some venture capital investors see
Draper’s style of investing – essentially
buying the best investments from
other firms – as providing short-term
benefits. “Simon is very clever, but
[the team] can’t compete in the same
way against Index,” says one source.
“In stormy weather it is better to have
long-term patient capital.” But Cook
argues most firms are staying private
for the long run, leading to growing
private valuations that benefit Draper.
“In Europe we have an early pre-IPO
market developing. Our shareholders
are all getting interested.”
He says this growing private market
has given Europe the chance to add
growth capital behind its brightest
stars. “We have amazing companies in
Europe. Revolut and others have
refined their apps where the
Americans have yet to really develop
them. If the top banks have an average
market cap of $70bn, one of these
challenger banks will get there.”
High hopes indeed. Yet such values
are likely to be years away. Certainly,
Draper’s deal making has paid off for
Cook, who last week sold 275,000
shares in the firm, valued at £1.5m.
Not all its bets work. For every
successful tech venture, hundreds fall
by the wayside, such as South
Yorkshire powdered metals firm
Metalysis, which had Draper as an
investor. It went into administration
before a rescue deal this month.
Cook argues Europe needs to do
risk taking to find its own Google or
Facebook. “We want to be the go-to
brand for the best entrepreneurs.
When Martin Eberhard [Tesla
founder] put some electric batteries
into a car it was Tim Draper that was
crazy enough to get in and go up and
down Route 280.”
While the firm may still have the
Draper pedigree in its name, it is clear
this fund is a totally different creation
to its Silicon Valley namesake.
As one venture capitalist puts it:
“Tim Draper may have kept his name
on board, but it’s the Simon Cook
show.”MATTHEW FIELD
FIELDBeing peculiar is just part
of the job for titans of techindustry, write Laurence
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