Billionaire VC Tim Draper compares OpenAI to AOL, predicts AI market correction

Legendary venture capitalist Tim Draper, who became a billionaire through early investments in Skype, Hotmail, Tesla, and Baidu, has compared OpenAI to AOL from the early internet era, suggesting the AI leader may not be the ultimate winner of the current AI revolution. The comparison comes as Draper embraces AI technology extensively in his own venture capital operations, creating multiple AI avatars of himself while predicting we’re near the peak of AI hype before an inevitable market correction.

What he’s saying: Draper draws parallels between today’s AI landscape and the early internet boom, positioning OpenAI as potentially vulnerable to future competition.

• “OpenAI is the equivalent of AOL in the first internet wave,” Draper said. “AOL and Netscape were the center of everything, and then came Yahoo and then Google.”
• Despite calling OpenAI “fantastic,” he admits regretting not investing early due to concerns about its unusual non-profit structure: “It had such a weird structure that I didn’t do it. I probably should have.”

Market predictions: Draper believes we’re approaching the peak of AI hype but expects the technology to ultimately exceed expectations after a market correction.

• “We’re at the top of the hype,” he said. “It’ll dip, then explode upward again and be bigger than anybody ever imagined.”
• He compares the current AI bubble to past technology cycles: “The same people who were saying, ‘I’m not putting my credit card on that Amazon thing,’ later couldn’t live without it.”

AI integration at Draper Associates: The venture capital firm has extensively integrated AI avatars and automation across multiple business functions.

• Students at Draper University can interact with a holographic version of Draper trained on years of his speeches and writing, with some sessions lasting up to 2.5 hours.
• Portfolio entrepreneurs can access an AI hotline featuring Draper’s digital twin for common questions before escalating to human partners.
• An AI system automatically reviews startup pitch decks and provides feedback to entrepreneurs before they present to the firm.
• The firm uses AI to identify five potential investment opportunities weekly that might otherwise be overlooked.

Technology capabilities: Draper’s AI systems analyze both content and behavioral patterns during startup evaluations.

• The firm records all startup pitches and uses AI to analyze tones and emotions, including potential deception detection.
• “We have an evaluator that determines emotions and it detects lies,” Draper explained.
• The AI avatar’s main weakness is providing balanced perspectives on issues rather than definitive answers, which Draper is working to refine.

Human vs. AI investing: Despite his extensive AI adoption, Draper maintains that venture capitalists won’t be replaced by artificial intelligence in the near future.

• “There’s an X-factor to every entrepreneur that AI can’t really evaluate,” he said, noting that AI struggles with backing entrepreneurs pursuing unprecedented ventures.
• Draper emphasizes his curiosity-driven approach: “I ask the second question and the third question and the fourth question to try to dig in and figure out whether this is something really promising.”
• “I can still outperform any AI in investing,” he added.

The bigger mission: At 67 years old with a $3.4 billion fortune according to Forbes, Draper continues venture capital work as what he considers a moral mission.

• “It’s good for the world, it’s good for society,” he said. “If people feel like they can start new businesses and they can change the old establishment, then you are going to make a better world.”