Draper helped build Silicon Valley, then led Ex-Im Bank and U.N. agency
William H. Draper III, a pioneering Silicon Valley venture capitalist who helped build the early technology-investing industry from a scattering of fruit orchards south of San Francisco, died Sept. 8 at the age of 98, The Wall Street Journal reported. Draper’s death leaves three generations of his family active in venture capital — including his son Tim Draper, who made early investments in Elon Musk’s Tesla and SpaceX and stars in the reality show “Meet the Drapers.”
William Henry Draper III, known as Bill, was born Jan. 1, 1928, and grew up in Scarsdale, N.Y. His father, an investment banker and reserve Army officer, later served as a U.S. diplomat, helped run the Marshall Plan after World War II and was undersecretary of the Army. His mother, Katharine (Baum) Draper, oversaw the home. In 1929, shortly before the stock-market crash and the onset of the Great Depression, most of the family’s savings vanished in an ill-starred investment by Draper’s father in a German maker of automated coffee machines — a tech debacle that might have put a less-optimistic clan off venture capital for good.
When it was time to choose a college, Draper said, he thought “Harvard was a little too intellectual for me, and Princeton was a little too social for me. So Yale sounded right in the middle.” He majored in history at Yale, made friends including William F. Buckley Jr., and graduated in 1950. His subsequent studies at Harvard Business School were interrupted by the outbreak of war in Korea, where he served for nine months as an Army patrol leader.
In the summer of 1952, while sailing on an ocean liner to Europe, he met Phyllis Culbertson, a Smith College student. Though Culbertson was wearing another man’s engagement ring, Draper proposed marriage three days later — and was encouraged when she didn’t say no. They married a year later.
After Draper received his Harvard M.B.A. degree in 1954, General Electric rejected his job application. Instead, he entered a management-training program at Inland Steel and moved to East Chicago, Ind., where coke dust from a nearby steel mill drifted into the family home. By 1959 he had become a fast-rising executive at Inland Steel in Chicago. Convinced that America’s steel industry was peaking and that startling advances in electronics would define the next economy, he gave up that career at age 31 to try venture capital, a little-known business at the time. He moved his wife and three children to what is now known as Silicon Valley but was then mostly fruit orchards south of San Francisco.
His father was setting up a pioneering venture-capital firm — Draper, Gaither & Anderson, partly financed by the Rockefeller family — in Palo Alto, Calif., and persuaded his son to join that effort. After learning the basics, Draper left his father’s firm three years later to set up a new venture-capital operation, Draper & Johnson, with a friend, Pitch Johnson, an engineer. They leased new Pontiacs and drove into the fruit orchards looking for startup companies.
“Every so often, we would come across a building with a name that sounded technology-related, and we would pull into the parking lot — often unpaved — walk in the front door, and ask the receptionist if we could speak with the president of the company,” Draper wrote in “The Startup Game,” a 2011 memoir and how-to manual. A few years later, Draper & Johnson merged with another firm to form Sutter Hill Ventures, with Draper as president. One of the attractions of the merger, he said later, was that the other firm had a receptionist and a Xerox machine.
In the early 1960s, when Draper was one of the few people offering early funding to tech startups on the West Coast, he frequently had to start his meetings with entrepreneurs by explaining what venture capital was. Though he knew little about electronics, he had the self-confidence required to ask questions that might reveal his ignorance.
“I don’t have a technical degree,” he said in a 2005 interview with the National Venture Capital Association, “and I’m just trying to catch up…. So I’m willing to ask the awkward, stupid question.” Asking stupid questions proved both educational and lucrative, because, as he put it in an oral history recorded by the Computer History Museum: “The difference between success and failure rests on who is running the show.” He added: “I have always been good at selecting people.”
In 1967, Draper considered running for Congress as a Republican. Vietnam was a political issue, so he made use of his Army connections to fly there and bone up on the situation. He was assured by military leaders that U.S. forces shouldn’t be pulled out. By seeking public office, “I was dipping my big toe into a tide of ambition, ego, and irrationality,” he wrote later. He dropped out of contention after finding he couldn’t compete with Shirley Temple Black and Pete McCloskey, the eventual winner.
Over a long career, Draper invested in scores of tech companies, including the chipmaker LSI Logic; Qume, which produced computer printers and memory devices; the disk-drive pioneer Quantum; and the electronic game developer Activision. He was open to all kinds of ideas, including a dental-flossing gadget that went nowhere and a successful heart defibrillator. One early investment, in Hybritech, yielded a PSA test for prostate cancer. “That test saved my life,” Draper said. The investment also gave him a substantial capital gain.
Draper passed up an early chance to invest in Apple and missed most of the 1980s, a lucrative time for tech startups, because he was running the U.S. Export-Import Bank and then serving as a top United Nations official. He also cashed out too early on Zappos, an online shoe retailer, missing a huge payoff when Amazon.com acquired it in 2009.
The Reagan administration appointed Draper chairman and president of the Ex-Im Bank in 1981. “I knew nothing about what they were doing,” he said in a 2010 interview at Harvard Business School, “but I learned.” He pushed successfully for reducing the amount of subsidies in the bank’s financing for U.S. exports. In 1986, he took over the United Nations Development Program, responsible for aid programs around the world. In 12 years at the Ex-Im Bank and the U.N., he visited more than 100 countries. “I felt like Robin Hood a little,” he said in the oral history, describing the work of raising money from rich countries to help poor ones.
After his U.N. service, Draper returned to Silicon Valley and, over a three-hour breakfast with the Stanford M.B.A. student Robin Richards, decided to create a venture-capital firm — Draper International. They initially considered focusing on China but concluded they would find more opportunities in India. One of their biggest hits was an investment in Selectica, a developer of internet software. Through a separate firm, Draper Richards, he backed Athenahealth, a medical software provider led by Jonathan Bush, a cousin of George W. Bush, and OpenTable, a restaurant-reservation service.
He was part of a venture-capital dynasty. His father, William H. Draper Jr., started in the business in the late 1950s, founding Draper, Gaither & Anderson, partly financed by the Rockefeller family. His son Tim stars in “Meet the Drapers,” and four of Draper’s grandchildren also are pursuing careers in venture capital.
In 2002, Draper co-founded what is now the Draper Richards Kaplan Foundation, funding what he called social entrepreneurship at organizations seeking to help underserved people. “I think my philosophy is: Do your best to be helpful to other people and it will come back in spades,” he said in the oral history.
Phyllis Draper, his wife, died in 2018. William Draper is survived by three children — Rebecca Draper, Polly Draper and Timothy Draper — eight grandchildren and 13 great-grandchildren. Polly Draper is an actress known for starring in the television series “Thirtysomething.”