Tim Draper

Venture capitalist Tim Draper started his keynote talk today at the WTIA Fast Pitch Forum with a photo of a nuclear blast, noting that an "economic nuke" leveled things last October.

But Draper tempered that image with an optimistic talk saying that entrepreneurs are the true "heroes" who have the ability to solve big problems.  In an interview with TechFlash prior to the talk, Draper said that the current economic climate is actually creating a "cleansing" effect of sorts.

"It allows the old historic monuments to fall so great new structures can grow," said Draper. That cleansing can benefit startup companies who Draper said can build things "cheaper, better, faster."

"That's why they are startups, and that's why they left their big companies," he said. Because things are changing so dramatically, Draper said that it is the best time ever to create a new startup company.

But isn't the venture capital business itself one of those historic monuments that's getting blown up? 

Draper prefers to use the term: "re-invented."

"We benefit from Moore's Law and all of those other laws where technology moves exponentially, and that benefit just keeps rocking forward whether you have a good economy or a bad economy, the science just keeps changing and improving," he said. "We venture capitalists benefit from the rate of change, and that rate of change is accelerating."

Still, Draper conceded that some startup ventures don't need venture capital at all, though he said investors can help by making connections.

Draper also offered his thoughts on Twitter, social media and the new private company marketplace he's creating called XChange.

"I don't know what is going to happen with (Twitter), but something is going to happen," said Draper, whose firm passed on an opportunity to invest. "I didn't really get it until I started using it, then I realized that this is pretty interesting." 

In terms of social media, Draper said there are opportunities to bring some of the technologies that have resonated with consumers to businesses.

"I think there is something there. It feels a little bit like what CRM was," said Draper, an early investor in Hotmail, Glam, Meebo, Skype and others.

And while Draper said that the IPO market may be creeping back to life, he also explained his rationale for creating the new marketplace XChange. That will create an alternative to Nasdaq -- a "stepping stone" of sorts -- where entrepreneurs who have built significant private companies can cash out without trying to go for a $1 billion market value.

"XChange will be the market that is the launchpad to the public markets, so it is an opportunity for the entrepreneur who is not quite ready to spend all of that money on (Sarbannes-Oxley)," he said. "It is better technology, and the entrepreneurs may want to hang out in that marketplace for a longer time."

Based on the recommendation of a reader, I also asked Draper about his thoughts on the Kindle. Here's what he had to say:

"It is great. I am kind of bummed because I have a Sony Reader, and now that the Kindle came out, my Sony Reader has 70 books on it. So I have to get through those ... before I get up and buy a Kindle," he said. "By the way, Amazon, that guy is so great. Think of what he has done, created an incredible bookstore. Then, he realized he had excess capacity, so he sold his capacity."

Related content: "VC Tim Draper pays homage to entrepreneurs in song."