Summary Chamath Palihapitiya, Founder and CEO Social Capital, on Money as an Instrument of Change - YouTube (Youtube) www.youtube.com
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n/a Thank you so much for being here. Thanks.
Chamath Palihapitiya You for including me.
n/a So excited to dig into that career and your thoughts on the valley. I'm gonna start us off with 1 of the things that jumped out at me in my prep for this interview.
Chamath Palihapitiya Okay.
n/a You are an extremely generous tip.
Chamath Palihapitiya Yeah.
n/a I love that, and I would like to know why.
Chamath Palihapitiya I mean, it's pretty... I worked... So I mean, it's well known and part of why I'm so open about this is that I think it gives permission for other people just to be honest. I grew up in a very kind of dysfunctional household on welfare. And that compounded a bunch of shit in my life that was not great.
Chamath Palihapitiya We were very focused on money It was a huge point of pressure and tension in the family. It created massive depression in my father drinking. Just it was very dysfunctional. And there was some point along the way where I was like, okay, is money like really important or not important. And I feel very lucky because I don't think if you asked my sisters, they got to the same place that I did.
Chamath Palihapitiya But I ended up not cove it. And I found it to be something that I could use to really empower myself to do the things that I wanted to do. And so in a situation where, you know, you go to it like a restaurant. If you really empathize with the people that are working there, I see people who are like me, brown skinned, working hard, creating these beautiful experiences, And then I can celebrate it by, you know, I guess giving a yelp review, but you can't buy food for your kids with a fucking yelp review. So I want a tip, and it's it's so...
Chamath Palihapitiya I mean, on... It gives me so much joy. Because it's like, you know, you'll have, like a 3 or 400 dollar bill. In some cases, you know, you tip 500 bucks or thousand bucks and you close it, and they're expecting 40 dollars. And I mean, the, I get a little emotional it.
Chamath Palihapitiya Like they will come out to you and there... It's transformational. And so it's such a great. It's so great. It's just like, little things like that mean a lot.
Chamath Palihapitiya To people. And just to be anonymously generous like that. I think it's like, it's a great gift that I have the ability to do. That's why I do it. I love it.
n/a And sounds like... To the experience of being seen and guilt. You are seen in the the individual is scene and you're sharing in that
Chamath Palihapitiya Well, I mean... You know, it's funny. He's it's like, 99 percent of the time, they don't say anything because they they they do the bill thing afterwards, and they for sure can't pronounce my name. And so they for sure Have no fucking clue who it was. I gave them the did.
Chamath Palihapitiya It's fine. It's totally fine, but I love it. I absolutely love it. My friends freak out. Now it's caused tension actually, because now when I go out with my friends, they know as well, and I've just made it very easy which is like, Hey.
Chamath Palihapitiya If we're going out, just like, let me just fucking pay. Just like, let's just not it's it's not... It's fine.
n/a K.
Chamath Palihapitiya And it makes it simpler.
n/a Yeah. I wanna dig into what you were describing about your upbringing and this unique position that you've gotten to where you don't feel that you cove money, but you see its power and and they used that it has in furthering some opportunities for you. How did you develop that? How do how do you distinguish between luck and skill, How do you how do you end up in that position?
Chamath Palihapitiya So I my parents crave money, meaning, they they needed it because it was... It it My dad was unemployed for long stretches of time. My mom was a sole bread winner. She was a house, then she was in nurse's aide. And so and you...
Chamath Palihapitiya And I would just see how she grind it. We didn't have a car for a long time. She takes the bus, We all take the bus at you know, when I've got my first job it was a Burger King, I take the money. And I had to give it to my parents and we would buy bus passes. And you know, I remember telling, like some of my friends, I went to a very good high school, like kind of like the rich high school, not the high.
Chamath Palihapitiya I should have gone to. I got... I was able to go to this different high school. And I would remember tell I would tell them, like, hey, this is like, yeah, I, you know, I would they... I would be so ashamed that I worked at Burger king.
Chamath Palihapitiya They would sometimes come by, and I would just be like, fuck, like. And then at some point, I... It was just... It was like this release moment where I was like, This is my life. Like I just...
Chamath Palihapitiya I can't do anything about it. This is what it is right now, and I kinda had a sense that I could figure some stuff out later, but I didn't really know And so I just accepted it. And then the minute I accepted it, I wasn't ashamed anymore. And then when I wasn't ashamed, I could start to actually be inside my head like what really matters. So then what happened was there these massive racial riots in Los Angeles.
Chamath Palihapitiya And not as if the fucking American government did anything about it, But the Canadian government was like, shit. Let's get all these black and brown kids jobs. Because we don't want the Rod making riots in Toronto and Ottawa. And parts of Ontario. And so I was able to take all of my dad's rejection letters, call every single 1 and 1 of them gave me a job, and I worked at this well known telecommunication startup in ottawa.
Chamath Palihapitiya Ottawa I had a really burg tech scene at the time. And I worked this organization that was run by this really iconic guy, Terry Matthews. And he was a billionaire And I was like, what the fuck is that worth? Like, I mean, I didn't even know fucking thousand error. Like, I was like, what is a billionaire?
Chamath Palihapitiya And this guy, was risk on. And he was just so dynamic in the businesses he had started and how he viewed his place in the world, and I was ent. I was 9 degrees away from him. But the cult of personality around him in that business the lore when it trickle down to you was not about, you know, his cons consumption or anything else. It was about Okay, we're launching this frame relay switch.
Chamath Palihapitiya Now we're gonna buy this company. Okay, We're gonna pivot the entire business to Atm. And you were just like it was an amazing time. And so I took the bus to N bridge. Complete luck that the controller of New bridge would go from his nice neighborhood through this shitty neighborhood to get on the highway.
Chamath Palihapitiya And so he would see this guy standing by the bus. And eventually, he saw me inside the office and 1 day he stopped. He's said you want write? You work in U. I'm I at it.
Chamath Palihapitiya This guy sam leg. So in the car, he was just... He was in the front seat like beside Terry, and he was able to tell me, like, how this guy thought about this I was like, because I would read it in the paper. And I was like, why is he doing this? And like, and he So it just completely rewire what money was.
Chamath Palihapitiya For Terry Matthews, his money was an instrument of change. Right? He had a market cap, he's like, wow. That's 8000000000 dollars of change. 10000000000 dollars of change, 15000000000 dollars of change.
Chamath Palihapitiya Versus there was another guy building a company at the time, his name was Michael Cope. Who ran a company called Core, also a billionaire. And he was the exact opposite, had a messy divorce, married some trophy wife. He took this obscene shiny glass from his building and covered its house in it. And so you had this this really this dichotomy of 2 different characters at that time in the nineties, building really interesting businesses.
Chamath Palihapitiya Core, which was a reasonable business New bridge, which was a reasonable business. They were both very successful, but they manifested money so totally differently. And I was like, I wanna be this guy. You know, I wanna be this mega compound sw buck around, trying to do really cool shit in the world. How do I do that?
Chamath Palihapitiya And Sam helped me because it was just like, you you could understand from him what Terry cared about. And then for me, I just copied. I mean, a lot of my life, quite honestly just, copying things that I see. There's not a lot of original thought here. It truly is not.
Chamath Palihapitiya I mean, we can all pretend we're all fucking geniuses, honestly, be good copier. Do you know what I'm saying? It's the best thing in the world, like be around high functioning, high quality people. And just copy the shit that they do. Observe the shit that's, you know, kind of crappy, and then don't do that stuff.
Chamath Palihapitiya It's not fucking complicated for anyone.
n/a When have you use that best?
Chamath Palihapitiya No, all the time. Mean, look now, it's funny. Like, it's it's like, you know, like, you have a surface area of ways to spend your time now or I do. And You know, I'm in this midst now where we're really scaling up what we're doing as a business. And I meet these people that to me are so iconic that they were sort of like arm length people that are now sitting face to face.
Chamath Palihapitiya And they treat me like a quasi pure. I wouldn't say pure, but quasi pure. But what I see is I see some amazing stuff, and I see some utter dysfunction in some of the richest most important people in the world. And I have to decide how am I gonna act, What am I going to embody? What am I copying, What am I not copying?
Chamath Palihapitiya And so I get a chance to now refine my decision making and discipline. And it's... So that... That's how I... That's how I place.
Chamath Palihapitiya I don't know if I answered your question.
n/a I I'm thinking very there's a deep connection between money as an instrument of change and what you're doing now and social media.
Chamath Palihapitiya Here's the thing. There's about a hundred and 50 people that run the world. Anybody who wants to go into politics. That's they're all fucking puppets. Okay?
Chamath Palihapitiya There are a hundred and 50 and they're all of men. That run the world, period full stop. They control most of the important assets, they control the money flows. And these are not the tech entrepreneurs. Now they they are going to get rolled over over the next 5 to 10 years by the people that are really underneath pulling the strings.
Chamath Palihapitiya And when you get behind the curtain and see how that world works. What you realize realizes is it is unfairly set up for them and their Pro. Now, I'm not gonna say that that's something that we can rip apart. But first order of businesses, I wanna break through and be at that table. That's the first order of business.
Chamath Palihapitiya And the way that I do that is by proving that I can do what they do as well as they do it. And then do it better than how they do it. Because at the end of the day, they are commercial fucking animals. Okay? And they'll open the door out of curiosity and they'll let me day because I because I add value.
Chamath Palihapitiya And then once I'm there, I can open the door for other people who can try to do the same thing. So my entire goal now is that. Today is to be in a position to aggregate enough of the capital of the world to then real it against my worldview view And I'm not saying my worldview is the best or right but it is mine. And at the end of the day, there are a hundred and 50 other fucking guys with their worldview. And they don't give a shit what you think about their fucking worldview view.
Chamath Palihapitiya That's the truth. And so why not me? Why not? Why not 1 of you? Why not?
Chamath Palihapitiya And so in my life now, I'm just kinda like, why not? Why the fuck not? Watch it.
n/a Can you tell? So you have these 50 year goals for social capital.
Chamath Palihapitiya Yeah.
n/a 3 of them. Yeah. Can you give us your world in through those goals.
Chamath Palihapitiya So my 20 45 ambition for the organization. This is as I see it right now, 20 45. Is I would like us to employ at least 10000000 people through the businesses that we own. I would like our businesses to positively affect at least a quarter of the world's population. And I would like us to have made cumulative about a trillion dollars.
Chamath Palihapitiya That's my 20 45 ambition. I think if we do that, we are the modern face of capitalism for the next 50 years. So how we do that now becomes really important. So if you think about building businesses and today, that could do any of those 3 things. You have to be technological.
Chamath Palihapitiya You absolutely just have to be. You not going to build a brick and mortar business gets anywhere close to those 3 things. Number 1. Number 2 is, you have to think very broadly about building things that can stand the test of time that Those businesses are by definition hard and non obvious. And so they compound in scale very slowly.
Chamath Palihapitiya And that's really counterintuitive to the overriding logic of Silicon Valley, which says quick, fast go. Right? But that kind of premature ejaculation doesn't work if you're trying to fucking be around forever. Like you gotta be in the flow for decades. That is hard.
Chamath Palihapitiya It tests people's patients. It tests people's resolve. It tests people's really intellectual incision. And this is where everybody gives up. Everybody gives up.
Chamath Palihapitiya I had this moment today just a total different way of describing this. Through the warriors, I've met a lot of players obviously, 1 of them who had become unbelievably close to is David League. David lee just got engaged to this unbelievable woman Caroline Was in, tennis player. Anyways, we're... We were working out this morning.
Chamath Palihapitiya Okay? Couples work workout. Me and my wife, him and him and his fiancee. So we're doing this thing, this treadmill thing, which my trainer was con con. And I'm I'm I'm in pretty good shape.
Chamath Palihapitiya And then you see what it really means to be. Extremely dedicated in their case to something which is physical fitness because they're professional athletes, when I give up, right when the average human gives up, their brain goes into fucking overdrive. Okay? And they're like, there's this next level burst. And so like, it's it's that.
Chamath Palihapitiya It's like when when things get hard, can you double down. A different example. We had yesterday, We do these things every quarter called quarterly portfolio reviews. We're incredibly intensive review of our entire portfolio, revisiting our strategy, talking about all the things we're doing to make sure we're on the right track. And I had this observation which was I started a diabetes business.
Chamath Palihapitiya My dad died diabetes 3 years ago. Sure most of my relatives have. I express the gene that makes me disproportionately susceptible to it. So it's something that I personally care about. But that business took 7 years to get to a place where we even have a chance of being viable.
Chamath Palihapitiya And I think to myself in that example, I embodied a bit of Caroline Was. When things got hard, I pushed through the pain. In my case, the pain was the fear of failure, continuing to write more money, a belief that I had that this business was going to work. And today that business... Now manages a million diabetic.
Chamath Palihapitiya And I think there is some kid out there whose family will be slightly less dysfunctional, because their parents disease is better managed. It's not gonna go to a place where like, you know, they're getting dial or, you know, they're on an organ registry. And that value for that kid in our world and all of you that benefits will never be connected to the dots, but that's okay, but it required just resilience. And I'm proud of that.
n/a Yeah.
Chamath Palihapitiya And so I want to bring back a little bit of that here so that it's not quick, fast, 5000000 users, 10000000 now, flip it, sell it, great, celebrate. It's like, hey, let's work on some hardship shit together. Let's like buckle down, and look each other in the eye and say, we're gonna support each other here. It's gonna take 7 or 8 years. But if it works, it will really mean something.
Chamath Palihapitiya And it's something that matters to you for something that's other than just simple motivation of... The social capital you get from your friends or money in the short term and winning bigger longer term. We're missing that and I think like part of our success will be if we can stay focused on that. Our education portfolio is another thing. It literally looked like a train wreck for 3 years, where everybody has always said you never invest in education.
Chamath Palihapitiya And my thing was, it's not about education. This is about human capital development. It's about for every 1 of you who's so smart that god into stanford for. Think of... All the people who could be as capable.
Chamath Palihapitiya I'm not asking you to empathize with them, but I as a capitalist want a starting line where all of those people can run race so that I can pick the winner. No offense to any of you here. And it took us 3 years where now those building blocks exist. I'm like, wow. How many times that have to look at my partners is they no.
Chamath Palihapitiya The easy answer is to walk away, the hard answer is to double down we have to support this business. That culture is missing here. So part of what we're trying to do to achieve those goals is like, take really big audacious points of view on the world. Culture and then train ourselves to be patient and it's really, really hard. The entire society is set up to not be patient anymore.
n/a And I'm hearing also a conflict with this like fail fast and learn, mentality where If if if you're taking a deep and big bet, like he want it to be the right 1, how do you know when that's true?
Chamath Palihapitiya I think that that's fail fast approach works in consumer internet businesses, but I don't think it works for anything that really matters. Basically. Consumer Internet businesses are about exploiting psychology. And that is 1 where you want to feel fast because, you know, people aren't unpredictable. And so we want to psychologically figure out how to manipulate you, as fast as possible and then give you back that dopamine hit.
Chamath Palihapitiya We did that at brilliantly at Facebook, Instagram has done at, Whatsapp has done it you know, Snapchat has done it. Twitter has done it. So there are great examples. Wechat is doing it. There are great examples of failing fast.
Chamath Palihapitiya Is the right path to exploiting psychology of mass populations of people. But it is not how you solve diabetes. It is not how you use precision medicine your cancer. It is not how you educate broad swath of the world's population. It's just not.
Chamath Palihapitiya It's taking a point of view and being methodical your That's okay. It's hard. No. It's hard.
n/a I'm glad that you're taking us to have at it.
Chamath Palihapitiya By the way, if it works, it's where all the money comes. Like if you talk about where all of the gains where all of the value will be created over the next 50 years, it'll be in those hard things and the reason is because those white spaces are so wide open. But competitive pressures are nonexistent existent. For example, Today, you have this weirdly academic argument about climate change. It exists.
Chamath Palihapitiya It doesn't exist. Well, we were in a nice age. Now, it's more of course, the... Who care? Who cares?
Chamath Palihapitiya What's undeniable is that we're ripping apart the biodiversity of our planet. What is undeniable is that we as a human population will be forced to concentrate because certain parts of the world will get basically you know, subs by water. We do not have food supplies at. These are conclusive known to be true. Yet nobody's really working on a problem.
Chamath Palihapitiya And part of it is because the people won't have the ambition to try to go after it, the capital markets don't reward that kind of decision making. But if somebody were to solve it, don't you think that they are in economic terms a multi trillion? Of course, don't You think food delivery is where, like the next great fucking breakthrough is gonna come. You know? You're all hopped up on fucking marijuana and you need a fucking brownie as you did.
Chamath Palihapitiya Like, What a joke? Again, go and go and look through crunch based and all the shitty use idiotic companies that have gotten funded doing garbage like that. Versus climate change. Think about that. Think about that.
Chamath Palihapitiya Think about that when you guys eventually find your partner, your significant other, your husband, your wife you get married you have kids, you will not be able to hand off a planet that they can predictably live in. You will not your generation. If and nobody is fucking doing anything about it. So the capital markets are just completely completely out of their minds. And so yeah.
n/a I wanna to bring us back to the point that you were making about exploiting consumer behavior in a consumer Internet business. You said that this is a time for Soul searching in social media businesses and and you were part of building the largest 1. What soul searching are you doing right now on that?
Chamath Palihapitiya I feel tremendous guilt. I we I think we all knew in the back of our minds, even though we fe this whole line of like, probably aren't any really bad unintended consequences. I think in the back deep deep recesses of our minds, we kind of knew something bad could happen. But I think the way we defined it was not like this. It literally is a point now, where I think we have created tools that are ripping apart the social fabric of how society works.
Chamath Palihapitiya That is truly where we are. And I would encourage all of you as the future leaders of the world to really internalize how important this is. If you feed the beast, that beast will destroy you. If you push back on it, we have a chance to control it and rein it in. And it is a point in time where people need to hard break from some of these tools and the things that you rely on.
Chamath Palihapitiya The short term dopamine driven feedback loops that we have created are destroying how society works. No civil discourse, no cooperation, misinformation, miss truth, and it's not an American problem. This is not about Russian ads. This is a global problem. So we're in a really bad state of affairs right now in my opinion.
Chamath Palihapitiya It it is eroding the core foundations of how people behave. Buy in between each other. And I don't have a good solution. You know, my solution is I just don't use these tools anymore. I haven't for years.
Chamath Palihapitiya It's created huge tension with my friends. Huge tensions in my social circles. If you look at like, you know, my Facebook feed. I probably haven't... I've posted maybe 2 times in 7 years, 3 times, 5 times.
Chamath Palihapitiya Just... It's less than 10. And it's weird. I guess I kinda just innate didn't want to get programmed. And so I just turned tuned it out, but I didn't confront it.
Chamath Palihapitiya And now to see what's happening, it's really it really it really bum me out. Like, think about, like, there were these examples where there was a hoax in Whatsapp where in some like village in India, people were like afraid that their kids were going get kidnapped, etcetera. And then there were these lynch that happened as a result. Where people were like vigilant running around, they think they found the person and they... I mean, I mean, seriously, Like that's what we're dealing with.
Chamath Palihapitiya You know, imagine like when you take that to the extreme, where, you know, bad actors can now manipulate large swath of people. To do anything you want, It's just it's a really, really bad state of affairs, and we compound the problem. Right? We curate our lives around this perceived sense of perfection because we get rewarded in these short term signals, hearts like thumbs up, and we con inflate that with value and we con inflate it with truth. And instead, what it really is is fake brittle popularity.
Chamath Palihapitiya That's short term and that leaves you even more and admit it, vacant and empty before you did it. Because then it forces you into this vicious cycle where you're like, what's the next thing I need to do now? Because I need it back. Think about that compounded by 2000000000 people and then think about how people react then to the perceptions of others. It's just a it's a really bad.
Chamath Palihapitiya It's really, really bad.
n/a It sounds like you're taking deep personal responsibility also in being a part of it.
Chamath Palihapitiya I kind of look. I did I did what I I did a great job there, and I think that business overwhelmingly does positive good in the world. Where I have decided to spend my time is to take the capital that they rewarded me with and now focus on the structural changes that I can control. I can't control that. I can control my decisions, which is I don't use this shit.
Chamath Palihapitiya I can control my kids decisions, which is they're
n/a not a lot to use this shit.
Chamath Palihapitiya And then I can go focus on diabetes and education and climate change. And that's what I can do. But everybody else has to soul search a little bit more about what you're willing to do because your behaviors, you don't realize it, but you are being programmed. It was unintentional, but now you gotta decide how much you're willing to give up, how much of your intellectual independence. And don't think, oh, yeah.
Chamath Palihapitiya Not me. I'm fucking genius Summit at Stanford. You're probably the most likely to fucking fall for it. Because you were fucking check boxing your whole Goddamn life. No offense guys.
n/a Not taking. So how... I mean, you've been outspoken about. The Trump administration's position on immigration on on a number... I mean, these things are gonna collide in government and business.
n/a Right? That's happening now.
Chamath Palihapitiya Yeah.
n/a So what what do you want these future business leaders to do about it? Once they get into that spot?
Chamath Palihapitiya Get the money. Get the money. And then let's get around a table and let's create new rules. Literally that simple. Get the fucking money.
Chamath Palihapitiya I'm serious. Do not get it. It is going be made. It is going to be allocated. And you have a moral imperative to make sure that if you have a point of view that matters and you wanna reflect it, you get it.
Chamath Palihapitiya I'm gonna go get it. Other people are gonna go get it. And then it will be about a competition of views. And don't wrap yourself in all this like, you know, liberal kind of bullshit about oh my God, money No stop. Here's how the fucking world works.
Chamath Palihapitiya Okay? It drives the world for better or for worse. Economic incentives drive and tire swath of populations to behave in very, very predictable. And then when you when you take it away, unpredictable ways. Ask anybody in your class that's from a developing nation.
Chamath Palihapitiya Ask anybody in your class like who has seen that play out from where they're from. So that's what you have to do. You gotta go and get it. If you control the capital and you have a point of view, you can now then the question is, don't be a sellout. Whatever your world view is, you should be spending time to think about what that is, so that when you control some of these purse strings, you push that view into the world.
Chamath Palihapitiya I will never judge you and you should not judge me for what that world view is. But the point is the more diversity of those views, the more rational actors we have, and the more of a balanced fair system. That is what diversity really means to me. It doesn't mean like, less manage back to a quota, you know, it doesn't mean like, okay, we need a black guy a brown guy. We need a few...
Chamath Palihapitiya Like that's not what it means. This is what it means. Right? There are people in this audience that have probably dealt with the same kind of like life that I've dealt with. You have a very unique worldview that matters.
Chamath Palihapitiya And in the absence of capital, you're irrelevant. With capital, you're powerful. And then you decide. In small ways and medium sized ways in large ways, Right? And just depends on the scale of capital that you have.
Chamath Palihapitiya And so that's what's necessary now in capitalism. Which is that we have to come back to, like, what is it really? Is it an economic system? Yes. But it is a philosophy as well.
Chamath Palihapitiya Right? And it's a philosophy that says, we will vote for the change we intend based on the views that we have. And when you look at the most successful people that operate in these tentacles, That's what they do. Look at the Koch Brothers. That's what they do.
Chamath Palihapitiya They had built a network of influence based on capital. Their worldview view is propagated into the world, at an unbelievably aggressive rate that has been compounding for decades, That is genius It is genius. It doesn't matter whether you agree with their worldview? The question is, what's the counter to their worldview? Can you name 1?
Chamath Palihapitiya Can you name a group of people that operate in the exact same way, methodically, meticulously assembling capital, influence, assets who believe the opposite. Irrespective of what you think of the coke, you want both views out in the world at scale. But right now you have this and you don't have this. And there are many examples of that. And so get the money and don't lose your...
Chamath Palihapitiya Moral compass when you do.
n/a You said that you think Vc is a horrendous all of capital. So if we need to go get the capital. How do we do it better?
Chamath Palihapitiya Well, we're chipping away? I think other people will copy us. You know, venture is basically just a bunch of soul coward. You know, like, they're all they're all just kind of... Look, they're well intention.
Chamath Palihapitiya But their well intention soul coward. They have fallen for what everybody else falls for, which is not which is which you can't blame them for, which is Here's his gold star and they're like, wow. I've gotten a gold star. And then the minute you do that, what you do is you start to just choke it really tight. And you're like, I don't wanna lose this gold star.
Chamath Palihapitiya And then what happens, you go risk off. And then what happens, your behaviors are about protecting the seed of power that you have. The social definition that that that seat affords you. And so now instead of being an acc of a progressive worldview view, you become a re retarded to a progressive worldview view. Right?
Chamath Palihapitiya Your risk appetite shrinks, the surface area in which you're willing to make decision shrink. You so you you And when you are a critical part of the future again going back to how I started. The most important part of capitalism is going to be the folks that are driving the technological change. Well, as a class, that's what Vcs are supposed to do, but they're by and large in my opinion, the wrong people. So how do we do it?
Chamath Palihapitiya You have to make it more systematic. You have to make it more data driven. You have to just strip out the bias. You have to be open 24 7. You can't have these dumb rules of like, oh, I only do deals if they're like, within 15 you know, miles driving distance, like, how how can the most important part of like, It's I mean, did you you can you imagine if I walked in to Z office Facebook board, Like, I have great fucking idea.
Chamath Palihapitiya Facebook is only going to be open for business. Monday through Friday. 10 to 5 kids want to get home. Summers we're gonna take off. And so but is gonna show like a 04:04 page.
Chamath Palihapitiya I I, does it make sense? Like or like Google. You know, you we only want you to search during business hours. And so, you know, you So you have to be open for scale. You have to be global.
Chamath Palihapitiya You have to do all of these things so that you can get the money into the hands of the people that deserve it. And then help them. And by helping them what you have to do is actually address the core structural parts of business building that are not done well today. And the best analog is Aws. If you were starting a business 15 years ago, I can even tell you a decade ago, we were racking servers in our data center because the growth was great.
Chamath Palihapitiya And somewhere along the way, Amazon said, you know what? All of that complexity is necessary, but it's not sufficient to building Facebook or any other great company. So let me abstract that for you. Let me go and replace all of those good people with an Api. And I'll take those good people and they'll be celebrated at Amazon.
Chamath Palihapitiya And initially, a few people said, yes. And you know, people thought in 2007, Aws was a joke. And we used to laugh that it. We're like, why would anybody do this stuff? And now see how fast the decade later.
Chamath Palihapitiya You're on the other side of fence. If any come... Any of you guys started a business and you're not on Aws, you would be at the joke. Right? So what did they do?
Chamath Palihapitiya They basically said, here's all this stuff that's necessary to building a business. You need to do it, You probably don't want to do it. You probably not gonna do it well. And so let me just replace it all. With an abstraction.
Chamath Palihapitiya Your company can be smaller, leaner, more efficient. And now the money you raise can be used for things that approximate core product value better. Okay. Now in 2017, ask the same question. What's the next set of things that make sense?
Chamath Palihapitiya And in my opinion, what we uncovered at Facebook is what every company needs, which is how do you shift from an anecdotal, political capital social capital oriented way of making decisions that a company means to a very precise une emotional data driven process. And the way you do it is by building a bunch of data infrastructure by collecting a bunch of data itself by helping you optimize your business in a bunch of obvious and non obvious ways. And so what we believe is that we should take that capability that that my team built at Facebook. And abstract it for all of you who intend to start a company. So now in the future, what should happen is, you'll go to Aws, you'll get some infrastructure, you go to social capital dot com and you'll get some insights and knowledge, and it's all interacting via Apis.
Chamath Palihapitiya It's all interacting interaction via endpoints and primitives. And what happens is we can now learn from the feedback from your data, how you're doing, we can merge those learnings across many, many other businesses. We can find things in some remote part of some company over here and translate that has value for you over here. Wouldn't you want that? Of course, you'd want that?
Chamath Palihapitiya You know, what if we could do more efficient customer acquisition, what if we could figure out churn better? What So all of these things now are what we are going to bring to the market, systematic capabilities. And I think over time what that does is again, it moves to a much more progressive view of what capitalism should be. It's not the few that matched a human driven pattern, But it's more about taking big shots, scaling up the money, being able to support people in structurally predictable ways and allowing them to build better companies. Those companies I suspect will be as profitable, but they'll be smaller.
Chamath Palihapitiya They'll be more efficient. They'll have more revenue per head. All the things that you would want over time, so that instead of having 4 or 5 mega companies, you could have millions and millions and millions of smaller, better run companies. So And that's my world. And I think if we do that, we achieve our goals, we kind of focus on hard...
Chamath Palihapitiya All of that stuff comes together if we enable that. So what you're seeing from us is that and it's really upsetting and disconcerting to the established sort of venture classes because it up ends how they've defined their value. It's a very classic inventor dilemma. Right? They are like, in my brain is pattern recognition.
Chamath Palihapitiya But we know that that's not true. And the data shows you that that's not true. You know, simple question for all of you guys that love the lore of Silicon Valley from to seventies when Microsoft was founded to now. If you look at all the major companies that have been created. Major say, over 50000000000, over 60000000000.
Chamath Palihapitiya What percentage of the series A investors overlap? You did the A of Microsoft and you did the A of Google or you did the a of Uber. Right? Like, we're pattern recognition again, You know, it's non numerical. Right?
Chamath Palihapitiya It's about like, wow. I like the cut of this guy's ji. You know what. Well, the answer is it's it's less than 2 percent. So what does that mean?
Chamath Palihapitiya Everybody's bullshit. That's what it really means. Right? If you're in a seat and you have good deal flow and you have precious capital, and there's a massive tailwind of technological change. Over time, you get 1 of the 20 and you look like a genius.
Chamath Palihapitiya That's basically what's happened. And nobody wants to admit that, but that's the fucking truth. It's the truth. So if anybody looks at you and tells you, they know what the fuck they're doing. They're lying.
Chamath Palihapitiya They're lying. They are lying to themselves at a minimum. And at a maximum they're lying to you because the data does not support that claim, and that's irr. So I don't wanna to be 1 of those people that stumble into a company and look back and like, oh, yeah, we are geniuses. I want us to be systematic.
Chamath Palihapitiya And I want us to be able to deploy tools and capabilities that get us closer and closer to that. And that is what if you're again a traditional list freaks you out.
n/a And that's what allows you to make these much longer term commitments to businesses that are going to... Address health care, education.
Chamath Palihapitiya Well, no. I've bet. That's just because I'm rich. But no I mean This just to be honest. It's like, I I don't need anybody else's money.
Chamath Palihapitiya That's like, look, this is not like a popular view. So the first fucking billion dollars is mine. And then I had to prove it, and then other people gl on. But I mean, many of them started by caring. But I suspect over time if we end up with a hundred 205 hundred billion dollars, how much of that last 50 60 percent really care?
Chamath Palihapitiya That's okay. I want the fucking money. I will play the Goddamn game and I'll win, because I want the money. Because I want to extend my influence. Do you know what I'm saying?
Chamath Palihapitiya Yeah. They wanna return. It's fine.
n/a Yeah. He wants the money.
Chamath Palihapitiya Because I wanna win. I I so deeply want win.
n/a How I'm just gonna say this exactly as it's coming. How do you keep that power from corrupting you?
Chamath Palihapitiya I have no idea. That's the honest answer. I have no idea. I've become increasingly isolated. It's harder and harder for me to connect because I'm so in my own mind.
Chamath Palihapitiya Like, how does this all play out? You know, how do I how do I fund raise? How do I make how do I help facilitate good investing decisions, which really means how do I help this great team, think about a more platform approach. And in that, I just get really isolated. And so I don't have a good answer.
Chamath Palihapitiya I like things like this and I I like to say the things that I do. And maybe it helps you in your own lives. But to be honest, it's very selfish. It helps me because, like, it reminds me of when I'm in a... Like...
Chamath Palihapitiya It reminds me of these stories like, just reminding myself, like, I made 04:55 an hour Burger king, I would get a 50 dollar check and I'd buy bus passes. That's awesome. I just... I don't ever want to forget that. And I'll go months and not remember that.
Chamath Palihapitiya But now as I said, I'm like, okay, I'm III started as a good earnest person, and I need to stay a good earnest person. So I don't have a good answer. And I'll tell you those hundred and 50 people. Maybe it's a little bit more, but I've met a lot of them. It's it's it's really hard.
Chamath Palihapitiya You it's very easy to end up, really drunk with power. It's It's really hard. Yeah.
n/a I really appreciate that can because I don't think that we get it very often. And you've laid out an incredible vision for money as an instrument of change. So I'm really great that you were here to share it with us today.
Chamath Palihapitiya Thank you.
n/a We're gonna open it up now to questions. I'm sure that there are many follow ups on what you've explored, but
Chamath Palihapitiya really Any feedback.
Dana Hi. Hi, Dana, I'm Second year To Gs. Thank you for being with us today. But I Am not here to give feedback, but I have
n/a a question for you. You just took social capital Keto Sophia public. I wonder what's your plan to run this public fund, How would that be different from running a private fund? Or it's just another way to get money?
Chamath Palihapitiya So awesome. Yes. But... No. So 1 of the things that I think about a lot is if I am in a position to reshape, I've I've been in a position where I was a part of a group.
Chamath Palihapitiya That help shape psychology of society. That's been a great experience. And and I learned a lot. And so now in this position, what I say to myself is what are the psychological things I'd love to change now. And 1 of them is around this idea of patients?
Chamath Palihapitiya And what's counterintuitive, and I said this earlier when we were just talking is that I think bringing liquidity into companies sooner will actually allow companies to bake longer and more patiently. And so part of what this vehicle is is about bringing liquidity sooner in a company's life cycle. Because if we can take this company, use it to acquire something else and that Ceo is now able to compensate their employees. As counterintuitive as it sounds I suspect that they are less likely to leave. And so now you could have employees stay at of business for 7, 8, 09:10 years, which used to be the historical norm.
Chamath Palihapitiya And now it's not. Most of you probably are thinking to yourselves, well, I'm gonna get a great job the after the Gs. But I should probably portfolio manage my my career for the next 6 or 7 years. 18 months here, 18 months there, 18 months there, and then I'll decide what I really wanna do. And part of it is because there's an incentive to sort of like build this kind of portfolio approach, But I suspect if you knew that liquidity was sort of like a more traditional predictable thing.
Chamath Palihapitiya Many people would actually say, you know what? I like these people here. I like the mission of the company. I wanna continue to help advance their goals. And now that you've actually, you know, solve my compensation problem, people I'm willing to commit.
Chamath Palihapitiya So part of this vehicle is trying to turn back the incentives towards people staying at companies longer. Which I think is going to be required if you're gonna try to solve hard problems. Because if right now the Silicon valley attrition rates in most companies 20 percent That means every 5 years is your entire employee base is turned over. Think about that. How do you do anything valuable if everybody is new every 5 years.
Chamath Palihapitiya How is that possible? It's probably not possible. So that's what I'm that's what I would try to change and get the money.
Carolyn If Hi. I'm Carolyn. I'm also an Nba 2. Your sports analogy of kind of buck down and going into hyper drive really resonated with me. I also realize that that can go too far.
Carolyn So I'm curious to hear how you make some of the tough calls on whether it's not to participate in the next round of fundraising or whatever that looks like to you? How do you make those decisions?
Chamath Palihapitiya This is honestly. This is the... So yesterday, it's we spent in an inordinate amount of time talking about this. We've made a bunch of decisions that I deeply regret. Because they were entirely monetary in nature.
Chamath Palihapitiya And what I said to the team was, I'm fine with us making purely monetary decisions but we didn't even do those wells. Not as if we like had a predictable rate of return on that. That said, yeah, you know what? We're just gonna to kind of like close our eyes here, you know, double our money and walk away. And so the reason I brought that up to them was I was like, our decision making can't.
Chamath Palihapitiya Bleed over time. And right now, it's very hard for us as an organization to know how much is should be mission driven, how much should not. When should we really double down on things that are not working, when should we not? When should we just give up? Because it's just either the timing is not the right time.
Chamath Palihapitiya And quite honestly, I don't have a very good answer. But if it is the thing that we are now I would say the most emotionally sensitive to. Because for example, the opposite may be true. So if the diabetes these business turns out to work, does the hundred and first person that works at social capital, say, fuck it. We're just gonna buckle down and, you know, when they're writing checks all of a sudden, we're 50000000 deep into something that is clearly not gonna work.
Chamath Palihapitiya Was that it... So I don't have a really good answer, but it is the thing that I think about the most. When do you know? How do you know to keep going for it? When do you know that it's just too much.
Chamath Palihapitiya When do you know that your decision making is bleeding into a vein that is not constructive. I have no idea. It's really a great question. It's it's... I think about that a lot.
Chamath Palihapitiya The way, a lot of things like, it's really powerful to be able to say, I don't know. I mean, I would just encourage you guys all to just be like, I don't know. Like this culture, like American culture, it's this weird thing of like no at all. Everybody has to know everything. How the fuck can you ever learn?
Chamath Palihapitiya How when is that gonna be valuable? Don't be the... Just own own that that 1 line, I don't know. Is so powerful. And as I kind of like get more abstract when I need people, and I ask them things, it is so end to hear, I don't know.
Chamath Palihapitiya Because behind that is just like... Just the self awareness and confidence that I think is increasingly rare. Now, you guys are like, I'm gonna fucking G fuck this guy, and just keep telling everybody, I don't know. Don't do that. I mean, really own it.
Chamath Palihapitiya If you're gonna say it really own it. But I really think it's a very powerful thing to be able to say, I don't know.
n/a Hi. My name is, and I'm a first year Mba student. I'm also a Canadian who went to Waterloo when my first job was Ape Kinks. So I really see you as a role.
Chamath Palihapitiya I got my fucking brother. I mean, literally, you look like me too. It's crazy if to weirdest a thing.
n/a So Are you planted? Or are you an after?
Chamath Palihapitiya What place?
n/a Swear? I swear to God.
Chamath Palihapitiya Well, you're really freaking me out right now. What do you want? So
n/a so my question for you is a couple years ago at an Event Sbs. You mentioned that Mba students are typically
n/a at a disadvantage with respect to getting capital at the pursue entrepreneurship.
n/a Do you think that still holds true today? If so...
Chamath Palihapitiya So that's a perfect example of me before Cas, which Dean 11 talked about? Expressing my bias. And I think part of my bias came from my insecurity about not having a grad degree, Part of my bias was like, looking at people like you saying, wow, I just feel inferior folks like you. I've had felt for huge amounts of time. And so it's it's a perfect example where...
Chamath Palihapitiya Even though I can say it, my... What I said at that H b thing was me just... Spout off making myself feel better about my biases. And what I would tell you today is, it can matter. It doesn't matter.
Chamath Palihapitiya I would rather say that there are ways of figuring out how valuable you are that are independent of those traditional signals, whether you have them or not. So I would say today, I've changed my mind. But by the way, that's another thing. Changing your mind. Is so powerful.
Chamath Palihapitiya I mean, fuck, Change your mind. It it it makes for really, really, really burst difficult marriages at times. My wife will tell you, but men is it powerful in business. Change your mind all the time. And it's amazing again where you'll find like really good scaled leaders, want the right answer, and they're fine with cap manipulation, They're fine with change.
Chamath Palihapitiya They really are because they just want the right answer. And then you just get so invested in an answer, And then you build up all of this superficial logic to reinforce it versus saying, I don't know let me... Oh, you know what I changed my mind. Wow. Another powerful thing, I think.
Chamath Palihapitiya I achieve my mind all the time.
n/a I think this is gonna be our last question.
n/a My name is. I saw some of the venture world at Soft bank some of the tech world. And you said something about a ama capital. Today, what do you think is 1 of the best ways for us to mass capital on a risk adjusted basis?
Chamath Palihapitiya On a I mean, the last part is just such a sellout part or risk adjusted base. I don't know if fucking buy some bonds I mean I don't know. Here's what I would tell you, man. I think I think if you ask me, who's building the most important ind company In the world, I've been very public about this. I think it's Jeff Bezos.
Chamath Palihapitiya Part of what he realized was the value of slow compounding. So here's my little theory company about company value creation. The faster you build it, that is the half life, it will get destroyed in the same amount of time, And so when you think about a lot of like social businesses, that's played out. But and when you see sort of like what the sort of like the top select. You know, does it take 8, 09:10 years to build a really great consumer business?
Chamath Palihapitiya It'll take 8, 09:10, 12 years to destroy it. And we may see the tipping point a couple of these businesses. Right now, we may be seeing it in front of our eyes. Regulatory otherwise. So why is that an important, Statement?
Chamath Palihapitiya A ama capital to me is about finding a smart useful solution to a very hard practical problem. And being slow and methodical. And again, is what I'm saying, you have to rewire your brain for that to be okay how do you in year 2 or year 5, come back to this room for your... What is it called That you get Reunion? And Sam I'm still working on the same thing.
Chamath Palihapitiya And when somebody says, and how's it going, you have the courage to say it's heart. Haven't figured it out yet. I don't know. But if you figure it out and you have this moderate growth, moderate compounding that is the key. That is like that's gold.
Chamath Palihapitiya You know, I look at like our returns and it's so funny because it's like, you can get so ent by Irr in our business. And like, you know, I have I have friends who run other organizations and they're like, we posted 92 percent Irr. And I'm like, well, you can't eat Irr. What does it really mean? And when you unpack what you realize is like fast money returns can completely really decay long term thinking and sound judgment.
Chamath Palihapitiya And so I'm like, wow, I would really love to just compound at 15 percent a year. And the reason is because if I can do that for 50 years, that's 250 fucking billion dollars, Like, some I'm crazy number, Like, it's just an enormous. So it's like, slow and steady against hard problems. Start by turning off your social apps and giving your brain a break. Because then you will at least be a little bit more motivated to not be motivated by whatever everybody else fucking thinks about you.
Chamath Palihapitiya You know what I'm saying? It's hard. Think about how all this stuff plays together. How does trying to get, you know, posting your fucking waffles. Online relate to me starting a business and accumulating capital?
Chamath Palihapitiya This is wiring your brain for super fast feedback. It's the same brain you're using to build a company. Don't think they're not the same. Do you know what I'm saying? No, Yes.
Chamath Palihapitiya No. Yes. Yes, Right? You have 1 brain. So you're training your brain here, whether you think it or not, whether you know it or not, whether you acknowledge it or not, acknowledge that these things where you're spending hours a day are re wiring your psychology and physiology in a way that now you have to use to go and figure out how to be productive in the commercial world.
Chamath Palihapitiya So if you don't change this, you are gonna to get the same behaviors over here. Change this. There's a reason why Steve jobs was like anti social media. I am telling you I'm not on these fucking app. I'm not him by any stretch of the imagination, but I am proactively trying to rewire my brain chemistry to not be short term focused.
Chamath Palihapitiya So I'm Telling You They're Linked.
n/a