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Chamath Palihapitiya, Founder and CEO Social Capital, on Money as an Instrument of Change — Transcript

by Stanford Graduate School of Business · 9,591 words · 1,311 segments · language en · Watch on YouTube

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0:00[Music]
0:04thank you so much for being here thank
0:06you for including me so excited to dig
0:08into that career and your thoughts on
0:11the valley and I'm gonna start us off
0:13with one of the things that jumped out
0:15at me in my prep for this interview okay
0:17you are an extremely generous tipper
0:21yeah I love that and I would like to
0:25know why I mean it's pretty I worked so
0:31I mean it's well known and part of why
0:34I'm so open about this is that I think
0:36it gives permission for other people
0:38just to be honest I grew up in a very
0:40kind of dysfunctional household on
0:43welfare and that compounded a bunch of
0:47[ __ ] in my life that was not great we
0:51were very focused on money
0:53it was a huge point of pressure and
0:56tension in the family it created massive
0:58depression in my father drinking just it
1:01was very dysfunctional and there was
1:04some point along the way where I was
1:06like okay is money like really important
1:08or not important and I feel very lucky
1:13because I don't think if you ask my
1:15sisters they got to the same place that
1:17I did but I ended up not coveting it and
1:20I found it to be something that I could
1:24use to really empower myself to do the
1:26things that I wanted to do and so in a
1:29situation where you know you go to a
1:31like a restaurant if you really
1:34empathize with the people that are
1:35working there I see people who are like
1:38me brown skinned working hard creating
1:44these beautiful experiences and then I
1:47can celebrate it by you know I guess
1:50giving a yelp review but you can't buy
1:52food for your kids with a [ __ ] yelp
1:54review so I want a tip and it's it's so
2:01I mean on it gives me so much joy
2:04because it's like you know you'll have
2:06like a three or four hundred dollar bill
2:08in some cases you know you tip five
2:10hundred bucks or a thousand bucks and
2:12you
2:13and they're expecting $40 and I mean
2:17then I'll get a little motion about like
2:20they will come out to you and there it's
2:22transformational and so it's such a
2:25great it's so great it's just like
2:27little things like that mean a lot to
2:29people and just to be anonymously
2:31generous like that I think is like it's
2:34a great gift that I have the ability to
2:35do that's why I do it I love it and it
2:37sounds like the experience of being seen
2:40and get you are seen and the individual
2:43is seen and you're sharing and well I
2:44mean you know it's funny it's like 99%
2:47of the time they don't say anything
2:48because they they do the build thing
2:50afterwards and they for sure can't
2:53pronounce my name
2:53and so they for sure have no [ __ ]
2:55clue who it was I gave them that it's
2:57fine it's totally fine but I love it
3:00I absolutely love it my friends freak
3:03out now it's cause tension of she
3:05because now when I go out with my
3:07friends they know as well and I've just
3:09made it very easy which is like hey if
3:11we're going out just like let me just
3:13[ __ ] pay just like it's just not it's
3:15it's not it's fine
3:17and it makes it simpler yeah I want to
3:21dig into what you were describing about
3:22your upbringing and this unique position
3:25that you've gotten to where you don't
3:26feel that you covet money but you see
3:29its power and they use that it has in
3:31furthering some opportunities for you
3:33how did you develop that how do how do
3:37you distinguish between luck and skill
3:38how do you how do you end up in that
3:40position so I my parents craved money
3:47meaning they needed it because it was it
3:52my dad was unemployed for long stretches
3:54of time my mom was a sole breadwinner
3:57she was a housekeeper then she was in
3:59nurses aide and so and you and I would
4:02just see how she grinded we didn't have
4:05a car for a long time she takes the bus
4:07we all take the bus at you know when
4:10I've got my first job as a Burger King I
4:11take the money and I'd had to give it to
4:13my parents and we would buy bus passes
4:15and you know I remember telling like
4:18some of my friends I went to a very good
4:20high school like kind of like the rich
4:22high school not the high school I should
4:23have gone to I got I was able to go to
4:25this different high school
4:26and I would remember tell I would tell
4:27them like hey this is like yeah I you
4:29know I they I would be so ashamed that I
4:31worked at Burger King they would
4:34sometimes come by and I would just be
4:36like oh [ __ ] like and then at some point
4:39it was just it was like this release
4:41moment where I was like this is my life
4:43like I just I can't do anything about it
4:45this is what it is right now and I kind
4:49of had a sense that I could figure some
4:50stuff out later but I didn't really know
4:52and so I just accepted it and then the
4:54minute I accepted it I wasn't ashamed
4:56anymore and then when I wasn't ashamed I
4:58could start to actually be inside my
5:00head like what really matters so then
5:02what happened was there was these
5:03massive racial riots in Los Angeles and
5:05not as if the [ __ ] American
5:07government did anything about it but the
5:09Canadian government was like [ __ ] let's
5:11get all these black and brown kids jobs
5:13because we don't want the Rodney King
5:15riots in Toronto and Ottawa and parts of
5:18Ontario and so I was able to take all of
5:21my dad's rejection letters call every
5:23single one and one of them gave me a job
5:25and I worked at this well-known
5:27telecommunications start-up in Ottawa
5:28Ottawa had a really burgeoning tech
5:30scene at the time and I worked in this
5:33organization that was run by this really
5:34iconic guy Terry Matthews and he was a
5:37billionaire and I was like what the [ __ ]
5:39is that worth like I mean I didn't even
5:42know [ __ ] thousandaire like I was
5:44like what is a billionaire and this guy
5:48was risk-on and he was just so dynamic
5:55in the businesses he had started and how
5:59he viewed his place in the world and I
6:01was enthralled I was nine degrees away
6:04from him but the cult of personality
6:06around him in that business the lore
6:08when it trickles down to you was not
6:10about you know his conspicuous
6:15consumption or anything else it was
6:16about okay we're launching this frame
6:18relay switch now we're gonna buy this
6:20company okay we're gonna pivot the
6:22entire business to ATM and you were just
6:24like it was an amazing time and so I
6:30took the bus to Newbridge complete luck
6:35that the controller of Newbridge
6:39would go from his nice neighborhood
6:41through this shitty neighborhood to get
6:43on the highway and so he would see this
6:45guy standing by the bus and eventually
6:48he saw me inside the office and one day
6:50he stopped he said your honor right you
6:52work in Newbridge I'm like yeah this guy
6:54Sam leg so in the car he was just he was
7:00in the front seat like beside Terry and
7:02he was able to tell me like how this guy
7:05thought about this I was like because I
7:06would read it in the paper and I'd be
7:08like why is he doing this and like and
7:09he so it just completely rewired what
7:12money was for Terry Matthews money was
7:15an instrument of change right he had a
7:17market cap he's like wow that's eight
7:19billion dollars of change ten billion
7:21dollars have changed fifteen billion
7:23dollars of change versus there was
7:25another guy building a company at the
7:27time his name is Michael Copeland who
7:29ran a company called Carell also a
7:31billionaire and he was the exact
7:35opposite had a messy divorce married
7:37some trophy wife he took this obscene
7:41shiny glass from his building and
7:43covered his house in it and so you had
7:46this this really dislike ah to me of two
7:48different characters at that time in the
7:5090s building really interesting
7:53businesses Corel which was a reasonable
7:54business Newbridge which was a
7:56reasonable business they were both very
7:58successful but they manifested money so
8:01totally differently and I was like I
8:03want to be this guy you know I want to
8:05be this mega compounder swashbuckling
8:08around trying to do really cool [ __ ] in
8:10the world how do I do that and Sam
8:13helped me because it was just like you
8:15you could understand from him what Terry
8:17cared about and then for me I just
8:19copied I mean a lot of my life quite
8:21honest he's just copying things that I
8:22see there's not a lot of original
8:24thought here it truly is not I mean we
8:27can all pretend we're all [ __ ]
8:29geniuses honestly be good copiers do you
8:32know what I'm saying
8:33it's the best thing in the world like be
8:36around high functioning high quality
8:39people and just copy the [ __ ] that they
8:41do observe the [ __ ] that's you know kind
8:45of crappy and then don't do that stuff
8:47it's not [ __ ] complicated formula
8:52when did you use that best no all the
8:55time
8:55I mean look now it's funny like it's
8:59it's like you know like you have a
9:00surface area of ways to spend your time
9:02now or I do and you know I'm in this
9:05midst now where we are really scaling up
9:07what we're doing as a business and I
9:10meet these people that to me are so
9:13iconic that they were sort of like arm's
9:16length people that are now sitting
9:17face-to-face and they treat me like a
9:21quasi periodic quasi pure but what I see
9:25is I see some amazing stuff and I see
9:29some utter dysfunction in some of the
9:31richest most important people in the
9:33world and I have to decide how am I
9:36going to act what am I going to embody
9:38what am i copying what am i not copying
9:40and so I get a chance to now refine my
9:46decision-making and discipline and it's
9:50so that that's how I that's how it plays
9:52out I don't know if I answered questions
9:53I I'm I'm thinking very there's a deep
9:57connection between money as an
9:59instrument of change and what you're
10:00doing now so here's the thing there's
10:02about a hundred and fifty people that
10:03run the world anybody who wants to go
10:06into politics
10:06they're all [ __ ] puppets okay
10:10there are a hundred and fifty in there
10:13all of men that run the world period
10:16full stop they controlled most of the
10:19important assets they control the money
10:20flows and these are not the tech
10:22entrepreneurs now they they are going to
10:25get rolled over over the next five to
10:27ten years by the people that are really
10:29underneath pulling the strings and when
10:32you get behind the curtain and see how
10:34that world works what you realize is it
10:37is unfairly set up for them and their
10:39progeny now I'm not going to say that
10:42that's something that we can rip apart
10:45but first order of business is I want to
10:48break through and be at that table
10:49that's the first order of business and
10:51the way that I do that is by proving
10:54that I can do what they do as well as
10:57they do it and then do it better than
11:00how they do it because at the end of the
11:01day they are commercial [ __ ] animals
11:03okay and they'll open the door out of
11:07curiosity and they'll let me stay
11:08because I because I add value and then
11:10once I'm there I can open the door for
11:12other people who can try to do the same
11:13thing so my entire goal now is that is
11:16to be in a position to aggregate enough
11:19of the capital of the world
11:21- then reallocate it against my world
11:24view and I'm not saying my world view is
11:26the best or right but it is mine and at
11:30the end of the day there are a hundred
11:31and fifty other [ __ ] guys with their
11:32world view and they don't give a [ __ ]
11:34what you think about their [ __ ] world
11:36view that's the truth and so why not me
11:42why not why not one of you why not and
11:46so in my life now I'm just kind of like
11:48why not why the [ __ ] not
11:53what can you tell us a little so you
11:59have these 50-year goals for social
12:02capital yeah three of them yeah can you
12:04give us your world view in through those
12:06goals so my 2045 ambition for the
12:12organization this is as I see it right
12:14now 2045 is I would like us to employ at
12:18least 10 million people through the
12:20businesses that we own I would like our
12:24businesses to positively affect at least
12:27a quarter of the world's population and
12:29I would like us to have made cumulative
12:32Li about a trillion dollars that's my
12:352045 ambition I think if we do that we
12:39are the modern face of capitalism for
12:41the next 50 years so how we do that now
12:45becomes really important so if you think
12:47about building businesses and today that
12:50could do any of those three things you
12:53have to be technological you absolutely
12:56just have to be you are not going to
12:58build a brick and mortar business that
13:00gets anywhere close to those three
13:01things number one number two is you have
13:05to think very broadly about building
13:08things that can stand the test of time
13:09those businesses are by definition hard
13:12and non-obvious and so they compound in
13:15scale very slowly and that's really
13:18counterintuitive to the overriding logic
13:20of Silicon Valley which says quick fast
13:23go right but that kind of premature
13:25ejaculation doesn't work if you're
13:27trying to [ __ ] be around forever like
13:29you've got to be in the flow for decades
13:33that is hard it tests people's patience
13:36it tests people's resolve it tests
13:39people's really intellectual incision
13:41and this is where everybody gives up
13:44everybody gives up I had this moment
13:46today just a total different way of
13:50describing this through the warriors
13:53I've met a lot of players obviously one
13:55of them who I become unbelievably close
13:56to as David Lee David Lee just got
13:59engaged to this unbelievable woman
14:01Caroline Wozniacki
14:02tennis player anyways we were working
14:05out this morning okay
14:06couples workout me and my wife him and
14:08him and his fiance so we're doing this
14:11thing this treadmill thing which my
14:13trainer would concocted and I mean I
14:16mean I'm in pretty good shape and then
14:19you see what it really means to be
14:22extremely dedicated in their case to
14:25something which is physical fitness
14:26because they're professional athletes
14:28when I give up but when the average
14:31human gives up their brain goes into
14:34[ __ ] overdrive okay and they're like
14:37there's this next level burst and so
14:40like it's it's that it's like when when
14:43things get hard can you double down a
14:45different example we had yesterday we do
14:48these things every quarter called
14:49quarterly portfolio reviews we're
14:51incredibly intensive review of our
14:53entire portfolio revisiting our strategy
14:55talking about all the things we're doing
14:57to make sure we're on the right track
14:58and I had this observation which was I
15:01started a diabetes business my dad died
15:03of diabetes three years ago most of my
15:05relatives have it I expressed the gene
15:07that makes me disproportionately
15:09susceptible to it so it's something that
15:11I personally care about but that
15:14business took seven years to get to a
15:18place where we even have a chance of
15:20being viable and I think to myself in
15:23that example I embodied a bit of
15:26Caroline Wozniacki when things got hard
15:29I pushed through the pain now in my case
15:32the pain was the fear of failure
15:34continuing to write more money a belief
15:37that I had that this business was going
15:38to work and today that business manages
15:41a million diabetics and I think there is
15:43some kid out there whose family will be
15:46slightly less dysfunctional because
15:49their parents disease is better managed
15:51it's not going to go to a place where
15:53like you know they're getting dialyzed
15:54or you know they're on an organ registry
15:56and that value for that kid in our world
16:00and all of you that benefits will never
16:02be connected the dots but that's okay
16:04but it required just resilience and I'm
16:09proud of that yeah and so I want to
16:11bring back a little bit of that here so
16:15that it's not quick fast five million
16:18users ten million
16:19flip it sell it great celebrate it's
16:23like hey let's work on some hard [ __ ]
16:24together let's like buckle down and look
16:27each other in the eye and say we're
16:28gonna support each other here this gonna
16:29take seven or eight years but if it
16:31works it will really mean something and
16:34it's something that matters to you for
16:36something that's other than just simple
16:38motivation of the social capital you get
16:41from your friends or money in the short
16:43term and winning bigger longer-term
16:46we're missing that and I think like part
16:49of our success will be if we can stay
16:51focus on that our education portfolio is
16:53another thing it literally looked like a
16:56train wreck for three years where
16:58everybody has always said you never
17:00invest in education and my thing was
17:02it's not about education this is about
17:04human capital development it's about for
17:06every one of you who's so smart that got
17:09into Stanford think of all the people
17:10who could be as capable I'm not asking
17:13you to empathize with them but I as a
17:15capitalist want a starting line where
17:18all of those people can run a race so
17:19that I can pick the winner no offense to
17:22any of you here and it took us three
17:26years we're now those building blocks
17:27exists and I'm like wow how many times
17:31did have to look at my partner's is they
17:32know the easy answer is to walk away the
17:35hard answer is to double down we have to
17:36support this business that culture is
17:39missing here so part of what we're
17:41trying to do to achieve those goals is
17:43like take really big audacious points of
17:46view on the world and then train
17:48ourselves to be patient and it's really
17:50really hard the entire society is set up
17:53to not be patient anymore and I'm
17:55hearing also a conflict with this like
17:58fail fast and learn mentality where if
18:02if you're taking a deep and big bet like
18:05you want it to be the right one how do
18:08you know when that's true I think that
18:11that's fail-fast approach works in
18:13consumer internet businesses but I don't
18:15think it works for anything that really
18:16matters
18:21basically consumer internet businesses
18:25are about exploiting psychology and that
18:29is one where you want to feel fast
18:30because you know people aren't
18:32predictable and so we want to
18:33psychologically figure out how to
18:34manipulate you as fast as possible and
18:37then give you back that dopamine hit we
18:39did that brilliantly at Facebook
18:41Instagram has done it whatsapp has done
18:43it
18:43you know snapchat has done it Twitter
18:45has done it so there are great examples
18:47we chat has doing it there are great
18:49examples of failing fast is the right
18:51path to exploiting psychology of mass
18:53populations of people but it is not how
18:56you solve diabetes it is not how you use
18:58precision medicine to cure cancer it is
19:00not how you educate broad swaths of the
19:02world's population it's just not it's
19:04taking a point of view and being
19:06methodical nothing heart no it's hard
19:12I'm glad that you're taking a stab at it
19:14by the way if it works it's where all
19:16the money comes like if you talk about
19:19where all of the gains where all of the
19:23value will be created over the next 50
19:25years it'll be in those heart things and
19:27the reason is because those white spaces
19:29are so wide open the competitive
19:32pressures are non-existent for example
19:34today you have this weirdly academic
19:38argument about climate change it exists
19:41it doesn't exist while we were in an ice
19:43age now it's one of course you're who
19:45care who cares what's undeniable is that
19:49we're ripping apart the biodiversity of
19:51our planet what is undeniable is that we
19:54as a human population will be forced to
19:55concentrate because certain parts of the
19:58world will get basically you know
19:59subsume by water we do not have food
20:03supplies that these are conclusively
20:05known to be true yet nobody's really
20:08working on a problem and part of it is
20:11because the people won't have the
20:13ambition to try to go after it the
20:14capital markets don't reward that kind
20:16of decision-making but if somebody were
20:19to solve it don't you think that they
20:21are in economic terms a multi
20:23trillionaire of course you think food
20:27delivery is where like the next great
20:29[ __ ] breakthrough is gonna come
20:31you're all hopped up on [ __ ]
20:33marijuana and you need a [ __ ] brownie
20:35like what a joke okay go ahead go and
20:40look through crunchbase not that shitty
20:41useless idiotic companies that have
20:43gotten funded doing garbage like that
20:44versus climate change think about that
20:48think about that think about that when
20:50you guys eventually find your partner
20:52your significant other your husband your
20:54wife you get married you have kids you
20:56will not be able to hand off a planet
20:58that they can predictably live in you
21:01will not your generation and nobody is
21:04[ __ ] doing anything about it so the
21:07capital markets work just completely
21:09completely out of their minds and so I
21:16[Applause]
21:22want to bring us back to the point that
21:24you were making about exploiting
21:26consumer behavior in a consumer internet
21:28business you said that this is a time
21:30for soul-searching in social media
21:32businesses and and you were part of
21:34building the largest one what
21:37soul-searching are you doing right now
21:38on that I feel tremendous guilt I think
21:44we I think we all knew in the back of
21:47our minds even though we feigned this
21:50whole line of like there probably aren't
21:52any really bad unintended consequences I
21:55think in the back deep deep recesses of
21:59our minds we we kind of knew something
22:03bad could happen but I think the way we
22:05defined it was not like this it
22:08literally is a point now where I think
22:11we have created tools that are ripping
22:13apart the social fabric of how society
22:16works that is truly where we are and I
22:20would encourage all of you as the future
22:22leaders of the world to really
22:24internalize how important this is if you
22:28feed the Beast that beast will destroy
22:30you if you push back on it we have a
22:33chance to control it and rein it in and
22:35it is a point in time where people need
22:38to hard break from some of these tools
22:41and the things that you rely on
22:44the short-term dopamine driven feedback
22:47loops that we have created are
22:49destroying how society works no civil
22:54discourse no cooperation misinformation
22:57miss truth and it's not an American
23:00problem this is not about Russian ads
23:02this is a global problem so we are in a
23:07really bad state of affairs right now in
23:09my opinion it is it is eroding the core
23:13foundations of how people behave by and
23:16between each other and I don't have a
23:19good solution you know my solution is I
23:21just don't use these tools anymore I
23:23haven't for years it's created huge
23:25tension with my friends
23:26huge tensions in my social circles if
23:30you look at like you know my facebook
23:32for you I probably haven't I posted
23:33maybe two times in seven years three
23:35times five times like just it's less
23:37than 10 and it's weird I guess I kind of
23:43just innately didn't want to get
23:44programmed and so I just tuned it out
23:47but I didn't confront it and now to see
23:50what's happening it's really it really
23:52it really bums me up like think about
23:55like there were these examples where
23:57there was a hoax in whatsapp where in
24:03some like village in India people were
24:06like afraid that their kids were gonna
24:08get kidnapped etc and then there were
24:11these lynchings that happened as a
24:13result where people were like vigilante
24:15running around they think they found the
24:16person and they I mean I mean seriously
24:22like that's what we're dealing with you
24:26know and imagine like when you take that
24:28to the extreme where you know bad actors
24:31can now manipulate large swaths of
24:34people to do anything you want it's just
24:39a it's a really really bad state of
24:41affairs and we compound the problem
24:45right we curate our lives around this
24:49perceived sense of perfection because we
24:51get rewarded in these short-term signals
24:54hearts likes thumbs up and we conflate
24:56that with Valley
24:57and we conflate it with truth and
25:00instead what it really is is fake
25:02brittle popularity
25:04that's short-term and that leaves you
25:06even more and admit it vacant and empty
25:09before you did it because then it forces
25:12you into this vicious cycle where you're
25:13like what's the next thing I need to do
25:15now because I need it back
25:17think about that compounded by two
25:19billion people and then think about how
25:21people react then to the perceptions of
25:23others it's just a it's really bad it's
25:27really really bad
25:28it sounds like you're taking deep
25:30personal responsibility also in and
25:32being a part of it I kind of look I did
25:36it I did what I did a great job there
25:38and I think that business overwhelmingly
25:41does positive good in the world where I
25:44have decided to spend my time is to take
25:46the capital that they rewarded me with
25:48and now focus on the structural changes
25:50that I can control I can't control that
25:53I can control my decisions which is I
25:54don't use a [ __ ] I can control my kids
25:57decisions which is they're not allowed
25:59to use this [ __ ] and then I can go focus
26:03on diabetes and education and climate
26:05change that's what I can do but
26:08everybody else has to soul-search a
26:09little bit more about what you're
26:11willing to do because your behaviors you
26:13don't realize it but you are being
26:15programmed it was unintentional but now
26:21you got to decide how much you're
26:22willing to give up how much of your
26:23intellectual independence and don't
26:25think oh yeah not me I'm [ __ ] genius
26:28I'm at Stanford you're probably the most
26:30likely to [ __ ] fall for it
26:33because you were [ __ ] check boxing
26:34your whole goddamn life no offense guys
26:38none taken
26:44so how I mean you've been outspoken
26:47about the Trump to administration's
26:49position on immigration on on a number I
26:52mean these things are gonna collide in
26:54government and business right that's
26:55happening now yeah so what what do you
26:58want these future business leaders to do
27:00about it once they get into that spot
27:02get the money get the money and then
27:07let's get around a table and let's
27:09create new rules literally that simple
27:12get the [ __ ] money I'm serious do not
27:17get it it is gonna be made it is going
27:21to be allocated and you have a moral
27:24imperative to make sure that if you have
27:25a point of view that matters and you
27:27want to reflect it you get it I'm gonna
27:31go get it other people are gonna go get
27:34it and then it will be about a
27:35competition of views and don't wrap
27:40yourself in all this like you know
27:42liberal kind of [ __ ] about oh my god
27:44money blah no stop here's how the
27:47[ __ ] world works okay it drives the
27:50world for better or for worse economic
27:54incentives Drive entire swaths of
27:56populations to behave in very very
27:58predictable and then when you when you
28:02take it away unpredictable ways ask
28:06anybody in your class that's from a
28:07developing nation ask anybody in your
28:10class like who has seen that play out
28:12from where they're from so that's what
28:16you have to do you gotta go and get it
28:18if you control the capital and you have
28:21a point of view you can now then the
28:23question is don't be a sellout whatever
28:28your worldview is you should be spending
28:30time to think about what that is so that
28:33when you control some of these purse
28:34strings you push that view into the
28:37world I will never judge you and you
28:40should not judge me for what that
28:42worldview is but the point is the more
28:45diversity of those views
28:46the more rational actors we have and the
28:49more of a balanced fare system that is
28:52what diversity really means to me it
28:56doesn't mean like let's manage back to a
28:58quota you know it doesn't mean like okay
29:01we need a black guy a brown guy we need
29:03a few that's not what it means this is
29:05what it means right there are people in
29:09this audience that have probably dealt
29:11with the same kind of like life that
29:14I've dealt with you have a very unique
29:17world view that matters and in the
29:19absence of capital you're irrelevant
29:22with capital you're powerful and then
29:28you decide in small ways and
29:31medium-sized ways and large ways right
29:33and it just depends on the scale of
29:36capital that you have and so that's
29:38what's necessary now in capitalism which
29:40is that we have to come back to like
29:42what is it really is it an economic
29:45system yes but it is a philosophy as
29:47well right and it's a philosophy that
29:50says we will vote for the change we
29:53intend based on the views that we have
29:56and when you look at the most successful
29:58people that operate in these tentacles
30:01that's what they do look at the Koch
30:04brothers that's what they do they have
30:06built a network of influence based on
30:10capital their world view is propagated
30:13into the world at an unbelievably
30:15aggressive rate that has been
30:17compounding for decades that is genius
30:21it is genius it doesn't matter whether
30:24you agree with their worldview the
30:27question is what's the counterweight to
30:29their worldview can you name what can
30:33you name a group of people that operate
30:35in the exact same way methodically
30:39meticulously assembling Capital
30:41influence assets who believe the
30:44opposite irrespective of what you think
30:47of the koch's you want both views out in
30:50the world at scale well right now you
30:53have this and you don't have this and
30:56there are many examples of that and so
30:59get the money and don't lose your moral
31:05compass when you do you said that you
31:07think VC is a horrendous allocator of
31:10capital so if we need to go get the
31:12capital how do we do it better
31:17well we're chipping away I think other
31:19people will copy us you know venture is
31:23basically just a bunch of soulless
31:25cowards you know like they're all
31:31they're all just kind of look they're
31:33well-intentioned but they're
31:37well-intentioned soulless cowards they
31:41have fallen for what everybody else
31:44falls for which is not which is which
31:47you can't blame them for which is here
31:50is this gold star and they're like wow
31:53I've gotten a gold star and then the
31:55minute you do that what you do is you
31:57start to just choke it really tight and
31:58you're like I don't want to lose this
32:00gold star and then what happens you go
32:03risk-off and then what happens your
32:06behaviors are about protecting the seed
32:07of power that you have the social
32:09definition that that seat affords you
32:12and so now instead of being an
32:14accelerant of a progressive worldview
32:16you become a retardant to a progressive
32:18worldview right your risk appetite
32:21shrinks the surface area in which you're
32:23willing to make decisions shrink you so
32:25you you eat and when you are a critical
32:27part of the future again going back to
32:29how I started the most important part of
32:31capitalism is going to be the folks that
32:33are driving the technological change
32:35well as a class that's what VCS are
32:37supposed to do but they're by and large
32:39in my opinion the wrong people so how do
32:43we do it you have to make it more
32:44systematic you have to make it more
32:46data-driven you have to strip out the
32:47bias you have to be open 24/7 you know
32:51you can't have these dumb rules of like
32:52oh I only do deals if they're like
32:54within 15 you know miles driving
32:56distance like how can the most important
32:59part of it
33:03I mean did you can you imagine if I
33:05walked in to Zach's office Facebook
33:07board I'm like I have a great [ __ ]
33:08idea
33:09Facebook is only going to be open for
33:11business Monday through Friday 10:00 to
33:165:00 kids want to get home
33:18summers we're gonna take off and so the
33:21pitch is going to show like a 404 page
33:23and if you make sense like over like
33:28Google you know you we only want you to
33:30search during business hours and so you
33:35know you have so you have to be open for
33:38scale you have to be global you have to
33:39do all of these things so that you can
33:41get the money into the hands of the
33:43people that deserve it and then help
33:46them and by helping them what you have
33:48to do is actually address the core
33:50structural parts of business building
33:52that are not done well today and the
33:54best analog is AWS if you were starting
33:58a business 15 years ago I can even tell
34:00you a decade ago we were racking servers
34:03in our data center because the growth
34:06was great and somewhere along the way
34:10Amazon said you know what all of that
34:12complexity is necessary but it's not
34:15sufficient to building Facebook or any
34:16other great company so let me abstract
34:19that for you let me go and replace all
34:21of those good people with an API and
34:24I'll take those good people and they'll
34:27be celebrated at Amazon and initially a
34:31few people said yes and you know people
34:33thought in 2007 AWS was a joke and we
34:36used to laugh at it we're like why would
34:38anybody do this stuff and now see how
34:40fast the decade later you're on the
34:43other side of the fence if any come any
34:44of you guys start a business and you're
34:45not on AWS you would be at the joke
34:48right so what did they do they basically
34:52said here's all this stuff that's
34:53necessary to building a business you
34:56need to do it you probably don't want to
34:59do it you're probably not going to do it
35:01well and so let me just replace it all
35:03with an abstraction your company can be
35:05smaller leaner more efficient and now
35:07the money you raise can be used for
35:10things that approximate core product
35:11value better okay now in 2017 asked the
35:15same question
35:16what's the next set of things that make
35:18sense and in my opinion what we
35:20uncovered at Facebook is what every
35:22company needs which is how do you shift
35:24from an anecdotal political capital
35:28social capital oriented way of making
35:30decisions aside a company to a very
35:33precise unemotional data-driven process
35:35and the way you do it is by building a
35:38bunch of data infrastructure by
35:39collecting a bunch of data itself by
35:41helping you optimize your business in a
35:43bunch of obvious and non-obvious ways
35:45and so what we believe is that we should
35:48take that capability that that my team
35:50built at Facebook and abstracted for all
35:52of you who intend to start a company so
35:55now in the future what should happen is
35:57you'll go to AWS you'll get some
35:59infrastructure you'll go to social
36:01capital comm and you'll get some
36:02insights and knowledge and it's all
36:04interacting via api's it's all in
36:07interaction via endpoints and primitives
36:09and what happens is we can now learn
36:13from the feedback from your data how
36:16you're doing we can merge those
36:18learnings across many many other
36:19businesses we can find things in some
36:22remote part of some company over here
36:24and translate that as value for you over
36:28here wouldn't you want that
36:29of course you'd want that you know what
36:32if we could do more efficient customer
36:34acquisition what if we could figure out
36:35churn better what if we so all of these
36:37things now are what we are going to
36:39bring to the market systemic
36:41capabilities and I think over time what
36:44that does is again it moves to a much
36:45more progressive view of what capitalism
36:47should be it's not the few that matched
36:51a human driven pattern but it's more
36:55about taking big shots scaling up the
36:57money being able to support people in
36:59structurally predictable ways and
37:01allowing them to build better companies
37:02those companies I suspect will be as
37:05profitable but they'll be smaller
37:06they'll be more efficient they'll have
37:08more revenue per head all the things
37:10that you would want over time so that
37:12instead of having four or five mega
37:15companies you could have millions and
37:16millions and millions of smaller better
37:18run companies and that's my worldview
37:21and I think if we do that we achieve our
37:23goals
37:24we kind of focus on hard product all of
37:26that stuff comes together if we enable
37:27that so what you're seeing from us is
37:29that
37:30it's really upsetting and disconcerting
37:32to the established sort of venture
37:34classes because it up ends how they've
37:37defined their value it's a very classic
37:39inventors dilemma right they are like in
37:42my brain is pattern recognition but we
37:46know that that's not true and the data
37:48shows you that that's not true
37:49you know simple question for all of you
37:51guys that love the lore of Silicon
37:52Valley from the 70s when Microsoft was
37:56founded - now if you look at all the
37:58major companies that have been created
38:00major say over 50 billion over 60
38:03billion what percentage of the series a
38:06investors overlapped you did the a of
38:09Microsoft and you did the a of Google or
38:11you did the a of uber right like we're
38:14pattern recognition again you know it's
38:16non-numerical right it's about like wow
38:18I like the cut of this guy's Jim you
38:20know well the answer is it's it's less
38:25than 2% so what does that mean
38:29everybody's bullshitting that's what it
38:31really means right
38:32if you're in a seat and you have good
38:36deal flow and you have precious capital
38:38and there's a massive tailwind
38:41of technological change over time you
38:45get one of the twenty hang you look like
38:46a genius that's basically what's
38:48happening and nobody wants to admit that
38:51but that's the [ __ ] truth it's the
38:57truth
38:58so if anybody looks at you and tells you
39:00they know what the [ __ ] they're doing
39:01they're lying they're lying they are
39:04lying to themselves at a minimum and at
39:07a maximum they're lying to you because
39:10the data does not support that claim and
39:13that's irrefutable so I don't want to be
39:17one of those people that stumble into a
39:19company and look back and like oh yeah
39:20we were geniuses I want us to be
39:23systematic and I want us to be able to
39:26deploy tools and capabilities that get
39:28us closer and closer to that and that is
39:31what if you're again a traditionalist
39:33freaks you out and that's what allows
39:36you to make these much longer-term
39:38commitments to businesses that are going
39:40to address healthcare education
39:43no I've got that's just because I'm rich
39:44but no I mean is it to be honest like I
39:48I don't need anybody else's money that's
39:50like look this is not like a popular
39:52view so the first [ __ ] billion
39:56dollars is mine and then I have to prove
39:59it and then other people glom on but I
40:02mean many of them started by caring but
40:06I suspect over time if we end up with a
40:08hundred two hundred five hundred billion
40:10dollars
40:10how much of that last 5060 percent
40:12really care that's okay I want the
40:16[ __ ] money I will play the goddamn
40:20game you know win because I want the
40:23money because I want to extend my
40:26influence do you know what I'm saying
40:27yeah they want to return it's fine
40:30he wants the money because I want to win
40:35I I so deeply want to win how I'm just
40:43gonna say this exactly as it's coming
40:44how do you keep that power from
40:47corrupting you I have no idea that's the
40:52honest answer I have no idea I've become
40:58increasingly isolated it's harder and
41:02harder for me to connect because I'm so
41:04in my own mind like how does this all
41:07play out you know how do i how do i
41:10fundraise how do I make how do I help
41:12facilitate good investing decisions
41:14which really means how do I help this
41:15great team think about a more platform
41:18eyes approach and in that I just get
41:21really isolated and so I don't have a
41:25good answer I like things like this and
41:29I I like to say the things that I do and
41:32maybe it helps you in your own lives but
41:36to be honest it's very selfish it helps
41:37me because like it reminds me of when
41:40I'm in a place like it reminds me of
41:42these stories like just reminding myself
41:44like I made 455 an hour Burger King I
41:48would get a $50 check and I'd buy bus
41:50passes that's awesome I just I don't
41:53ever want to forget that
41:55and I'll go months and not remember that
41:58but now as I say it I'm like okay I'm I
42:01was I started a good earnest person and
42:03I need to stay a good earnest person so
42:07I don't have a good answer and I'll tell
42:10you of those 150 people maybe it's a
42:12little bit more but I've met a lot of
42:14them it's it's it's really hard you it's
42:18very easy to end up really drunk with
42:24power it's really hard yeah I really
42:30appreciate that candor because I don't
42:32think that we get it very often and
42:35you've laid out an incredible vision for
42:38money as an instrument of change so I'm
42:41really grateful that you were here to
42:42share it with us today thank you and
42:44we're gonna open it up now to questions
42:47I'm sure that there are many follow-ups
42:49on what you've explored but any feedback
42:55[Applause]
43:09hi I'm Dana I'm second year MBA at GSP
43:13thank you for being with us today but
43:16I'm not here to give feedback but I have
43:18a question for you you just took social
43:21capital Quito Sophia topic
43:23I wonder what's your plan to run this
43:25public fund how would that be different
43:27from running a private fund or it's just
43:30another way to get money
43:40so awesome yes but no uh so one of the
43:50things that I think about a lot is if I
43:53am in a position to reshape I've been in
43:56a position where I was a part of a group
43:57that helped shape psychology of society
44:00that's been a great experience and and
44:02and I learned a lot and so now in this
44:04position what I say to myself is what
44:06are the psychological things I'd love to
44:08change now and one of them is around
44:10this idea of patience and what's
44:12counterintuitive and I said this earlier
44:14when we were just talking is that I
44:15think bringing liquidity into companies
44:19sooner will actually allow companies to
44:23bake longer and more patiently and so
44:26part of what this vehicle is is about
44:28bringing liquidity sooner in a company's
44:30life cycle because if we can take this
44:32company use it to acquire something else
44:34and that CEO is now able to compensate
44:37their employees as counterintuitive as
44:40it sounds I suspect that they are less
44:41likely to leave and so now you could
44:45have employees stay at a business for
44:46seven eight nine ten years which used to
44:49be the historical norm and now it's not
44:52most of you probably are thinking to
44:56yourselves well I'm gonna get a great
44:58job at the JI after the GSB but I should
45:01probably portfolio manage my my career
45:03for the next six or seven years 18
45:05months here 18 months there 18 months
45:07there and then I'll decide what I really
45:09want to do and part of it is because
45:11there's an incentive to sort of like
45:14build this kind of portfolio approach
45:16but I suspect if you knew that liquidity
45:18was sort of like a more traditional
45:20predictable thing many people would
45:23actually say you know what I like these
45:24people here I like the mission of the
45:25company I want to continue to help
45:27advance their goals and now that you've
45:29actually you know solved my compensation
45:31problem I'm willing to commit so part of
45:34this vehicle is trying to turn back the
45:38incentives towards people staying at
45:40companies longer which i think is going
45:42to be required if you're gonna try to
45:43solve hard problems because if right now
45:45the Silicon Valley attrition rates in
45:47most companies twenty percent that means
45:49every five years your entire employee
45:50base is turned over think about that how
45:53do anything valuable if everybody is new
45:56every five years how is that possible
45:58it's probably not possible so that's
46:02what I'm that's what I would try to
46:03change and get the money hi I'm Carolyn
46:10I'm also an MBA - your sports analogy of
46:13kind of buckling down and going into
46:14hyperdrive really resonated with me I
46:16also realized that that can go too far
46:18so I'm curious to hear how you make some
46:20of the tough calls on whether it's not
46:22to participate in the next round of
46:24fundraising or whatever that looks like
46:25to you how do you make those decisions
46:29this is honestly this is that so
46:32yesterday it's we spent an inordinate
46:35amount of time talking about this we've
46:37made a bunch of decisions that I deeply
46:40regret because they were entirely
46:42monetary in nature and what I said to
46:44the team was I'm fine with us making
46:48purely monetary decisions but we didn't
46:50even do those well it's not as if we
46:51like had a predictable rate of return on
46:53that that said yeah you know what we're
46:55just gonna kind of like close our eyes
46:57here you know double our money and walk
46:59away and so the reason I brought that up
47:02to them was I was like our
47:04decision-making can't bleed over time
47:08and right now it's very hard for us as
47:13an organization to know how much it
47:15should be mission driven how much should
47:17not when should we really double down on
47:19things that are not working when should
47:20we not when should we just give up
47:21because it's just either the timing is
47:23not the right time and quite honestly I
47:27don't have a very good answer but if it
47:30is the thing that we are now I would say
47:34the most emotionally sensitive - because
47:38for example the opposite may be true so
47:40if the diabetes business turns out to
47:41work does the hundred and first person
47:44that works at social capital say [ __ ] it
47:45we're just gonna buckle down and you
47:47know when they're writing checks all of
47:48a sudden were 50 million deep into
47:50something that is clearly not going to
47:51work was that it so I don't have a
47:54really good answer but it is the thing
47:56that I think about the most when do you
47:58know how do you know to keep going for
48:01it when do you know that it's just too
48:02much when do you know that your
48:04decision-making is bleeding into a vein
48:05that is not constructive
48:07I have no idea so Billy's a great
48:11question it's it's I think about that a
48:13lot probably a lot of things like it's
48:18really powerful to be able to say I
48:19don't know I mean I would just encourage
48:21you guys all to just be like I don't
48:23know like this culture like American
48:27culture it's this weird thing of like
48:28know-it-alls everybody has to know
48:30everything how the [ __ ] can you ever
48:32learn how is when is that gonna be
48:35valuable
48:37don't be the just own own that that one
48:41line I don't know it's so powerful and
48:44as I kind of like get more abstracted
48:47when I meet people and I ask them things
48:50it is so endearing to hear I don't know
48:53because behind that it's just like just
48:56a self-awareness and confidence that I
48:58think is increasingly rare now you guys
49:02are like I'm gonna [ __ ] grin [ __ ]
49:05this guy and just keep telling everybody
49:06I don't know don't do that I mean really
49:08own it if you're gonna say it really own
49:11it but I really think it's a very
49:12powerful thing to be able to say I don't
49:14know hi my name is Venusian and I'm a
49:20first year MBA student I'm also a
49:22Canadian who went to Waterloo and my
49:24first job was at Burger King so I really
49:26see you as a role model my [ __ ]
49:28brother you look like me - it's crazy to
49:32think are you planket or good actor I
49:35swear I swear to God well you're really
49:38freaking me out right now
49:41what do you want so my question for you
49:47is a couple years ago at an event in HBS
49:51you mentioned that MBA students are
49:53typically at a disadvantage with respect
49:55to getting capital if they pursue
49:57entrepreneurship do you think that still
49:59holds true today if so that's a perfect
50:01example of me before Cass which team
50:05haven't talked about expressing my bias
50:09and I think part of my bias came from my
50:12insecurities about not having a grad
50:13degree part of my bias was like looking
50:16at people like you saying wow I just
50:17feel inferior to folks like you I've had
50:19felt for huge amounts of time and so
50:24it's a perfect example where even though
50:26I can say it my what I said at that HBS
50:29thing was me just spouting off making
50:31myself feel better about my biases and
50:35what I would tell you today is it can
50:37matter it doesn't matter I would rather
50:39say that there are ways of figuring out
50:42how valuable you are that are
50:43independent of those traditional signals
50:45whether you have them or not so I would
50:48say today I've changed my mind that's
50:50another thing changing your mind is so
50:56powerful I mean [ __ ] change your mind it
51:00makes for really really really bursty
51:04difficult marriages at times my wife
51:07will tell you but man is it powerful in
51:11business change your mind all the time
51:14and it's amazing again where you'll find
51:17like really good scaled leaders want the
51:20right answer and they're fine with
51:22capitulation they're fine with change
51:23they really are because they just want
51:25the right answer and then you just get
51:27so invested in an answer and then you
51:30build up all of this superficial logic
51:32to reinforce it versus saying I don't
51:35know
51:35let me oh you know what I changed my
51:37mind Wow another powerful thing I think
51:39I show you my mind all the time I think
51:43this is gonna be our last question I saw
51:49some of the venture world at South Bank
51:50some of the tech world and you said
51:52something about amassing capital today
51:54what do you think
51:55one of the best ways for us to amass
51:56capital on a risk-adjusted basis I mean
52:01the last part is just such a sellout a
52:04risk-adjusted base I don't [ __ ] buy
52:06some bonds I mean I don't know here's
52:11what I would tell you man I think I
52:14think if you ask me who's building the
52:16most important indelible company in the
52:18world I've been very public about this I
52:20think it's Jeff Bezos part of what he
52:22realized was the value of slow
52:23compounding so here's my little theory
52:26about company value creation
52:28the faster you build it that is the
52:30half-life it will get destroyed in the
52:32same amount of time and so when you
52:34think about a lot of like social
52:36businesses that's played out but and
52:38when you see sort of like what the sort
52:41of like the tops are like you know does
52:43it take eight nine ten years to build a
52:45really great consumer business
52:47it'll take 8 9 10 12 years to destroy it
52:49and we may see the tipping point on a
52:52couple of these businesses right now we
52:54may be seeing it in front of our eyes
52:55regulatory otherwise so why is that an
52:58important statement amassing capital to
53:02me is about finding a smart useful
53:05solution to a very hard practical
53:07problem and being slow and methodical
53:10and again this what I'm saying you have
53:12to rewire your brain for that to be okay
53:15how do you in year two or year five come
53:21back to this room for your what is it
53:23called when you get reunion and say I'm
53:30still working on the same thing and when
53:31somebody says and how's it going you
53:33have the courage to say it's hard I
53:35haven't figured it out yet I don't know
53:38but if you figure it out and you have
53:41this moderate growth moderate
53:43compounding that that is the key that is
53:47like that's gold you know I look at like
53:49our returns and it's so funny because
53:51it's like you can get so enthralled by
53:54IR ours in our business and like you
53:58know I have I have friends who run other
54:01organizations and they're like we posted
54:0492% pi RR and I'm like well you can't
54:07eat
54:09what does it really mean and when you
54:12unpack it what you realize is like fast
54:14money returns can completely really
54:17decay long-term thinking and sound
54:19judgment and so I'm like wow I would
54:21really love to just compound at 15% a
54:23year and the reason is because if I can
54:26do that for 50 years that's 250 [ __ ]
54:29billion dollars like some crazy number
54:31like it's just enormous so it's like
54:33slow and steady against heart problems
54:37start by turning off your social apps
54:39and giving your brain a break because
54:42then you will at least be a little bit
54:43more motivated to not be motivated by
54:45what everybody else [ __ ] thinks about
54:46you do you know what I'm saying
54:48it's hard think about how all this stuff
54:49plays together how does trying to get
54:52you know posting your [ __ ] waffles
54:55online relate to me starting a business
54:57and accumulating capital
54:59this is wiring your brain for superfast
55:02feedback it's the same brain you're
55:04using to build a company don't think
55:06they're not the same do you know what
55:08I'm saying no yes give one break so
55:17you're training your brain here whether
55:19you think it or not whether you know it
55:20or not whether you acknowledge your not
55:21acknowledge that these things where
55:23you're spending hours a day are rewiring
55:27your psychology and physiology in a way
55:30that now you have to use to go and
55:32figure out how to be productive in the
55:34commercial world so if you don't change
55:36this you are going to get the same
55:38behaviors over here change this there's
55:41a reason why Steve Jobs was like
55:44antisocial media I am Telling You I'm
55:47not on these [ __ ] apps I'm not him by
55:49any stretch of the imagination but I am
55:52proactively trying to rewire my brain
55:55chemistry to not be short-term focused
55:58I'm telling you they're linked come on
56:02thank you so much for being here and
56:05[Applause]

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