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

[MUSIC] Thank you so much for being here today.
>> Thank you for including me.
>> I'm so excited to dig into that career and
your thoughts on the Valley. And I'm going to start us off with one of
the things that jumped out at me in my prep for this interview. You are an extremely generous tipper.
>> Yeah. >> I love that and I would like to know why.
>> 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. 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 ask my sisters, they got to the same place that I did.

But I ended up not coveting 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 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,
I guess, giving a YELP review. But you can't buy food for
your kids with a fucking YELP review. >> [LAUGH] >> So I want a tip. And, I mean, it gives me so much joy because it's like
you'll have a 3 or $400 bill. In some cases, you tip 500 bucks or
1,000, and you close it. And they're expecting $40. And, I mean,
I'll get a little emotional, but they will come out to you,
and it's transformational.

And so it's so great. It's just like little things
like that mean a lot of people. And just to be anonymously
generous like that, I think it's a great gift that
I have the ability to do. That's why I do it, I love it.
>> And it sounds like the experience
of being seen. And you are seen and
the individual is seen, and you're sharing in that [INAUDIBLE].
>> Well I mean, it's funny.

It's like 99% of the time
they don't say anything, because 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 that gave them the tip. 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, if we're going out, let me just fucking pay. Just like, it's fine,
and it makes it simpler. Okay, yeah. I want to 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 covet money. But you see it's power and the use that it has in furthering
some opportunities for you. How did you develop that? How do you distinguish between luck and
skill? How do you end up in that position?
>> So I, My parents craved money,
meaning they needed it because my dad was unemployed for
long stretches of time.

My mom was the sole breadwinner. She was a housekeeper,
then she was a nurse's aide. And I would just see how she grinded. We didn't have a car for a long time. She takes the bus, we all take the bus. When I got my first job,
it was at Burger King. I'd take the money, and I had give it to
my parents, and we would buy bus passes. And I remember telling some of my friends,
I went to a very good high school, kind of like the rich high school. Not the high school I should've gone to. I was able to go to this
different high school. And I would tell them, like, I would be so
ashamed that I worked at Burger King. They would sometimes come by,
and I would just be like fuck. And then at some point,
it was this release moment where I was, this is my life. I can't do anything about it. This is what it is right now. And I kind of 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 was these
massive racial riots in Los Angeles. 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 Rodney King 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 one. And one of them gave me a job. And I worked at the well known
telecommunication start up in Ottawa. Ottawa had a really burgeoning
tech sense at the time. And I worked in 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 word? I mean,
I didn't even know a fucking thousandaire. I was like what is a billionaire? 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 enthralled. I was 9 degrees away from him. But the cult of personality around him in
that business, the lore, when it trickles down to you, was not about his
conspicuous consumption or anything else. It was about okay,
we're launching this frame relay switch.

Now we're going to buy this company. Okay, we're going to pivot
the entire business to ATM. And you were just, it was an amazing time. And so I took the bus to Newbridge. Complete luck that the controller
of Newbridge would go from his nice neighborhood through this
shitty neighborhood to get on the highway. And so he would see this
guy standing by the bus and eventually he saw me inside the office. And one day he stopped.

He said, you want a ride? Do you work at Newbridge? I'm like, yeah. This guy, Sam Legg. So in the car, he was in the front seat,
like beside Terry. And he was able to tell me how
this guy thought about this. because I would read it in the paper,
and I'd be like, why is he doing this? So it just completely
rewired what money was. For Terry Matthews,
money was an instrument of change, right? He had a market cap, he's like, wow,
that's 8 billion dollars of change, 10 billion dollars of change,
15 billion dollars of change.

Versus, there was another guy
building a company at the time. His name was Michael Copeland,
who ran a company called Corelle, 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 his house in it. And so you have this dichotomy of two
different characters at that time in the 90sm building really
interesting businesses. Correll, which was a regional business,
Newbridge, which was regional business. They were both very successful, but they
manifested money so totally differently. And I was like, I want to be this guy. I want to be this mega-compounder, swashbuckling around, trying to
do really cool shit in the world. How do I do that? And Sam helped me because 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,
is just copying the things that I see.

There's not a lot of original
thought here, there truly is not. We can all pretend we're all fucking
geniuses, honestly, be good copiers. Do you know what I'm saying?
>> [LAUGH]. >> It's the best thing in the world. Be around high functioning,
high quality people and just copy the shit that they do.
>> [LAUGH] >> Observe the shit that's kind of crappy and then don't do that stuff. It's not a fucking complicated formula.
>> [LAUGH] >> When did you use that best? >> No, all the time, now it's funny, it's like, you have a surface area of
ways to spend your time now, or I do.

And I'm in this midst now where we
are really scaling up what we're doing as a business. And I meet these people that to me are so
iconic that they were like arms length people that are now
sitting face to face and they treat me like a quasi-peer,
I wouldn't say peer, but quasi-peer. 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 going to act? What am I going to embody? What am I copying? What am I not copying? And so I get a chance to now refine
my decision-making and discipline.

And it's, so that's how it plays out. I don't know if I answered your question.
>> I'm thinking very, there's a deep connection between
money as an instrument of change and what you're doing now at Social Capital.
>> Look, here's the thing, there's about
150 people that run the world. Anybody who wants to go into politics,
they're all fucking puppets, okay? >> [LAUGH] >> There are 150, and they're all 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 entrepeneurs. Now they are going to get rolled
over over the next five to ten years by the people that are really
underneath pulling the strings. And when you get behind the curtain and
see how that world works, what you realize is, it is unfairly
set up for them and their progeny. Now, I'm not going to say that that's
something that we can rip apart. But first order of business is, I want to
break through and be at that table. That's the first order of business. 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 stay because I add value. 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,
is to be in a position to aggregate enough of the capital of the world, to then
reallocate it against my world view. And I'm not saying my world view is
the best or right, but it is mine.

And at the end of the day, there are 150
other fucking guys with their world view and they don't give a shit what you
think about their fucking world view. That's the truth. And so, why not me? Why not? Why not one of you? Why not? And so in my life now I'm
just kind of like, why not? Why the fuck not?
>> [LAUGH] [APPLAUSE] >> Fuck it! [APPLAUSE]
>> So you have these 50 year goals for Social Capital, three of them. Can you give us your world
view through those goals? >> So my 2045 ambition for the organization,
this is as I see it right now, 2045. Is I would like us to employ at
least ten million 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
cumulatively about a trillion dollars. That's my 2045 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
today that could do any of those three things, you have to be technological,
you absolutely just have to be. You are not going to build a brick and mortar business that gets anywhere close
to those three things, number one. Number two is,
you have to think very broadly about building things that
can stand the test of time. Those businesses are by definition
hard and non-obvious and so they compound in scale very slowly. 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.

You gotta be in the flow for
decades, that is hard. It tests people's patience,
it tests people's resolve, it tests people's really
intellectual incision. And this is where everybody gives up,
everybody gives up. I had this moment today, just a total
different way of describing this. Through the Warriors,
I've met a lot of players obviously, one of them who I had become
unbelievably close to is David Lee. David Lee just got engaged to this
unbelievable woman, Caroline Wozniacki, tennis player. We were working out this morning, okay? Couples work out, me and
my wife, him and his fiancee. >> [LAUGH] >> So we're doing this thing, this treadmill thing,
which my trainer concocted. And I'm in pretty good shape. 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,
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 it's that. It's like when things get
hard can you double down? A different example, we had yesterday, we do these things every quarter called
quarterly portfolio reviews where 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. My dad died of diabetes three years ago. Most of my relatives have it. I express the gene that makes me
disproportionately susceptible to it. So it's something that I
personally care about. But that business took seven years to get to a place where we even
have a chance of being viable.

And I think to myself, in that example,
I embodied a bit of Caroline Wozniacki. When things got hard,
I pushed through the pain. Now 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 manages a million diabetics. And I think there is some kid out there
whose family will be slightly less dysfunctional because their
parent's disease is better managed. It's not going to go to a place where
like, they're getting dyalized, or 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 the dots, but that’s okay. But it required, just,
resilience and I'm proud of that. And so I want to bring back a little bit
of that here so that it's not, quick, fast, five million users, ten million now,
flip it, sell it, great celebrate. It's like,
hey let's work on some hard shit together. Let's buckle down,
look each other in the eye, and say we're going to
support each other here.

This is going to take seven or
eight years, but if it works, it will really mean something. 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 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 three years, where everybody has always
said you never invest in education. And my thing was,
it's not about education. This is about human capital development. It's about, for every one of you who is so
smart, that got into Stanford, think of all the people
who could be as capable. 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
a race so that I can pick the winner. No offense to any of you here.
>> [LAUGH] >> And it took us three years we're now at those building blocks exist and
I'm like wow. How many times did I have to
look at my partners and say no? The easy answer is to walk away,
the hard answer is to double down, we have to support this business.

That culture's missing here. So part of what we're trying to do to
achieve those goals is take really big audacious points of view on the world
and then train ourselves to be patient. And it's really, really hard. The entire society is set up
to not be patient anymore. >> And I'm hearing also a conflict with this fail fast and learn mentality
where if you're taking a deep and big bet,
like you want it to be the right one. How do you know when that's true?
>> I think that that stale fast approach works in consumer Internet businesses,
but I don't think it works for anything that really matters. >> [LAUGH]
>> Basically. >> [LAUGH] >> Consumer Internet businesses are about exploiting psychology, and that is one
where you want to fail fast because you know people aren't predictable and so
we want to psychologically figure out how to manipulate you as fast as possible and
then give you back that dopamine hit.

We did that brilliantly at Facebook,
Instagram has done it, WhatsApp has done it,
Snapchat has done it, Twitter has done it. So there are great examples. WeChat is doing it. There are great examples of
failing fast 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 to cure cancer. It is not how you educate broad
swats of the world's population. It's just not. It's taking a point of view and
being methodical. It's hard, no it's hard.
>> I'm glad that you're taking a stab at it.
>> By the way, if it works, it's where all the money comes.

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. The competitive pressures
are non-existent. For example, today, you have this weirdly
academic argument about climate change. It exists, it doesn't exist. Well, we were in an Ice Age,
now it's warm, of course the earth. Who cares? Who cares? 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 subsumed by water.

We do not have food supplies that will,
these are conclusively known to be true. Yet nobody is really working on a problem. 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 they are, in economic terms, a multi-trillionaire? Of course. You think food delivery is
where the next great fucking breakthrough is going to come? You're all hopped up on
fucking marijuana and you need a fucking brownie?
>> [LAUGH] >> Like what a joke.

>> [LAUGH] >> Go and look through Crunchbase and all the shitty, useless, idiotic companies that have gotten
funded doing garbage like that. Versus climate change. Think about that. 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. And nobody is fucking
doing anything about it. So the capital markets are just
completely, completely out of their minds. And so, yeah.
>> [LAUGH] [APPLAUSE] >> I want 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 you were part of building the largest one. What soul searching are you
doing right now on that? >> I feel tremendous guilt. I think we all knew in the back of our
minds, even though we feigned this whole line of there 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.

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 brake from some of these tools and
the things that you rely on. The short-term, dopamine-driven feedback loops that we have created
are destroying how society works.

No civil discourse,
no cooperation, misinformation, mistruth and it's not an American problem. This is not about Russian ads. This is a global problem. So, we are in a really bad state of
affairs right now, in my opinion. It is eroding the core foundations
of how people behave by and between each other, and
I don't have a good solution. My solution is I just don't use these
tools anymore, I haven't for years. It's created huge tension with my friends,
huge tensions in my social circles. If you look at my Facebook feed, I probably haven't, I've posted
maybe two times in seven years. Three times, five times,
it's less than ten. And it's weird, I guess I kind of just
innately didn't want to get programmed, and so I just tuned it out. But I didn't confront it. And now to see what's happening,
it really bums me out. Think about there are these examples
where there was a hoax in WhatsApp, where in some village in India People were afraid that their
kids were going to get kidnapped etc.

And then there were these lynchings
that happened as a result where people were like
vigilante running around. They think they found a person,
and they I mean, I mean seriously,
like that's what we're dealing with. Imagine when you take that
to the extreme where bad actors can now manipulate large swathes
of people to do anything you want. It's just 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, likes, thumbs up, and we conflate that with
value, and we conflate it with truth.

And instead what is really is,
is fake, brittle popularity. 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 2 billion people, and then think about how people react
then to the perceptions of others. It's just a it's really bad,
it's really,really bad. >> It sounds like you're taking deep personal responsibility
also in being a part of it. >> I kind of look, 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. I can control my kids' decisions,
which is they're not allowed to use this shit.
>> [LAUGH] >> 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, yeah, not me,
I'm a fucking genius, I'm at Stanford. You're probably the most
likely to fucking fall for it. >> [LAUGH] >> because you are fucking check boxing your whole God damn life. No offense guys.
>> [LAUGH] >> None taken. >> [LAUGH] >> So, you've been outspoken about the Trump's Administration's
position on immigration, these things are going to collide
in government and business, right? That's happening now, so what do you
want these future business leaders to do about it once they get into that spot?
>> 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. I'm serious, do not get it, it is going to
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 want to reflect it, you get it. I'm going to go get it,
other people are going to go get it, and then it will be about
a competition of views. And don't wrap yourself in all this liberal kind of bullshit about my God,
money, blah, no, stop. Here's how the fucking world works, okay? It drives the world for
better or for worse. Economic incentives drive entire swaths
of populations to behave in very, very predictable, and then when you
take it away, unpredictable ways. Ask anybody in your class that's
from a developing nation, ask anybody in your class 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 sell out. 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.

pexels photo 6953934

I will never judge you, and you should
not judge me for what that worldview 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 let's manage back
to a quota, it doesn't mean, okay, we need a black guy, a brown guy,
we need a few, 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. In the absence of capital,
you're irrelevant, with capital, you're powerful. And then you decide in small ways,
in medium size ways, in large ways, right, and it just depends
on the scale of capital that you have. And so
that's what's necessary now in capitalism, which is that we have to come
back to what is it really? Is it an economic system, yes. But it is a philosophy as well, 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. They have built a network of
influence based on capital. Their world 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 world view. The question is, what's
the counterweight to their world view? Can you name one? 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 Kochs.

You want both views out
in the world at scale. Well 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 moral compass when you do.
>> You've said that you think VC is
a horrendous allocator of capital. So if we need to go get the capital,
how do we do it better? Well, we are chipping away,
I think other people will copy us. Venture is basically just a bunch of soulless cowards.
>> [LAUGH] >> They're well intentioned, but they're well intentioned soulless cowards.
>> [LAUGH] >> They have fallen for what everybody else falls for,
which you can't blame them for.

Which is here is this 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
want to lose this gold star. And then what happens? You go risk off. And then what happens? Your behaviors are about protecting
the seat of power that you have, the social definition that
that seat affords you. And so now instead of being an accelerant
of a progressive worldview, you become a retardant to
a progressive worldview, right? Your risk appetite shrinks, the surface area in which you're
willing to make decisions shrink. 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? You have to make it more systematic,
you have to make it more data driven, you have to strip out the bias,
you have to be open 24/7. You can't have these dumb rules of like, I only do deals if they're within
15 miles driving distance. How can the most important part of,
>> [LAUGH] >> I mean, can you imagine if I walked into Zuck's office, Facebook, where
I'm like, I have a great fucking idea. Facebook is only going to be open for
business Monday through Friday. >> [LAUGH] >> 10 to 5, because we want to get home.

Summers we're going to take off, and
so but just going to show a 404 page. >> [LAUGH] >> Does it make sense? >> [LAUGH] >> Or Google, we only want you to search
during business hours. >> [LAUGH] >> And so you have to be open for scale, you have to be global, 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 at our data
center, because the growth was great. 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. And initially a few people said yes, and
people thought in 2007 AWS was a joke. And we used to laugh at it. We were like,
why would anybody do this stuff? And now see how fast a decade later
you're on the other side of the fence.

If any of you guys start a business and
you're not on AWS, you would be the joke, right? So what did they do? 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're probably not going to do it well. And so let me just replace
it all with an abstraction. 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? 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 inside a company to a very precise, unemotional,
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 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'll go to socialcapital.com, and you'll get some insights and knowledge. And it's all interacting via APIs.

It's all 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 as value for you over here. Wouldn't you want that? Of course you'd want that. What if we could do more
efficient customer acquisition? What if we could figure out churn better? 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. 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 four or five mega companies,
you could have millions and millions and millions of smaller,
better run companies. And that's my world view. And I think if we do that, we achieve our goals, 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's dilemma. They are like,
in my brain is pattern-recognition.

But we know that that's not true, and
the data shows you that that's not true. Simple question for all of you guys
that love the allure of Silicon Valley. From the 70s when Microsoft was founded
to now, if you look at all the major companies that have been created,
major, say over 50 billion, over 60 billion, what percentage of
the Series A investors overlapped? You did the A of Microsoft, and you did
the A of Google or you did the A of Uber, right? Like for pattern recognition, again,
it's non-numerical, right, it's about wow, I like the cut of this guy's jib.
>> [LAUGH] >> Well, the answer is it's less than 2%. So what does that mean? Everybody's bullshitting,
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 one of the 20,
and you look like a genius.

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. 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 irrefutable. So I don't want to be one of those
people that stumble into a company and look back and like,
yeah, we were geniuses. I want us to be systematic. 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 traditionalist, freaks you out.
>> And that's what allows you to make these much longer term commitments
to businesses that are going to address healthcare, education.
>> Well, no, that's just because I'm rich.

>> [LAUGH] >> But just to be honest. I don't need anybody else's money. Look, this is not a popular view. So the first fucking billion
dollars is mine, and then I have to prove it and
then other people glom on. But, I mean Many of them
started by caring, but I suspect over time, if we end up
with a hundred, two hundred or five hundred billion dollars, how much
of that last 50 to 60% really care? That's okay, I want the fucking money. I will play the goddamned game and
I'll win, because I want the money. because I want to extend my influence, do you know what I'm saying?
>> Yeah. >> They want to return, it's fine. >> [LAUGH] >> Yeah, he wants the money. >> [LAUGH] >> because I want to win, I so deeply want to win.
>> How, I'm just going to say this
exactly as it's coming, how do you keep that power from corrupting you?
>> 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. Like, how does this all play out? How do I fundraise? How do I help facilitate good investing
decisions which really means, how do I help this really great think
about a more platformized approach. And in that, I just get really Isolated
and so I don't have a good answer. I like things like this and 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, when I'm in a place
like, it reminds me of these stories.

Just reminding myself like I made
$4.55 an hour at Burger King, I would get a $50 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, but now as I say it, I'm like okay,
I 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 of those 150 people,
maybe it's a little bit more, but I've met a lot of them,
it's really hard.

It's very easy to end up
really drunk with power, it's really hard.
>> I really appreciate that candor 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 grateful that you are here to share it with us today.
>> Thank you. >> We're going to open it up now to questions, I'm sure that there are many
followups on what you've explored, but really-.
>> Any feedback? >> [LAUGH] >> [APPLAUSE] >> Hi, I'm Hi, I'm Dana, I'm second year MBA at the GSB. Thank you for being with us today. But I'm not here to give feedback,
but I have a question for you. You just took Social Capital
of the 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
>> [LAUGH]. >> [APPLAUSE] >> So awesome, yes.

>> [LAUGH] >> But, no. So one of the things that I think about
a lot is, if I'm in a position to reshape. I've been in a position where
I was a part of a group that helped shape psychology of society. That's been a great experience 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 one of them is around
this idea of patience. 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 lifecycle. 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 a business for seven, eight, nine, ten years, which used to be
the historical norm and now it's not. Most of you,
probably are thinking to yourselves, well I'm going to get
a great job after the GSB. But I should probably portfolio manage my
career for the next six or seven years. 18 months here, 18 months there,
18 months there, and then I'll decide what I really want to do.

And part of it is because
there's an incentive to sort of build this kind of portfolio approach. But I suspect if you knew that
liquidity was a more traditional, predictable thing, many people
would actually say, you know what? I like these people here,
I like the mission of the company, I want to continue to
help advance their goals. And now that you've actually
solved my compensation problem, I'm willing to commit. 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 going to
try to solve hard problems. because right now, the Silicon Valley
attrition rate in most companies is 20%. That means every five years,
your entire employee base is turned over.

Think about that,
how do you do anything valuable, if everybody is new every five years? How is that possible? It's probably not possible. So that's what I would try to change and get the money.
>> [LAUGH] >> Hi, I'm Carolyn, I'm also an MBA too. Your sports analogy of kind of buckling
down and going into hyperdrive really resonated with me,
I also realize that that can go too far. 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? This is, honestly, this is, so yesterday, we spent 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. And what I said to the team was, I'm fine
with us making purely monetary decisions, but we didn't even do those well. It's not as if we had a predictable
rate of return on that that said, yeah you now what? We're just going to close our eyes here,
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 bleed over time.

And right now, it's very hard for
us as an organization to know how much 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 its just either the timing is not the right time and quite honestly
I don’t have a very good answer. But if it is the thing
that we are now the most emotionally sensitive to, because for
example the opposite may be true. So if the diabetes business turns out to
work, does the hundred and first person that works at Social Capital say fuck it,
we're just going to buckle down and when they're writing checks all of a sudden
we're 50 million deep into something that is clearly not going to work was that a?
>> 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? When do you know that it's just too much? When do you know that your decision
making is bleeding into a vein that is not constructive? I have no idea.

So it's a great question,
I think about that a lot. By the way, a lot of things, 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. This culture, American culture is
this weird thing of know-it-alls. Everybody doesn't know everything. How he fuck can you ever learn? When is that going to be valuable? Don't be the, just own that one line,
I don't know. It's so powerful. And as I kind of get more abstracted,
when I meet people, and I ask them things, it is is so
endearing to hear, I don't know. Because behind that is just
the self-awareness and confidence that I think
is increasingly rare. Now you guys are like, I'm going to
fucking grin fuck this guy and just keep telling everybody, I don't know. Don't do that. >> [LAUGH]
>> I mean really own it. If you're going to say it,
really own it, but I really think it's a very powerful
thing to be able to say, I don't know.

Hi, my name is and
I'm a first year MBA student. I'm also a Canadian who went to Waterloo
and my first job was at Burger King, so I really see you as a role model.
>> You're like my fucking brother.
>> [LAUGH] >> I mean no literally, you look like me too, it's crazy. It's the weirdest thing.
>> [LAUGH] >> [APPLAUSE] >> Are you planted, are you an actor? >> I swear, I swear to God.
>> Well, you're really freaking me out right now.
>> [LAUGH] >> What do you want? >> [LAUGH] >> So my question for you is, a of couple years ago at an event at HBS, you mentioned that MBA students
are typically at a disadvantage. With respect to getting capital if they
pursue entrepreneurship Do you think that still holds true today? And if so [CROSSTALK].
>> So, that's a perfect example of me, before Cas, which Dean Leven 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 looking at
people like you and saying, wow, I just feel inferior to folks like you,
I have felt for huge amounts of time. And so it's a perfect example, where
even though I can say it, what I said at that HBS thing was me just spouting off,
making myself feel better about my biases. And what I would tell you today is,
it can matter, it doesn't matter. 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.
>> [LAUGH] >> Changing your mind. >> Is so powerful. >> [LAUGH] >> I mean, fuck, change your mind. It makes for really,
really, really, bursty, difficult marriages at times.
>> [LAUGH] >> My wife will tell you. But man, is it powerful in business. Change your mind all the time. And it's amazing, again, where you'll find really good
scaled leaders want the right answer.

And they're fine with capitulation,
they're fine with change. 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 this
superficial logic to reinforce it, versus saying I don't know,
you know what, I changed my mind. Wow, another powerful thing I think. I change my mind all the time.
>> I think this is going to be our last question.
>> My name is. I saw some of the venture work at banks,
some of the tech world and you said something about amassing capital. Today, what do you think is one of
the best ways for us to amass capital on a risk adjusted basis?
>> I mean, the last part is just such as sellout part.
>> [LAUGH] >> A risk adjusted base, I don't know, fucking buy some bonds? I mean, I don't know.
>> [LAUGH] >> [LAUGH] >> Here's what I would tell you, man.
>> [LAUGH] >> I think, if you ask me,
who's building the most important, indelible company in the world,
I've been very public about this.

I think it's Jeff Bezos. Part of what he realized was
the value of slow-compounding. So here's my little theory
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
social businesses, that's played out. And when you see what sort
of the tops are like, does it take, eight, nine, ten years to
build a really great consumer business? It'll take 8, 9, 10,
12 years to destroy it.

And we may see the tipping point now
in a couple of these businesses. Right now we may be seeing it in front
of our eyes, regulatory or otherwise. So why is that an important statement? Amassing capital to me,
is about finding a smart, useful solution to a very hard,
practical problem. And being slow and methodical. And again, that's what I'm saying,
you have to rewire your brain for that to be okay.

How do you, in year two or year five,
[COUGH] come back to this room for your, what is it called when you get-
>> Reunion. >> [LAUGH] >> [COUGH] And say I'm still working on the same thing, and
when somebody says, and how is it going? You have the courage to say, it's hard, I
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's cool. I look at our returns and it's so
funny, because you can get so enthralled by IRRs in our business. And I have friends who run
other organizations, and they're like, we posted 92% IRR,
and I'm like, well you can't eat IRR.
>> [LAUGH] >> What does it really mean? And when you unpack it, what you realize
is, fast money returns can completely, really decay long-term thinking and
sound judgment. And so I'm like wow, I would really
love to just compound at 15% a year.

And the reason is, because if I can do that for 50 years,
that's 250 fucking billion dollars. It's some crazy number,
it's just enormous, so it's slow and steady against heart 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 everybody
else fucking thinks about you. Do you know what I'm saying? It's hard, think about how all
this stuff plays together. How does trying to get,
posting your fucking waffles online, relate to me starting a business and accumulating capital.
>> [LAUGH] >> 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.
>> [LAUGH] >> Do you know what I'm saying? No, yes? No?
>> [LAUGH] >> Yes, yes, right? You have one 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 rewiring 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. So if you don't change this, you are going to get the same
behavior as over here. Change this, there's a reason why
Steve Jobs was anti social media. I am telling you, I'm not on these fucking apps, 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. I'm telling you they're linked.
>> Kumar, thank you so much for being here and
enlightening all of us. >> [APPLAUSE].

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