Speaker 1: This is mesters in Business with Very Results on Bloomberg
Speaker 1: Radio this weekend. On the podcast man Strap yourself and
Speaker 1: this is really one of the old time great Chamath
Speaker 1: paula founder of Social Capital, very successful venture capitalist, part
Speaker 1: owner of the Golden State Warriors, and all around uh
Speaker 1: insightful investor, social critic and tech wonk. If you're interested
Speaker 1: in anything from technology to social media too, venture investing, startups, entrepreneurship.
Speaker 1: I don't know what else to say other than strap
Speaker 1: yourself in. This is a great one with no further ado.
Speaker 1: My conversation with Chamath Polly. This is Mester's Business with
Speaker 1: Very Hults on Bloomberg Radio. I'm Barry Ridhults. You're listening
Speaker 1: to Masters in Business on Bloomberg Radio. My extra special
Speaker 1: guests this week is Chamath Pollypatia. He is the founder
Speaker 1: of Social Capital, one of the more interesting and successful
Speaker 1: venture capitalists out in Palo Alto. He is also an
Speaker 1: engineer and team leader working at places like a O, L, Facebook,
Speaker 1: and Slack. He has been known as the Spack King
Speaker 1: for his numerous successful deals in that space, and he
Speaker 1: is also a ten percent owner of the Golden State Warriors.
Speaker 1: Chamat Polly Hapatia, Welcome to Bloomberg, Gary. Thanks, I've been
Speaker 1: looking forward to having this conversation for a while. Let's
Speaker 1: let's normally I start with people's backgrounds and we go chronologically.
Speaker 1: But you have some quotes that I love, and I
Speaker 1: want to ask you about them and let you run
Speaker 1: while with them. Starting with venture capital properly deployed can
Speaker 1: solve the biggest problems, filling a void left by the
Speaker 1: shrinking scientific ambitions of governments, foundations and international organizations. Explain, well,
Speaker 1: if you, um, look at what's happening in California or
Speaker 1: what's happening at the federal level of the United States currently,
Speaker 1: there's a really interesting thing that's happened, which is we
Speaker 1: have effectively single party rule. Um, you have a you know,
Speaker 1: elected leader that's of one party, you have a Senate
Speaker 1: that's of that same party. House and then you know,
Speaker 1: in the case of California, mayors as well, all democratic
Speaker 1: in this case. And what's interesting is it also happens
Speaker 1: to be a moment in time where the societal problems
Speaker 1: that we've been facing are the worst they've ever been.
Speaker 1: Climate change is worse than it's ever been. We have
Speaker 1: a water crisis, we have an impending food crisis, homelessness, crime.
Speaker 1: And you have to ask yourself, well, if a single party,
Speaker 1: like you know, when you have a typical normal, you know,
Speaker 1: political setup, you have these two opposing forces, then you
Speaker 1: have to find common ground. And each party says the
Speaker 1: exact thing, which is, well, if we had complete control,
Speaker 1: this would all be fixed. And it turns out that
Speaker 1: the two examples where you have complete control, in fact,
Speaker 1: nothing gets fixed, even less gets fixed than what got
Speaker 1: fixed before. So why is that? It's that the tool
Speaker 1: kit of policy and the tool kit of society's has changed.
Speaker 1: It's no longer as much about laws necessarily, but it's
Speaker 1: about technology, it's about code, it's about very specific inventions
Speaker 1: of science. And the problem with that then well then
Speaker 1: you would say, well, great, well that's the solution to
Speaker 1: all of our problems. If we go in and figure
Speaker 1: out how to actually, you know, just have more of
Speaker 1: all of that stuff, everything will be solved. Okay. Well,
Speaker 1: then then you go in and you decompose that problem
Speaker 1: to first principles, and what you find is, for example,
Speaker 1: in places like core scientific research, people care more about
Speaker 1: citations and papers and research. And it's also highly politicized
Speaker 1: and infested with all kinds of infighting, and so foundations
Speaker 1: can't fund the work that they used to. Universities aren't
Speaker 1: nearly as good and actually promoting massive breakthroughs. So more
Speaker 1: and more of this responsibility gets put on for profit enterprises.
Speaker 1: But to be very specific, they have to be for
Speaker 1: profit and they have to be technical. And when you
Speaker 1: say it that way, the venture capitalist all of a
Speaker 1: sudden has this critical role in society that they didn't
Speaker 1: have before because they are a translator. They are, you know,
Speaker 1: in a technical meeting, the smartest business person, but in
Speaker 1: a business meeting, the smartest technical person, and they're able
Speaker 1: to put these things together to solve problems. And so
Speaker 1: that's what I was trying to get across, which is
Speaker 1: we need more people building for profit technical businesses, organizing
Speaker 1: resources against problems. So so so let's stay with the concept
Speaker 1: of of venture capital being organized to solve problem and
Speaker 1: talk a little bit about social capital. Tell us about
Speaker 1: your first couple of venture investments and who were your
Speaker 1: first limited partners. So I was at Facebook at the time,
Speaker 1: and um I had been doing a bunch of angel investing,
Speaker 1: and this is maybe two thousand eight or nine. But
Speaker 1: I was the first solo g P. I think in
Speaker 1: many ways, UM, I was putting some money to work
Speaker 1: of my own money, small checks, Berry, ten thousand dollars,
Speaker 1: fifteen thousand dollars, early seed round early seed rounds in
Speaker 1: you know, two thousand and seven and eight, basically all
Speaker 1: the money that I had, and I had a win. UM.
Speaker 1: I met a guy named Rick Thompson, an amazing entrepreneur
Speaker 1: who started a gaming company, and I jumped in with
Speaker 1: two feet. I invested my money. I spent a little
Speaker 1: bit of time. They're helping him, you know, certif I
Speaker 1: mean as a as a part timer obviously, because I
Speaker 1: was still working on Facebook at the time. And the
Speaker 1: company gets bought by Disney for like set million bucks
Speaker 1: and I made a few million bucks, and I thought,
Speaker 1: this is it. I have my I have my escape Velocity,
Speaker 1: and um, at the time at Facebook, there were all
Speaker 1: these people that were trying to invest in the company,
Speaker 1: and Zuck basically said to me, hey, can you help
Speaker 1: sort out whose money we should take. I mean, and
Speaker 1: I was running Facebook Platform, I was building Facebook Mobile,
Speaker 1: I was doing all of these products. So but I
Speaker 1: was like, yeah, sure, I guess and uh, I met
Speaker 1: the guys a Tiger Global Um Chase Coleman specifically, and
Speaker 1: we built a relationship and then you know, Tiger ended
Speaker 1: up investing in the business. And along the way, you know,
Speaker 1: I said, hey, I'm thinking of, you know, investing a
Speaker 1: little bit of capital on the side, and he goes, well,
Speaker 1: if you organize a little LLC, you know, I'm happy
Speaker 1: to kick in a you know, a few shuckles. And
Speaker 1: so all of a sudden, I had this little group
Speaker 1: of me and my friends, and I just organized about
Speaker 1: eleven million bucks, you know, and I was like three
Speaker 1: or four of it, and like, you know, other couple
Speaker 1: of folks jumped in for fifty k there, there are
Speaker 1: a million there whatever. Um. And so while I was
Speaker 1: a full time employee and Facebook, I was a part
Speaker 1: time investor UM. And that's how I started. And so
Speaker 1: those are my first helps. Wonderful guys read Hoffman, Um.
Speaker 1: You know a whole list of kind of like who
Speaker 1: who's the rest of that list? Because already I'm loving
Speaker 1: this group. The list was pretty impressive. I want to say,
Speaker 1: it was like Peter Thiel, Reid Hoffman, Chase Coleman, UM.
Speaker 1: I'd have to look that the slides to get the
Speaker 1: murderers row. Yeah, I was pretty Dave Goldberg. You know
Speaker 1: Xander Lurie, who's the CEO of Momentum AI. So a
Speaker 1: bunch of really great entrepreneurs and CEOs and investors. Anyways,
Speaker 1: I put the money to work, and you know, it
Speaker 1: was non obvious that that fund was good. I was
Speaker 1: learning and most of the investments I made were way
Speaker 1: too ambitious and I was deeply under capitalized. Right, So
Speaker 1: you in two thousand and eight and nine, in hindsight,
Speaker 1: it was really dumb to make a bunch of deep
Speaker 1: tech investments. Now some of them have come home to
Speaker 1: roost and that fund has now tunned it. But we
Speaker 1: got very lucky and it did very well. But it
Speaker 1: took an enormously long period of time. So I put
Speaker 1: the money to work and I learned. I learned, Hey,
Speaker 1: portfolio construction is important. I didn't get that right. I
Speaker 1: was way under capitalized, Like, hey, wait a minute, Like
Speaker 1: I needed way more reserves to defend these companies. And
Speaker 1: I had to think about duration, meaning I can't solve
Speaker 1: twenty year problems in a ten year fund. I need
Speaker 1: to solve five year problems, and a ten year fund
Speaker 1: if I want to be in the fund business. And
Speaker 1: you know that obviously changed in seventeen when I just
Speaker 1: basically consolidated with my own money. But so then I
Speaker 1: left Facebook inven and I went back to these same
Speaker 1: folks and I said, guys, let's go much bigger. I
Speaker 1: think I know what I'm doing UM, and we created
Speaker 1: My first fund was two fifty or sixty million bucks.
Speaker 1: I put up sixty and then it was really like
Speaker 1: you know, John Door, Peter Thiel, Reid Hoffman, Leeka shing Um,
Speaker 1: you know, just I ran the table, Georgia Pawel Lehman,
Speaker 1: like incredible people and a handful of really great institutions,
Speaker 1: Mayo Clinic, you know folks that I was really proud
Speaker 1: to make money for UM. And I said, this is
Speaker 1: like a great intersection of entrepreneurs and you know, investors
Speaker 1: in philanthropists and foundations, and you know, I'm gonna go
Speaker 1: and try to find great businesses. And that's how it started.
Speaker 1: So from there, what was the subsequent funds that came
Speaker 1: out of that? Because that you know, funds that run
Speaker 1: a seven or a ten year lifespan, and some companies,
Speaker 1: some vcs will just do fund to fund three fund four.
Speaker 1: You didn't exactly go in that direction, you know, I
Speaker 1: can tell you so like the returns as of this
Speaker 1: last quarter, because I just I had I had a
Speaker 1: little advi as board meeting. You know, I put about
Speaker 1: a billion one in the ground. Um that is worth
Speaker 1: today just a little under five billion dollars. And this
Speaker 1: was so this was I raised about a billion dollars
Speaker 1: over four funds, over five funds, sorry, in the first
Speaker 1: five years basically, so a two fifty million dollar, sixty
Speaker 1: million dollar fund, another to sixty five hundred, and then
Speaker 1: I had a small hundred million dollar fund and in
Speaker 1: a thirty million dollar opportunities fun kind of so about
Speaker 1: one point one billion dollars. And you know, so far
Speaker 1: we've returned a little almost a little under two extra
Speaker 1: capital so cash on cash, we've returned about two some
Speaker 1: odd billion. The carrying value is a little under five billion.
Speaker 1: And I think that you know, when I look in
Speaker 1: the next in the next few years, that will turn
Speaker 1: one more time. So basically you know, one billion will
Speaker 1: turn into ten billion. And the returns are you know
Speaker 1: probably well right now they're in the high twenties nets
Speaker 1: and it will be in the probably the low thirties
Speaker 1: nets when it's so as all that comes up, are
Speaker 1: you just going to roll that over into another fund?
Speaker 1: Or are you looking to spread this into different spaces?
Speaker 1: Because I'm aware you are a man of many interests,
Speaker 1: You're not just I find the world really fascinating and
Speaker 1: curious and looking at what you and ved Ston I
Speaker 1: can tell you approach the universe the same way. Right,
Speaker 1: so along the way, I think in what I realized
Speaker 1: was running funds doesn't accomplish my goal, and it took
Speaker 1: me some number of years to figure that out. I
Speaker 1: loved working inside of these companies. I loved trying to
Speaker 1: make some of these businesses work. I loved taking really
Speaker 1: big moon shots on technical problems that I wanted to solve.
Speaker 1: I didn't like the constraints of a fund. I didn't
Speaker 1: like managing LP relations because by that point, you know,
Speaker 1: as you know Barry, when you're in the fund business,
Speaker 1: then it's all about quantity of LPs. And so the
Speaker 1: LPs had grown beyond my co cohort of people, right,
Speaker 1: because it's not as if their money is infinite either, right,
Speaker 1: And so then we have fund of funds and other
Speaker 1: organizations who are in the business of, you know, being
Speaker 1: investors in these organizations, and it became very administrative, and
Speaker 1: a lot of my time was spent fundraising and managing
Speaker 1: those relationships as opposed to investing or starting companies. And
Speaker 1: so that was one big error of judgment that I
Speaker 1: felt I needed to fix. The other one was I
Speaker 1: was looking at myself thinking like, well, am I going
Speaker 1: to be able to defend the ownership of these best companies?
Speaker 1: And think about what happens in a fund. If you
Speaker 1: make an investment and it's working, you have all this
Speaker 1: pressure to double down. But when there's something smaller and
Speaker 1: more technical, where there's way more asymmetric risk, it's much
Speaker 1: harder to convince other that you should continue to invest
Speaker 1: in that as well. So let's stay with that a second,
Speaker 1: because that's there's some really interesting things. When I hear
Speaker 1: someone like you say double down, what I'm usually thinking
Speaker 1: of is, hey, we made a small investment in the
Speaker 1: seed round, and now it's the A of the beam round,
Speaker 1: and we're gonna have to step up and five hundred
Speaker 1: thousand is now a fifty million, or two million becomes
Speaker 1: a hundred million dollar. Is that what you mean by
Speaker 1: double down versus now I mean the following decision, which
Speaker 1: is very hard. So let's just say, and we use
Speaker 1: explicit examples because it's easier. So let's just say we
Speaker 1: invested in a crypto business and a software as a
Speaker 1: service startup on the same day, ten million dollars in each.
Speaker 1: The SAS business has a much higher probability of short
Speaker 1: term progress. I sold you know, x amount of software.
Speaker 1: Here's my bookings, here's my revenue, high probability of modest success,
Speaker 1: high probability of modest success. Most people are, you know,
Speaker 1: enraptured with that. That's what well, that's what the SMP
Speaker 1: fire is for. If you want a high probability of
Speaker 1: modest success, go by the spiders. But I imagine people
Speaker 1: come to venture because hey, I have all my conservative
Speaker 1: stuff so that I'm looking for you to hit me.
Speaker 1: It's not true, it really it may be listen. So
Speaker 1: there there are two conundrums here. The conundrum number one
Speaker 1: is if you're a limited partner. If you're a limited
Speaker 1: partner right now sitting inside of a foundation or a
Speaker 1: pension fund, and you have to return capital and you
Speaker 1: have to get over your hurdle, you need an allocation
Speaker 1: inter venture. But those allocations are minuscule. Um. Nobody's getting
Speaker 1: you know, huge allocations into sequoia, right because the opacity
Speaker 1: is has limited allocations into benchmark. You know, these are
Speaker 1: five hundred million dollar funds, you know, and I you know,
Speaker 1: in my example, I was thirty percent of all the capital.
Speaker 1: So there's just not a lot of room for others.
Speaker 1: Number one. And then the more insidious problem is actually
Speaker 1: the human capital inside funds themselves. And what I mean
Speaker 1: by that is not that they're bad people. They're wonderful people,
Speaker 1: but there are products of a very specific and very
Speaker 1: rigid um hierarchy. Um. You know, they typically went to
Speaker 1: a handful of schools. They typically are educated in exactly
Speaker 1: the same way. They typically um you know, have the
Speaker 1: exact same kind of risk tolerance as a result of
Speaker 1: all those things. And so when the rubber meets the road,
Speaker 1: this Harvard NBA or the Stanford MBA, they want to
Speaker 1: treat the venture capital organization as their version of the
Speaker 1: sp very predictable, steady eddie, let me make you know,
Speaker 1: a good salary, don't rock the boat. So what happens
Speaker 1: Crypto stuff gets underfunded until it's obvious, you know, hard
Speaker 1: tech and and you know, life sciences get underfunded until
Speaker 1: it's obvious. Sas gets overfunded until it's obvious. And that's
Speaker 1: the whip saw that you face. Now there are a
Speaker 1: handful of organizations that have fought against that and have
Speaker 1: done it brilliantly. So when you look, for example, like
Speaker 1: Founders Fund, I'll pick an example incredible set of investors
Speaker 1: who are iconoclasses to the one, atypical on every dimension.
Speaker 1: There's not a single drop of real pedigree amongst them,
Speaker 1: except they're all incredible entrepreneurs. If you look at coastal Ventures,
Speaker 1: same situation, incredibly atypical in their intellectual makeup and the
Speaker 1: way they think and what they value, and to a one,
Speaker 1: they're generally great entrepreneurs. So you see this recurring theme.
Speaker 1: So you know, for me, what I've tried to do
Speaker 1: is recalibrate my time around that realization I have a
Speaker 1: fixed amount of capital. If I surround myself with these
Speaker 1: good they're good people, it will lead me astray because
Speaker 1: I will get risk off. And the whole goal of
Speaker 1: this business, as you exactly well put it, is to
Speaker 1: be one percent massively risk on. And so that's how
Speaker 1: I live my life. I have a small allocation of
Speaker 1: capital in case all of this goes to zero, but
Speaker 1: otherwise my net worth and wealth is massive risk on that.
Speaker 1: That's quite quite fascinating. I keep wanting to go to
Speaker 1: some of my questions, but you keep saying things that
Speaker 1: make me have to respond. I'm still kind of struck
Speaker 1: by your LPs needing management. And what I mean by
Speaker 1: that is, someone runs a successful fund, there's a very
Speaker 1: limited amount of slots for money to come in. I
Speaker 1: just imagine it's like, here's the deal. I have a
Speaker 1: slot for a hundred for you. I'll send you the
Speaker 1: annual updates, will have an annual meeting, and I don't
Speaker 1: want to hear from you the rest of the year.
Speaker 1: You can't take a step broach. It doesn't work well.
Speaker 1: It's not that easy even for the best organizations. Um.
Speaker 1: You know, when you're dealing with these large pools of capital,
Speaker 1: there are large bureaucracies, and in fairness to these bureaucracies,
Speaker 1: there's there's really important guard rails of risk management right
Speaker 1: and legal and operational due diligence that they have to do.
Speaker 1: Because again, it's the fireman's pension, it's the teacher's pension,
Speaker 1: it's the you know, it's the foundation. It's that they're
Speaker 1: all doing good work right. So it's not like, you know,
Speaker 1: they have a right to be cavalier um, but it
Speaker 1: creates an infrastructure of folks UM that approached their job
Speaker 1: in a very specific way that for me didn't make sense.
Speaker 1: For others, I think it does make a ton of
Speaker 1: sense because you know, they look, there's a trade off. Today,
Speaker 1: that trade off, by the way, has rewarded them more
Speaker 1: than me. And what is the tradeoff? When you're a
Speaker 1: successful investor, you'll get to a fork in the road
Speaker 1: at a certain level of assets where you have to
Speaker 1: go on the path well traveled or the path less traveled.
Speaker 1: The path less traveled is what I've taken. You're low,
Speaker 1: meaning you're by yourself, all your own money, all risk
Speaker 1: on the path while traveled, says, syndicate the risk, let
Speaker 1: the let the returns decay, build an a u M machine,
Speaker 1: monetize the fee income, sell a percentage to dial or
Speaker 1: to whomever, and then eventually sell the GP to somebody
Speaker 1: and you're done. And you know, if you have enough
Speaker 1: capital M at some point you're like, well, why don't
Speaker 1: need any more money? This is a safer route to take.
Speaker 1: I am of this different view, which is I want
Speaker 1: very specific kinds of progress that will not happen unless
Speaker 1: I am a tip of the spear on a bunch
Speaker 1: of things that I want to change. And I'm using
Speaker 1: my money as a mechanism of showing the change that
Speaker 1: I want to see in the world, with the idea
Speaker 1: that if free markets are ultimately efficient, other money will
Speaker 1: follow and it will unlock and create change. SPACs are
Speaker 1: a perfect example. We're gonna talk about SPACs in a
Speaker 1: little bit. I'm fascinated by the path less traveled UM
Speaker 1: and I'm kind of reminded of an old joke of
Speaker 1: friend used to say, what's the difference between having a
Speaker 1: billion dollars or having two billion dollars? And the answer
Speaker 1: is really nothing? Um, nothing, right, isn't it? What is
Speaker 1: the difference? So, so once you wrap your head around that,
Speaker 1: why build an a UM machine? Why take a GP
Speaker 1: and do all the things you don't want to do
Speaker 1: just so you can say, look, I think there's something
Speaker 1: very valiant in building a company of any kind. I
Speaker 1: don't care what it is, because you end up hiring people,
Speaker 1: you end up creating your own little economy. You know,
Speaker 1: by hiring good people and paying them, you're giving them
Speaker 1: a path, You're giving them, you know, some amount of
Speaker 1: purpose in their lives. So, you know, any form of
Speaker 1: company building I think is heroic. The person that chooses
Speaker 1: to build a company, I don't care what it is.
Speaker 1: It could be a garbage business and a u M business.
Speaker 1: You know, Um, they're all to me where I look
Speaker 1: at the founders of those things, like you, and you're
Speaker 1: in a class of hero for me. Um. Everybody may
Speaker 1: not view with the same you know. Sometimes now founders
Speaker 1: unfortunately sometimes can get vilified for being an entrepreneur. Um.
Speaker 1: But in general I think they're heroic. Um. But again,
Speaker 1: that's not what I was trying to do my returns
Speaker 1: in society. I wanted to be expressed by a different
Speaker 1: kind of change and a different kind of purpose, which
Speaker 1: was a practical problem solved. You know, I want reforestation
Speaker 1: to be, you know, done differently. I want a gene
Speaker 1: editing solution to be so cheap and so fastly available
Speaker 1: we can eradicate, you know, the thirty two thousand inherited
Speaker 1: Mandelian diseases. You know, I want to figure out how
Speaker 1: to get you know, sub hundred dollars solar on everybody's roof,
Speaker 1: and to build a massive distributed energy utility in America.
Speaker 1: It turns out I'm doing all those things now I
Speaker 1: can do that with my capital, and that's really great.
Speaker 1: That capital may go to zero UM. But you're saying
Speaker 1: that if you had these institutional endowments and other maybe
Speaker 1: large more conservative investors who were more concerned about I
Speaker 1: r R, then moving the needle short term I r
Speaker 1: R because you know, again, they have a job to do.
Speaker 1: They have pension obligations to make, they have, you know,
Speaker 1: other things that they're funding. They have the lifestyle they
Speaker 1: want to pay for, um. They have their own annual
Speaker 1: reviews and bonuses and things. So you know, it's not
Speaker 1: to debate the validity of it. It just exists. And
Speaker 1: I'm not willing to sign up for that because durationally,
Speaker 1: and by the way, you can see that certain funds
Speaker 1: have realized that that durational limitation doesn't work in tech anymore. Right,
Speaker 1: So now you're seeing these fifteen year funds, right, Some
Speaker 1: of these climate funds are really long dated so that
Speaker 1: they can take huge, long risk with very sticky money.
Speaker 1: I think that's moving in the right direction. You know what,
Speaker 1: I raise a you know, a twenty year fund. You're
Speaker 1: how old? Forty five? All right, So you could do
Speaker 1: with twenty year funds if you want to move the needle,
Speaker 1: but a ten year fund I will never do. Well,
Speaker 1: never say never, but I you know, it would be
Speaker 1: a very very high bar. Quite fascinating. Let's talk a
Speaker 1: little bit about social cap all social media and being
Speaker 1: a lightning rod. I kind of get the sense that
Speaker 1: you like mixing things up and getting people upset by
Speaker 1: saying things that are contrary to commonly accepted beliefs. Well,
Speaker 1: I mean, look, here's what I'll say. Um, I really
Speaker 1: like saying what's on my mind. Um, I think it's
Speaker 1: really important. It's sort of one of the advantages of
Speaker 1: you know, being free, right and living in a free society.
Speaker 1: And so I really take that to heart and I
Speaker 1: love that. And you know, along the way, sometimes I
Speaker 1: do get a you know, some some giggles out of
Speaker 1: like trolling some folks on Twitter, which is fun. So
Speaker 1: let's talk about trolling. You mentioned you were up one
Speaker 1: quarter three point six percent compared to the SMP which
Speaker 1: was only up two point three percent, and you said, hey,
Speaker 1: I'm doing fifty six percent better than the index, which
Speaker 1: is technically true. But the enumerates on Twitter lost their minds.
Speaker 1: Tell us what was that? An example of trolling? Absolutely?
Speaker 1: I got such a kick out of that. People just
Speaker 1: lose it. It's so delicious, Um, you know. I I
Speaker 1: think what's important is that a lot of those things
Speaker 1: are probably saying more about them than they are about
Speaker 1: me UM, and their own insecurities and whatever they're dealing with.
Speaker 1: I think there are a lot of people, in fairness
Speaker 1: to them, that are trying really hard and treading water.
Speaker 1: And I think one thing in fin twit that you'll
Speaker 1: see a lot is folks that are out there, you know,
Speaker 1: in the arena. As Roosevelt used to say with the
Speaker 1: dust on his face, Guys like me UM can be
Speaker 1: viewed as polarizing. And it's not because of what we
Speaker 1: do or our success, but it's the actual act of
Speaker 1: doing because that's what other people are constrained by. And
Speaker 1: I think that tilts folks times. So so let me
Speaker 1: turn this away from them to you for a second,
Speaker 1: and pardon me if I'm projecting at all. So the twentysomething,
Speaker 1: thirty something Chamat who's an engineer and a team leader
Speaker 1: and his confident of Zuck. That's a different person than
Speaker 1: the forty five year olds venture capital and someone looking
Speaker 1: to make a dent in the world. Have you found
Speaker 1: you had to sort of change your m O based
Speaker 1: on who you are and where you sit and have
Speaker 1: that's changed your outlook and job and complete reputation? How
Speaker 1: is that morphed over the years? I think the the
Speaker 1: best way to save Barry is that UM, in the
Speaker 1: in the absence of a very few people, most of
Speaker 1: us bring into adulthood a ton of baggage and a
Speaker 1: lot of folks are dealing with baggage from how they
Speaker 1: grew up. And I am sort of exhibit a of that.
Speaker 1: You know, you leave a country because of a civil war.
Speaker 1: You know you settle in a different country, where in
Speaker 1: Canada in this case, where you know you come as refugees.
Speaker 1: You know you live above a laundromat, you take you know,
Speaker 1: used hand me down clothes. Um, you live on welfare. UM.
Speaker 1: You know your dad has you know, issues with alcohol, depression, employment.
Speaker 1: Those are not unique to me. Those are unique to
Speaker 1: so many people in the United States end in Canada.
Speaker 1: What happens though, is that then it creates these very
Speaker 1: subtle loops of self sabotage. So when you're young, you
Speaker 1: can overcome that by sheer brute force. And when I
Speaker 1: was young, I was, you know, more mathematical than other people,
Speaker 1: more technical than other people, just more clever than other
Speaker 1: people in the jobs that I did. So I could
Speaker 1: overcome my tendency to give myself a hard time and
Speaker 1: make my life more difficult than it needed to be.
Speaker 1: Then you slowly become Then I slowly started to become successful.
Speaker 1: And for whatever reason, the biggest thing was I said,
Speaker 1: I gotta go and fix those holes because that baggage
Speaker 1: is becoming way too heavy for me. How did you
Speaker 1: come to that realization? Because most people present company included
Speaker 1: meander through life oblivious, leaving awake of death and destruction
Speaker 1: behind them, and through distress, really through distress. What was
Speaker 1: the distress that led you to that? Inside, I had
Speaker 1: a six month period where my father died, So he
Speaker 1: was he died at seventy two. Right at that time,
Speaker 1: you know, I was already very successful, um, and so
Speaker 1: I had all this money. But my dad had been
Speaker 1: a lot lifelong diabetic, no credible path to a kidney transplant.
Speaker 1: He had a cardiac arrest. He was he was an
Speaker 1: end stage renal failure and he died October. And then
Speaker 1: six months later in May, my best friend died. We
Speaker 1: were all on vacation together in Mexico and he died. UM.
Speaker 1: And so it was just this gut punch, this one
Speaker 1: too gut punch. One person who is this very complicated
Speaker 1: figure in my life, and another person who is my
Speaker 1: bigger brother and very much my protector. And without these two,
Speaker 1: I was a little listless, to be honest. And that's
Speaker 1: when I said, I have to figure out what's going
Speaker 1: on and get to the bottom of this um. And
Speaker 1: I don't know to this day why, because the other
Speaker 1: you know, the other modality when you're like, if you
Speaker 1: ask anybody you look at it really performing, you know
Speaker 1: anybody who's really good at anything who grew up in
Speaker 1: a really shitty environment. Sorry, you could say that, we'll
Speaker 1: just be The reaction is to suppress and compartmentalized. That
Speaker 1: is the most powerful coping mechanism you have. And for
Speaker 1: whatever reason, in my mid thirties, I finally stopped trying
Speaker 1: to do that as much. And then I found people
Speaker 1: in my life who became these outlets that just start
Speaker 1: pulling stuff out of me. Now this sounds really soft,
Speaker 1: but it goes to when you look at the future
Speaker 1: or when you look at your like when I look
Speaker 1: at my heroes, one of the things that I see
Speaker 1: is the common through line is that they've all become
Speaker 1: exceptionally comfortable with themselves. They're not necessarily palatable to other people.
Speaker 1: It means, it means nothing, but they they have done
Speaker 1: that work and that's what allows them to be highly functional.
Speaker 1: And when you look at folks like Buffett, or you
Speaker 1: look at folks like Mike Bloomberg, how are you functional
Speaker 1: and competent and so on point through so many decades
Speaker 1: and changes, it's because they know who they are. They're
Speaker 1: not asking you to like who they are. They like
Speaker 1: who they are, and so I embraced that process. And
Speaker 1: so it's a journey. So I am seven years in
Speaker 1: to a journey, and these last seven years have been
Speaker 1: very powerful because of that. I feel like I've been unshackled.
Speaker 1: But those were those were uh, those are handcuffs that
Speaker 1: I had made for myself. But that's still pretty young
Speaker 1: to be that enlightened and self aware. Those of us
Speaker 1: who have found that and and a lot of people
Speaker 1: eventually find that, but it's not at thirty seven. It's
Speaker 1: usually a little later in life. So first, kudos to
Speaker 1: you for for picking that up so early. But second,
Speaker 1: do you look around and see other peers and other
Speaker 1: colleagues and say that guy would be great if or
Speaker 1: that one will be fantastic if only he was a
Speaker 1: little more self aware of the less it's less judgmental
Speaker 1: than that, because that that is like if the if
Speaker 1: only part. No, But I have now become hyper attuned
Speaker 1: to the things that used to hold me back when
Speaker 1: it manifests in other people, and I see it everywhere.
Speaker 1: But I have a lot of empathy for that now.
Speaker 1: So as whereas before I think I would have been
Speaker 1: much more judgmental, Um, I'm a lot calmer about it,
Speaker 1: and I and I and I'm more empathetic. And where
Speaker 1: it helps, very practically speaking, is I'm still you know,
Speaker 1: big shareholders in many companies, and the people that get
Speaker 1: the benefit of that training for whatever it's worth to them,
Speaker 1: or all my CEOs, as all the founders, they get it.
Speaker 1: And uh, and I think I'm the edges on the margins.
Speaker 1: I think some of them really appreciate it. I don't know.
Speaker 1: I don't ask them, but not everybody is that zen
Speaker 1: when real money is involved. Is that well, will it's
Speaker 1: gonna be? What it's going to be? I could share
Speaker 1: my wisdom. Is the biggest distraction you can create for
Speaker 1: yourself if you want to do something useful. Isn't that fascinating?
Speaker 1: Go and read the obituary of Steve Jobs that his
Speaker 1: sister wrote in the New York Times. And I've said
Speaker 1: this a couple of times, and I'll just repeat it
Speaker 1: because it's so powerful. When he's on his deathbed, he's
Speaker 1: not saying I invented the iPhone. He has his family
Speaker 1: around him, and he's saying, oh wow, repeatedly, oh wow,
Speaker 1: oh wow, oh Wow. My interpretation of that is that
Speaker 1: he is talking about something that is so much more
Speaker 1: important than money and accomplishments. It's a journey, it's an evolution.
Speaker 1: It's basically feeling like you've had these great, beautiful relationships,
Speaker 1: right and accounting, a real life accounting of your progress. Uh.
Speaker 1: And I want to be on that journey so that
Speaker 1: fifty years from now, sixty years from now, seventy years
Speaker 1: from now, you know, touch with is as far away
Speaker 1: as it takes. I want to be able to do that,
Speaker 1: and so it allows me to not care one sintila.
Speaker 1: Like I said, I have a little bit of money
Speaker 1: that I put away to protect myself, but I don't
Speaker 1: need the house I live in. I don't need the
Speaker 1: plane I have. I don't need any of that crap.
Speaker 1: I use it to make my life efficient, but I
Speaker 1: don't need any of it. It doesn't define me. I
Speaker 1: don't let how other people view me and let it
Speaker 1: impact me. And that's really powerful. So let's stay with
Speaker 1: the concept of money as getting in the way of
Speaker 1: accomplishing things or of decision making. Right. I'm fond of
Speaker 1: saying money is a tool and all a hammer could
Speaker 1: be used to build a house or to break a window.
Speaker 1: It's tools can be used and misused. But I want
Speaker 1: to talk about this within the context of what you've
Speaker 1: described as activist capitalism, and then we'll we'll get into
Speaker 1: crypto shortly after that. Tell us what is activist capitalism.
Speaker 1: If you want to make enormous amounts of returns, you
Speaker 1: have to go where there is the most risk. So
Speaker 1: meaning if if you if I said to you, hey, Barry,
Speaker 1: can you become a trillionaire investing in bonds, you would say,
Speaker 1: chamath not in a trillion years, right, There is zero
Speaker 1: risk in that market. The returns are meager. But if
Speaker 1: I said to you Berry, could you make a trillion
Speaker 1: dollars in crypto? You would say absolutely. I don't know how,
Speaker 1: but it's possible. But now think of what it really means.
Speaker 1: It doesn't mean that you're taking massive, huge bets of capital.
Speaker 1: In fact, you could make enormous returns. And you know,
Speaker 1: I mean I have. I've made billions of dollars in crypto,
Speaker 1: investing millions of dollars. So you didn't need to have
Speaker 1: billions of dollars. What did you need? You needed to
Speaker 1: have an extremely different point of view, and in many
Speaker 1: ways that point of view isolates you, and so you
Speaker 1: become a little bit of an activist. You have to
Speaker 1: believe something that everybody else doesn't, that in that moment
Speaker 1: is a little bit countercultural or counterintuitive, and you have
Speaker 1: to hold the line. That's what activist capitalism is. It's
Speaker 1: the ability to have these non consensus ideas and perspectives
Speaker 1: and hold on for dear life. So let me push
Speaker 1: back on that a touch only by saying you're located
Speaker 1: in Palo Alto. All the other venture capitalists out in
Speaker 1: California are mostly there on Sandhill Road and around it.
Speaker 1: Wouldn't the more contrarian perspective be let me get out
Speaker 1: of California and go somewhere else where I'm not part
Speaker 1: of the same crowd looking at the same deals. I
Speaker 1: think that's I think where you live is irrelevant. You know,
Speaker 1: I live where I live because I like it, and
Speaker 1: I like my backyard and uh, you know, I haven't
Speaker 1: you know, nice house, and uh time, it's great, my
Speaker 1: friends are around. Um, that's why I live where I live. Um.
Speaker 1: The ideas that I find in our yard oftentimes are
Speaker 1: really countercultural to what the orthodox perspective is in that moment,
Speaker 1: I don't need to move to Austin or Miami to
Speaker 1: find that. I can find that where I live. It
Speaker 1: comes down to are you willing to buck the establishment
Speaker 1: and how the establishment measures you to be an activist?
Speaker 1: So let's stay with that. And there's another quote of
Speaker 1: yours that I have to bring up, Crypto destroys capitalism
Speaker 1: and that's better for the world. Explain that, because that's
Speaker 1: quite a nuanced perspective. We're replacing what capitalism is. There
Speaker 1: are small pockets of how it will work in the future.
Speaker 1: I think venture capital is an embodiment of that. But
Speaker 1: the overwhelming amount of capitalism today is inefficient, and it's
Speaker 1: supported by decision making and constructs that are artificial. So
Speaker 1: let me be specific. Today the entire financial infrastructure of
Speaker 1: the world is in part merit, and in part historical artifact,
Speaker 1: and in part um establishment and prestige. I go to
Speaker 1: a good school, I play lacrosse. I'm a three letter athlete.
Speaker 1: I get into an IVY. I go through IVY, then
Speaker 1: I go work at a bulge bracket firm. Then maybe
Speaker 1: I go and I get an m b A at
Speaker 1: one of these said ivys that I go back to
Speaker 1: said bulge bracket firm. Then I go to the buy side.
Speaker 1: I work at a blue chip hatch fund. Maybe I
Speaker 1: start my own. I know all of my buddies, My
Speaker 1: buddies did the same things, and eventually what happens is
Speaker 1: there's not enough diversity. And I don't mean diversity and
Speaker 1: like skin color and religion and sexual orientation. I mean
Speaker 1: diversity in your mind. You know which is you have
Speaker 1: been playing by a very rope playbook. And if everybody
Speaker 1: else that's also at the top echelons of a pecking
Speaker 1: order are playing by that same playbook, you all become
Speaker 1: a monoclass. You're predictable. The same factory is producing the
Speaker 1: same thing. You could be. You could be brown, yellow, black, white.
Speaker 1: You went through them. You could be male, female, it
Speaker 1: doesn't matter. You went through the same things. You were
Speaker 1: rewarded by the same mechanisms. You were taught Pavlovian like
Speaker 1: a Pavlovian dog to behave in one way. And then
Speaker 1: you armed people with money and say go do what
Speaker 1: you think is right. Imbue the markets force into the world,
Speaker 1: and they're all going to do the same. They're all
Speaker 1: going to do the same thing. That's why capitalism isn't working.
Speaker 1: It's not working for enough people because we have a
Speaker 1: mono class of people that control the money. So what's
Speaker 1: the solution to that. So when you look at Defy,
Speaker 1: and when you look at Bitcoin, and when you look
Speaker 1: at Ethereum and Salana and all of these projects, are
Speaker 1: three principles that rip that industry and entitlement and establishment apart.
Speaker 1: Number one is that it's completely decentralized. So instead of
Speaker 1: having these centers of power. You have loose affiliations. Why
Speaker 1: is that so disruptive? It's because you can't go and
Speaker 1: get a gold star from working at x y Z organization. Right,
Speaker 1: there's no more hierarchy. There's no ladder decline, no middleman
Speaker 1: charging a fee in between every no different There's no
Speaker 1: place where you can say I worked at x y Z,
Speaker 1: so I am as a result, smarter than you. Right,
Speaker 1: if you work at a bulge bracket firm, you look
Speaker 1: at people that haven't worked there as lesser than you.
Speaker 1: That's what people do. But in a world of decentralization,
Speaker 1: where there's all these projects and you know there's there
Speaker 1: are no companies anymore, um, you have completely different ways
Speaker 1: in which organizations get built. You have completely different ways
Speaker 1: in which regulations have to adapt because you can't control
Speaker 1: these projects. Um. And as a result of all of
Speaker 1: these things, you have very different outcomes. And the outcomes
Speaker 1: are now you have diversity. All kinds of crazy random
Speaker 1: people thinking, all kinds of crazy random things are now
Speaker 1: acting through these tools to rebuild capitalism the way they want.
Speaker 1: I want, you know, checking accounts to work this way.
Speaker 1: I want mortgages to work that way. I want credit
Speaker 1: scoring to work the other way. I want insurance to
Speaker 1: work this way. By the way, it's not just finance.
Speaker 1: I want art to work in the other way. That's
Speaker 1: how n f t s are right. I want music
Speaker 1: to work in this way. I want social networks to
Speaker 1: work in the other way. There are thousands and thousands
Speaker 1: of these projects being built that are completely decentralized, completely democratic,
Speaker 1: you know, completely a p I ified. It's hugely disruptive
Speaker 1: for capitalism because it introduces massive heterogen eighty right, massive
Speaker 1: diversity in the people that control the allocation of the money.
Speaker 1: Number one, and then number two. Of the reason why
Speaker 1: it's super disruptive is all of this either damage your progress.
Speaker 1: Depending on which side of the ledger you want to
Speaker 1: can get started with a few thousand, ten thousand, hundred
Speaker 1: thousand dollars. And so now you don't need five hundred
Speaker 1: million dollars, You don't need to go to four growth
Speaker 1: funds to raise half a billion dollars because you're one thousand.
Speaker 1: You know, you're one thousand. Dollar investment can literally become
Speaker 1: half a billion dollars. So now you democratize who can
Speaker 1: play the game. You can democratize the capital allocation. So
Speaker 1: now there's a diversity of ideas, there's a diversity of
Speaker 1: people putting money to work. It's a brave new world.
Speaker 1: What's the third bullet point you had, you had referenced,
Speaker 1: So it's democratization, it's decentralization, and then it's what I
Speaker 1: call decompose ability, meaning um, the beautiful thing about this
Speaker 1: brave new world as well is without company, ease and
Speaker 1: without project, without you know, hierarchy, there's enormous amounts of cooperation.
Speaker 1: And the basic way to think about this brave new
Speaker 1: world of crypto is using legos. I have an idea,
Speaker 1: I build something with all the legos that have come
Speaker 1: before me. But there's only one rule, Barry. If you
Speaker 1: use the legos, you yourself have to be a lego
Speaker 1: to somebody else. And that's what compose ability and decomposability means.
Speaker 1: Those are the three pillars of this brave new world,
Speaker 1: and it's going to rewrite capitalism. I build an organization
Speaker 1: that doesn't have a company around it. I make everything
Speaker 1: hyper transparent. It takes small amounts of money to completely
Speaker 1: blow up entrenched interests, and then all of that value
Speaker 1: I must make available to anybody else. And I cannot
Speaker 1: say no to them. Think of how the world today works.
Speaker 1: That's not how it works. If you wanted to build
Speaker 1: an app on the Apple App Store, they can say no,
Speaker 1: you got to get their approval, And if and even
Speaker 1: if you get their approval, there's nothing that prevents them.
Speaker 1: As epic games have slurens of saying, we're gonna pull back.
Speaker 1: We don't like what you're doing. So so let me
Speaker 1: ask what I think is an obvious question. Capitalism has
Speaker 1: proven itself extremely adept at co opting challenges to itself.
Speaker 1: The old line um capitalism, which capitalists would sell you
Speaker 1: the rope to hang himself by, turns out not to
Speaker 1: be all that true, because the capitalist is also gonna
Speaker 1: be selling tickets to the crowd and building hotels, and
Speaker 1: before you know it, what was going to be a
Speaker 1: single event becomes a giant economic engine. What's going to
Speaker 1: prevent those existing bulge bracket firms, Ivy League schools, endowments,
Speaker 1: the usual uh capitalists from plowing into crypto and blockchain
Speaker 1: and all the fun stuff and but co opting it
Speaker 1: so it becomes just part of a capital firmament. It's
Speaker 1: not you're saying, it's not. It's not cooptible. It's not.
Speaker 1: But I think that they should be a part of it.
Speaker 1: I I don't like exclusion. I am like a inclusion maximalist.
Speaker 1: Like you know, what is the like the mission of
Speaker 1: social capital, right or a vision? I have a vision
Speaker 1: at our firm. We right, We talked about it all
Speaker 1: the time. Which is even the starting line. Now, imagine
Speaker 1: you had a world where you could find the smartest
Speaker 1: rocket scientist, the smartest mathematician, the smartest biochemist, the smartest
Speaker 1: materials engineer, the smartest AI person, the smartest artist, the
Speaker 1: best seamstress, whatever it is. The world today doesn't allow
Speaker 1: us to find the best human capital, as expressed in
Speaker 1: any of the things we need to move the world forward.
Speaker 1: Why if you're a woman in the wrong country, you're screwed.
Speaker 1: If you're a colored man in the wrong country, you're screwed.
Speaker 1: If you're you know, Jewish or not Jewish in a
Speaker 1: certain country, you're screwed. If you're you know, gay in
Speaker 1: this country or that country, you're screwed. If you're in
Speaker 1: the wrong cast in this other country. I mean, like
Speaker 1: the amount of limitations we put on maximizing human potential
Speaker 1: is insane. Half the world doesn't allow people to reach
Speaker 1: their potential. It's probably more um and it's all by design.
Speaker 1: We choose to let these inefficiencies compound. And so you know,
Speaker 1: I believe that we are way better off where there's
Speaker 1: a race, right. My My vision is like there's a
Speaker 1: starting line, the gun goes off. Everybody on the earth
Speaker 1: is on an even playing field to start, not to end,
Speaker 1: but to start, and some people will take the off
Speaker 1: ramp and become, you know, a fashion designer and you
Speaker 1: would say, how did this guy come out of nowhere
Speaker 1: to become you know? Or some people go off and
Speaker 1: do music in a way that you never thought was possible,
Speaker 1: and there'll be such a renaissance of possibilities. So I'm
Speaker 1: an inclusion maximal, which is, let's get everybody into the party,
Speaker 1: gave everybody the same tools, and then let's see what happens.
Speaker 1: It's so fair and just for people. And what I
Speaker 1: don't like is because I went to x y Z school,
Speaker 1: or because my last name is x y z, or
Speaker 1: because you know I worked at x y Z place,
Speaker 1: I should have some advantage and I don't think that's right.
Speaker 1: So I'm am I being overly optimistic in saying that
Speaker 1: world you've described bulge bracket farms, big banks, ivy league schools.
Speaker 1: It's a very twentieth century construct, and it was pretty
Speaker 1: clear early in the twenty one century that that was
Speaker 1: losing its grip on on the economy, on the government,
Speaker 1: and on capitalism itself. Or am I am I just
Speaker 1: being too pollyanish with that. I think you're I would
Speaker 1: not include like you know, Look, I think the financial
Speaker 1: organizations have enormous potential to adapt and be an incredible
Speaker 1: participant in the future. And I think that there's so
Speaker 1: many good people inside these banks and organizations that I
Speaker 1: think will thrive. So I'm kind of convinced they're they're
Speaker 1: on the side of history going to be judged well.
Speaker 1: I have much more of an issue with universities. I
Speaker 1: think they're fundamentally on the wrong side of history, and
Speaker 1: I think that they have done an enormous disservice to
Speaker 1: so many of our kids and parents because basically in
Speaker 1: the nineteen look, if you take the cost of a
Speaker 1: university education and you graph it as a function of time,
Speaker 1: and you put one single dot on it as a
Speaker 1: trigger for price inflation, I would annotate that dot as
Speaker 1: the two U S News and World Report that started
Speaker 1: to create university rankings in America. It literally you can
Speaker 1: see that costs were contained until that stupid magazine tried
Speaker 1: to create this insert to sell ads. By the way,
Speaker 1: so what were they motivated by. They were motivated by,
Speaker 1: you know, selling CPM inventory to like R. G R.
Speaker 1: Reynolds and Ford. Right, paper ads in a magazine has
Speaker 1: all of a sudden tricked university administrators to think that
Speaker 1: this is a luxury good that should be meted out
Speaker 1: like a reservation line to get a nerm as person.
Speaker 1: That is insanity. And especially in the world where we
Speaker 1: can have you know, uh, pervasive internet connectivity, where we
Speaker 1: can find the best grade five science teacher, you know,
Speaker 1: the best you know, AP calculus teacher, that we're not
Speaker 1: letting all of humanity benefit from that to me is insanity.
Speaker 1: So and then on top of that, there's this moral
Speaker 1: overlay now inside of universities where they will also then
Speaker 1: now make judgments about what you can be taught. And
Speaker 1: so what that effectively does is rob people from the
Speaker 1: ability to learn from first principles, right to attack idea
Speaker 1: down to the basics and build a back up, which
Speaker 1: is a tool. Kid, It's a process thing. So I
Speaker 1: I am very negative on universities and what they've done
Speaker 1: culturally and academically and institutional in societally in America. Uh
Speaker 1: less so about Like you know, I think financial firms
Speaker 1: in general will be great participants of this new capitalist ecosystem,
Speaker 1: but I think the universities have completely failed. That's quite
Speaker 1: an interesting take, and I know a few people who
Speaker 1: share versions of that perspectives on both the left and
Speaker 1: the right. The criticism of the of the US college
Speaker 1: and university system is is pretty robust. Let's stick with
Speaker 1: one more um criticism. We'll talk about zombie companies. You
Speaker 1: had criticized the pandemic bailout of companies by the US government.
Speaker 1: Tell us what you specifically, Uh, we're unhappy with when
Speaker 1: it came to entities like airlines, I have no issue.
Speaker 1: I want to be clear with airlines. Um, and quite honestly,
Speaker 1: I have Uh. You know, look, when a company, I
Speaker 1: just want to set the table stakes. When a company
Speaker 1: goes through bankruptcy, any company, you know, it can happen
Speaker 1: in a way that preserves employment for all of the employees.
Speaker 1: It can happen in a way that preserves pensions. Now,
Speaker 1: you know, rapacious people who take over companies and force
Speaker 1: them into backgrountcy can do all kinds of bad things,
Speaker 1: but it's also possible that you can do it in
Speaker 1: this other way as well. What I was reacting to
Speaker 1: in that moment was that we were about to reward
Speaker 1: a behavior. So I had no issue with airlines, but
Speaker 1: I had I had an issue with the following behavior. Barry.
Speaker 1: We have seen R and D investment inside of America's
Speaker 1: companies effectively go to zero over the last twenty years.
Speaker 1: We've seen instead buy backs replace R and D investment.
Speaker 1: In that same period of time, we've seen compensation plans
Speaker 1: get written by boards that completely reward a manipulation of
Speaker 1: earnings per share. And then we see c e O
Speaker 1: s optimizing earnings per share by pilfering all of this
Speaker 1: money that should go into R and D into buy backs.
Speaker 1: And the airlines, to be very honest, were one of
Speaker 1: the worst offenders of that. The airline's new climate change
Speaker 1: was coming. Did they invest in a fuel stock that
Speaker 1: was basically more carbon efficient over the last years, Did
Speaker 1: we figure out a way to do more efficient plane routing?
Speaker 1: Did we influence how Boeing and Airbus really built those
Speaker 1: airplanes to be you know, to have better wing designs. No,
Speaker 1: they optimized for massive free cash flow, and they optimized
Speaker 1: for share buy backs, and they optimized for massive compensation
Speaker 1: plans to the CEOs of those companies. Now, in fairness
Speaker 1: to the airlines, it wasn't just them, it was entire industries.
Speaker 1: And then the idea that you go on you bail
Speaker 1: them out before you bail out individual folks on main street,
Speaker 1: to me seemed very unfair. And I thought, what would
Speaker 1: be better would be to show people that actually we
Speaker 1: want to reward R and D, you know, we want
Speaker 1: to make buy backs harder. And by the way, if
Speaker 1: you look at what's proposed in the current you know,
Speaker 1: plans that are in front of Congress, there are elements
Speaker 1: of what I proposed. Right, folks are being forced to basically,
Speaker 1: they will be taxed on buy backs. Great idea. I
Speaker 1: think the tax should be much higher, um and then
Speaker 1: they should be there. And there are some incentives for
Speaker 1: R and D, and I wish those incentives were higher. Now,
Speaker 1: put all these things together, why is that idea so
Speaker 1: powerful today? Sitting here in two thousand and twenty one. Um, yeah,
Speaker 1: we're in September. We're seeing China unravel, right, We're seeing
Speaker 1: the great vertical integration of the second largest economy in
Speaker 1: the world. And what that's going to create is a
Speaker 1: national security interest for us to be reliant on ourselves
Speaker 1: and to be diversified in who we work with around
Speaker 1: the world. That requires an enormous amount of R and D.
Speaker 1: So you cannot keep doing share buy backs and compensation
Speaker 1: schemes to CEOs. The right CEOs in the SMP five
Speaker 1: should be planning twent of free cash flow to solve
Speaker 1: these problems because these are of national interest and national security.
Speaker 1: That's a really interesting place to take it. I was
Speaker 1: not expecting you to go there. We think of China
Speaker 1: as both a I'm not going to use the word
Speaker 1: that everybody uses and it's terrible, but both uh a
Speaker 1: industrial real ally and an economic competitor. You're taking this
Speaker 1: to the whole next level. National security requires us to
Speaker 1: bring back a lot of the manufacturing that we've outsourced
Speaker 1: to China, whether it's semiconductors or something less sophisticated. China
Speaker 1: is a friend of me. That's the word I was
Speaker 1: trying to avoid there an exceptionally intelligent, brilliant freen of me,
Speaker 1: and so we have to be extremely thoughtful and strategic
Speaker 1: and how we engage in them with them. But here
Speaker 1: are a couple of things that I think will come
Speaker 1: to pass. G is the new Mau. There is only
Speaker 1: one economy, and then that's China inc. And China will
Speaker 1: have to deal with their you know, a lot of
Speaker 1: all of this, by the way, is motivated, is motivated
Speaker 1: by demographics. China is a demographic time bomb and it's
Speaker 1: probably already gone off. And this is why I think
Speaker 1: G is acting much more aggressively than he has when
Speaker 1: you say demographic time bomb. It was the single child,
Speaker 1: single child policy for far too long. There's not enough girls,
Speaker 1: there's too many men, and they're they're an aging population.
Speaker 1: I mean all of those boundary conditions. You know, young
Speaker 1: capable men. We're great fodder for industrial manufacturing and automation
Speaker 1: and exports during the nineties and two thousand's, but now
Speaker 1: these men are forty and fifty. There's not enough women,
Speaker 1: there's not enough kids, and so it's a huge problem
Speaker 1: for China. And you know, right now, I think the
Speaker 1: forecast is you know, again, the outside in projections, are
Speaker 1: China's gonna shrink by half by the end of It's
Speaker 1: probably worse than that, based on my observation of how
Speaker 1: she is acting now. Because if you can vertically integrate
Speaker 1: the economy, you control upcomes better and then you can
Speaker 1: basically have a software landing for the people that are there.
Speaker 1: That's but as that's happening, it is beyond the shadow
Speaker 1: of a doubt that China at some point will engage
Speaker 1: in some sort of foreign adventure. The only foreign adventure
Speaker 1: that makes sense for them is time, and so we
Speaker 1: will be pulled into an enormous decision. What do we
Speaker 1: have to do today? We have to invest, but not
Speaker 1: just in semiconductors. It's an example of a problem where
Speaker 1: China controls the overwhelming majority of the rare earth. So
Speaker 1: to the extent that we believe in electrification, we have
Speaker 1: to do stuff there to the to the extent we
Speaker 1: believe in solar panels. Even a lot of the you know,
Speaker 1: polycar silicon carbonate is made in China. Why, by the way,
Speaker 1: because China has coal and you need enormous heat and
Speaker 1: enormous energy to produce solar panels. So that raises a
Speaker 1: pretty obvious question, how do you compete with the country
Speaker 1: that thinks in terms of decades. When we were recording
Speaker 1: this a few days before the death ceiling vote takes place,
Speaker 1: we can't even think in terms of hours and days.
Speaker 1: How do you compete against the country that thinks in
Speaker 1: terms of decades and century. It's an elegant big I
Speaker 1: would go back. It's an a good way to tie
Speaker 1: back to the beginning. The venture capitalist and the engineer
Speaker 1: and the entrepreneur are the most important that they've ever been.
Speaker 1: And when you marry that cohort of people with a
Speaker 1: more decentralized form of capitalism, what I think eventually you
Speaker 1: will have is a lot more bets, a lot more
Speaker 1: ambitious bets, and some bets that are frankly more duration
Speaker 1: weighted twenty year bets. You know, and you see some
Speaker 1: folks right now that have done this, the work that
Speaker 1: Breakthrough Energy Ventures Bill Gates organization has done to fund nuclear.
Speaker 1: You know, I don't want to hear people's opinions on
Speaker 1: nuclear because most people's opinions are uninformed. The real thing
Speaker 1: about nuclear is that if you strip away perceptional issues,
Speaker 1: this is a real technical solution to climate change in decarbonization,
Speaker 1: it just is um but it required, you know, a
Speaker 1: sentibillionaire to basically plow billions of dollars of his own
Speaker 1: any over twenty tens and twenty years at the time.
Speaker 1: So I think that we are solving the problem, but
Speaker 1: we just need to accelerate it. The risk that we
Speaker 1: have is actually one of ideology, which is what you said,
Speaker 1: which is that we've actually unfortunately demoralized capitalists, We've demoralized entrepreneurs,
Speaker 1: We've demoralized engineers, we've demoralized moderates. And that is what
Speaker 1: we need to fix because sometimes I don't know if
Speaker 1: you feel this way. I wonder to myself, should I
Speaker 1: feel guilty for being a business person, you know, because
Speaker 1: it's like it's like there's a level of vilification and
Speaker 1: vitriol that I think is it's it's it's misplaced. Well,
Speaker 1: there's this general frustration and anger, um. And we'll talk
Speaker 1: a little bit about social media that does such a
Speaker 1: wonderful job amplifying and misinforming people. But there's a sense that,
Speaker 1: you know, Apple and Amazon don't pay their fair share
Speaker 1: of tax is and that the system has been rigged
Speaker 1: by the moneyed class. Who lobby Congress to get rules
Speaker 1: that pass for themselves, and that that the level playing
Speaker 1: field that you so eloquently described has been precluded by
Speaker 1: the has wanting to maintain what they have and not
Speaker 1: allow anybody else to even get a hand on the
Speaker 1: lowest wrung on the ladder. Absolutely right, all those things
Speaker 1: are right. So what the next question is what can
Speaker 1: we do about it? If we're not sent to billionaires
Speaker 1: with the ability to bring thorium reactors or whatever Bill
Speaker 1: Gates is working on to the four what can the
Speaker 1: average person do to accelerate the change that we all
Speaker 1: know is so needed. A. There's a really beautiful question,
Speaker 1: and well said. People can vote with their time, and
Speaker 1: in order to do that properly, you need places to
Speaker 1: allocate that time that give you this kind of purpose.
Speaker 1: And so there should be more nuclear reactor companies that
Speaker 1: exist so that more people can choose to work there.
Speaker 1: You don't need to be a nuclear scientist. They need accountants,
Speaker 1: they need lawyers, they need you know, all kinds of
Speaker 1: different people. I t people, you know, they need facilities people.
Speaker 1: So there's these breakthroughs in science. There should be more
Speaker 1: of these. The first part is really the critical part
Speaker 1: of what you said, we need to reframe the legislation.
Speaker 1: We shouldn't be preventing people from trying. We should take
Speaker 1: or fix the laws that make trying hard. I'll give
Speaker 1: you an example. One of the most important things that
Speaker 1: we could do for society in the United States is
Speaker 1: to fix chronic kidney disease, hypertension, and heart disease. We
Speaker 1: all know three in the US. We either all have
Speaker 1: it or we all know people with it. We're all
Speaker 1: taking some form of medication for it. Okay, there has
Speaker 1: not been nearly as much progress in these things over
Speaker 1: the last few years because, unfortunately, we have some legislation
Speaker 1: that says that if you want to go and you know,
Speaker 1: invest in diabetes type two diabetes solutions or you know,
Speaker 1: heart disease or whatnot, you have to also, after all
Speaker 1: of that work is done, which we already know costs
Speaker 1: billions of dollars, spend another couple billion dollars and have
Speaker 1: a ten person longitudinal trial on cardiac safety as well.
Speaker 1: That's just kind of like a standard upbringing procedure. You
Speaker 1: know what that does. Well, if you take a billion
Speaker 1: dollars of costs and lay on another billion dollars of costs.
Speaker 1: What you basically say is like, well, maybe the available
Speaker 1: number of companies that could fix this problem or a hundred,
Speaker 1: you reduce them to ten. And they're all public, and
Speaker 1: they're all beholden to public shareholders. And none of them
Speaker 1: are going to come out and put out a press
Speaker 1: release that says, now we're just gonna torch earnings for
Speaker 1: the next two years while we go off on this.
Speaker 1: You know, they're not gonna do it. So we need
Speaker 1: to change and refactor some of these laws. But we
Speaker 1: so I think I think the solution is to not
Speaker 1: demoralize the people who earnestly want to be on in
Speaker 1: the arena. You know, again, the Roosevelt quote is so good.
Speaker 1: It's like, you want to be the person that's in
Speaker 1: the arena with the dust on your face. You're gonna
Speaker 1: have some wins, you're gonna have some losses, but you're
Speaker 1: not on the sidelines. And you just got to give
Speaker 1: those folks a chance to try. And I think if
Speaker 1: we can fix some of these laws and regulations, they'll
Speaker 1: be less entrenched interest and they'll be more entrepreneurship. Quite
Speaker 1: quite fascinating, you know. I've had people tell me to moth.
Speaker 1: You got lucky. You've had far too many successes for
Speaker 1: me to think that this is the result of random luck,
Speaker 1: including you tried to buy the Sacramento Kings. It didn't
Speaker 1: work out, but a friend said, hey, you oh, this
Speaker 1: is back before the age of Curry, before the Warriors
Speaker 1: were Hey, you know, I'm looking to pick up the
Speaker 1: Golden State Warriors. Would would you like ten percent of it?
Speaker 1: You're like, well, okay, you put twenty five million into
Speaker 1: it last year. I think that million was worth half
Speaker 1: a billion. What's it worth now is it? That's about
Speaker 1: half a billion? Alright, So that's what Uh, that's a
Speaker 1: lot of That's so anybody who says I just got lucky,
Speaker 1: you can't get that lucky that frequently and recognize opportunity
Speaker 1: when it comes along. So first I have to ask
Speaker 1: what's it like being a team owner or partial owner?
Speaker 1: It's incredible fun, right, You know that I built some
Speaker 1: deep relationships with a bunch of the players past and present. Um,
Speaker 1: you know, we've had a lot of really great moments together, friendships. Um,
Speaker 1: you know, I found a lot of kinship in these
Speaker 1: players because they're they're a lot like me as well,
Speaker 1: like it's like you get committed to a craft, you
Speaker 1: get committed to excellence. We all had very similar backgrounds
Speaker 1: as well growing up, so there's a lot of you know,
Speaker 1: shared empathy and just having you know, tough childhood circumstances
Speaker 1: and fighting through it. Um They're they're great. I mean
Speaker 1: there there are are they are there are three Um
Speaker 1: of all of the guys I've that I've become unbelievably
Speaker 1: close to. Um, Um who I would say are my
Speaker 1: my dear friends. You know. So overall, the whole experience
Speaker 1: just sounds like it's just an absolute blast everything you
Speaker 1: Let's talk a little bit about SPACs. You've done really
Speaker 1: well with SPACs, including talked about twenty year time Horizon
Speaker 1: Virgin Galactic. I mean that is not a let's make
Speaker 1: the next quarters numbers. That's a decade long process. What
Speaker 1: attracted you to that company? Um? When I got under
Speaker 1: the hood of Virgin, I was attracted to how complicated, um,
Speaker 1: the solution was and how many things they had to
Speaker 1: put together. UM. Because so I had a different business
Speaker 1: at the time, which I still own a large piece
Speaker 1: of I'm the largest investor of, but it's the second
Speaker 1: most valuable private space company after SpaceX, it's called Relativity
Speaker 1: Space and Relativity had decided to try to three D
Speaker 1: print the whole shebang, the engines, the rock and everything
Speaker 1: and uh and and it was an incredibly ambitious project
Speaker 1: and it's you know, and now it's a multi billion
Speaker 1: dollar company and you know, touch wood that it's successful.
Speaker 1: But in all of that, I had learned how technically
Speaker 1: complicated space was, and I fell in love with it.
Speaker 1: But I had also learned how building for space allows
Speaker 1: you to build for the Earth. So then when I
Speaker 1: encountered you know, virgin and Branson, uh, you know, I
Speaker 1: was like, I can't believe, Richard, you have spent so
Speaker 1: much time and dedicated so much money um to this endeavor.
Speaker 1: These guys had created an revolutionary design and for a
Speaker 1: plane um and I say plane specifically because most rockets
Speaker 1: go up and down vertically, and Richard's you know, engineering
Speaker 1: was for a horizontal takeoff and landing. And when I
Speaker 1: explored that further, you know, his vision was not just
Speaker 1: to be able to go to space, but then to
Speaker 1: also go two different points on the Earth. And to
Speaker 1: use that same rocket, they had had to build their
Speaker 1: own hybrid rocket engine. They had to design fuel. They
Speaker 1: had to all this incredible stuff, and to me, what
Speaker 1: I saw were a lot of embedded option value. Um
Speaker 1: and so I was really proud to be a part
Speaker 1: of that. And what they're doing, I think is very special.
Speaker 1: So you've also been very successful in the spack space,
Speaker 1: the special purpose acquisition UH Vehicle company. Tell us a
Speaker 1: little bit what attracted you to SPACs. They have a
Speaker 1: long history. I don't think the average investor realizes SPACs
Speaker 1: have been around for decades. They just seemed to find
Speaker 1: a new popularity over the past a couple of years. So, um, yeah,
Speaker 1: I'll tell you my motivations um there too. One is
Speaker 1: very selfish, which is I want to own pieces of
Speaker 1: great businesses for as long as possible. And there are
Speaker 1: businesses that I've known in Silicon Valley being you know,
Speaker 1: birthed and growing up over the years where for whatever
Speaker 1: set of reasons, I wasn't an investor in in the
Speaker 1: private markets, but I was like, Wow, these could be
Speaker 1: really great businesses, and you know, I wanted to get
Speaker 1: to know them, and in that process, SPACs were a
Speaker 1: great way for me to compound my capital. Why because
Speaker 1: I am an enormously large investor in these things, right,
Speaker 1: So you know, the way SPACs work is that you
Speaker 1: put up a little bit of money for the potential
Speaker 1: of a huge return, and that's where most people start
Speaker 1: and stop. I do something additional, which is then I
Speaker 1: lead a pipe and I put a lot of my
Speaker 1: own money. Minimum the smallest pipe I've ever and there's
Speaker 1: a hundred million and the biggest I think is closer
Speaker 1: to fifty. I can't remember the exact number. But the
Speaker 1: point is that I love the process of putting my
Speaker 1: own money to work in a way where I have
Speaker 1: to really pay attention and make a really good decision.
Speaker 1: It's an incredible process. So that's my part. But then
Speaker 1: the second part, back to what we talked about before,
Speaker 1: I do think this is a way of creating more
Speaker 1: uh an even playing field. I think that you know,
Speaker 1: typically I p o s of hot shot tech companies
Speaker 1: are reserved to folks like me, rich guys with lots
Speaker 1: of assets, who have great relationships with the banks, and
Speaker 1: you just get fed these deals um and again, I
Speaker 1: think it's better where there's an even playing field and
Speaker 1: everybody has a shot to find these um to find
Speaker 1: these gems, and the spack is really clever because you
Speaker 1: can bet on the person who can find the company.
Speaker 1: You can also then if you don't like the company,
Speaker 1: redeem and get all your money back. So there's this
Speaker 1: downside protection. You can buy it in so many different
Speaker 1: points in time in the cycle, you know, before you
Speaker 1: find a target, once you found a target, after the
Speaker 1: target has been you know, bought and despact. I think
Speaker 1: that embedded optionality is actually really beneficial for retail individuals
Speaker 1: because they have many bites at the apple to make
Speaker 1: a good decision. And that's very different from when you know,
Speaker 1: you typically buy a stock, where you're now really wedded
Speaker 1: to that decision. Um. But the redemption features of this
Speaker 1: back I think are very powerful and and and not
Speaker 1: not talked about enough. So so let's stick with the
Speaker 1: concept of the laying level playing field and and not
Speaker 1: seeing deals only flow to folks like you. Um, let's
Speaker 1: talk about angel lists and influencers and others that are
Speaker 1: have have great deals. So it's not just So the
Speaker 1: first question is a does this create competition for deal
Speaker 1: flow with folks like you? Yes, and I think that
Speaker 1: that's right and good and and be what is the
Speaker 1: result of that competition gonna be are are we going
Speaker 1: to see venture capital eventually decentralized? And I think that
Speaker 1: that's incredible really, So so what does that look like?
Speaker 1: What does DFI VC look like ten years hence? So
Speaker 1: Phase one was things like Angelists, which was building the
Speaker 1: infrastructure so that um, smaller funds and SPVs like single
Speaker 1: purpose vehicles or special purpose vehicles could get created in
Speaker 1: an automated way. Step two is happening right now, which
Speaker 1: is that individuals are taking the leap and saying, I
Speaker 1: don't need to be a part of my you know, uh,
Speaker 1: an infrastructure. I'm gonna be I'm gonna hang a shingle
Speaker 1: and I'm gonna do it my own. And there's some
Speaker 1: incredible solo gps. Some of them are some of the
Speaker 1: most successful investors in the world. Um, and I'm really
Speaker 1: fascinated by that. So now what's happening is sort of
Speaker 1: what I did back in the day. You know, in
Speaker 1: two thousand and ten I called Embarcadera Ventures because at
Speaker 1: the time I lived on Embarcadero Road and uh, but
Speaker 1: to see that to go from that to you know,
Speaker 1: folks like a lot gil or in Zev you know,
Speaker 1: Locky Groom, Um, you know, bridget loud. These people are crushing.
Speaker 1: They're crushing, and I'm like, God, that's incredible. So that's
Speaker 1: the second phase. You're going from groups of people to individuals.
Speaker 1: And then the third phase after this as I suspect
Speaker 1: that you'll do a little bit more automated so that
Speaker 1: it's less biased than that. You know, for example, like
Speaker 1: you know a company, Like if you think about a
Speaker 1: company today, Barry, you're gonna build it on top of stripe,
Speaker 1: on top of quick books, on top of all of
Speaker 1: this software. Why can't you just submit all of that
Speaker 1: data into some a p I and the next generation
Speaker 1: of you know, venture firms will just look at all
Speaker 1: that data and say this is good, here's your check,
Speaker 1: and be done with it. You know, no pitch meetings,
Speaker 1: you know, none of that stuff. That just seems so inefficient.
Speaker 1: So I think that's the acce iteration. It's inefficient, but
Speaker 1: it gives people places to go, excuses to maintain their authority,
Speaker 1: power and wealth. And who wants to give that up?
Speaker 1: It's very challenging. No wants to give it up. I'm
Speaker 1: probably the only one that speaks about it all the time. Ah,
Speaker 1: and it probably you know, sometimes ticks off my peers.
Speaker 1: But it's better. It's like change, change is good. Let's
Speaker 1: just see what the other side looks like. So let
Speaker 1: one last question about giving a power. You you worked
Speaker 1: shoulder to shoulder with Zuck at at Facebook, but you've
Speaker 1: been somewhat critical about what Facebook has turned into. What
Speaker 1: sort of advice would you give Zuck today in terms
Speaker 1: of putting Facebook back on a more positive path. Well,
Speaker 1: they are now operating from an enormous trust deficit. Um.
Speaker 1: I've worked with a lot of people. There are a
Speaker 1: lot of those folks that are in the senior ranks
Speaker 1: worked for me when I was there. I really love
Speaker 1: the people. Um. I think that the best path forward
Speaker 1: is to go to the regulators and figure out how
Speaker 1: to write a legislative framework that allows them to implement
Speaker 1: some rules that are scalable. You know, I think the
Speaker 1: fig leaf is now pretty much gone about about section
Speaker 1: two thirty. You know, I think that they're a publisher.
Speaker 1: That's pretty much clear. Um. So it's about it's but
Speaker 1: but ultimately, honestly, here's the thing, Barry. You have an
Speaker 1: almost trillion dollar company. It's getting attacked by Apple, who
Speaker 1: is trying to literally eviscerate the Facebook business model and
Speaker 1: lift the value of the rest of the Internet and
Speaker 1: the inventory on the Internet. You have all these decentralized
Speaker 1: projects now that are trying to reconstruct social hierarchy in
Speaker 1: a way that's more measurable and transparent. You have regulators
Speaker 1: all around the world that are clamoring for something to happen.
Speaker 1: And then you have these mental health issues now for
Speaker 1: for a parent with a child that you we all
Speaker 1: have now a responsibility to deal with. I think if
Speaker 1: folks were willing to let that company be one quarter
Speaker 1: of its market cap, you can probably implement a bunch
Speaker 1: of rules. It would just mean that, you know, a
Speaker 1: small number of people would be much less rich. But
Speaker 1: then I think the rest of society wouldn't care that
Speaker 1: much and they would continue to use Facebook. Interesting, and
Speaker 1: before we get to our favorite questions, we ask all
Speaker 1: our guests, I gotta throw you a curveball. Uh, you
Speaker 1: were pretty successful at the World Series of Poker events.
Speaker 1: You you one, you placed a hundred first, which is
Speaker 1: in the main event. Alright, that's that's a substantial number.
Speaker 1: What and totally card dead by the way, I mean,
Speaker 1: if I got if I got even a few cards,
Speaker 1: I could have made an even deeper. So so here's
Speaker 1: the question. What are the parallels between holds him no limit,
Speaker 1: texas holds him everything? And and venture and investing every
Speaker 1: question I want in life? Everything explained. You start life
Speaker 1: in some situation. You start poker with a stack of chips.
Speaker 1: In life, you could be born to the richest man
Speaker 1: in the world. You could be born in poverty. You
Speaker 1: could be born with a disability. Right, so it's your
Speaker 1: Your stack is different, right. Some people have a huge stack,
Speaker 1: some people have no stack. Poker, same thing. There will
Speaker 1: always be somebody at the table who can buy in
Speaker 1: for more than you. In life, you then have to
Speaker 1: make bets. You have to take some shots. Who do
Speaker 1: I trust, Who do I fall in love with? Who
Speaker 1: do I work with? Who do I go to school with?
Speaker 1: Where do I go to school? What job do I take?
Speaker 1: In poker, you make bets, which part do I play?
Speaker 1: When do I raise? When do I call? How much
Speaker 1: do I risk? In life, you sometimes make all the
Speaker 1: right decisions, horrible outcome, sometimes all the wrong decisions, great outcome,
Speaker 1: Sometimes all the right decisions, right outcomes. Poker, same thing.
Speaker 1: Poker is a chance for you to see that pattern,
Speaker 1: take a step back and realize how much of is
Speaker 1: really in your control and how much of it is not.
Speaker 1: And if you really pay attention, poker teaches you that
Speaker 1: the process is in your control, and your reaction to
Speaker 1: the outcome is in your control, and everything else his
Speaker 1: luck right, the outcome is not within your control, just
Speaker 1: how you approach it. How you approach it, and then
Speaker 1: how you respond to it. And so you know, I
Speaker 1: played poker for twenty years. There's games where I have
Speaker 1: literally millions of dollars playing poker at the highest stakes,
Speaker 1: the highest levels. I've played them, and I have crushed them,
Speaker 1: and they have also crushed and destroyed me, and I
Speaker 1: have had to learn to bounce back. I've also played
Speaker 1: at the lowest stakes and it built incredible relationships and
Speaker 1: bonds and learned things about people and my tolerance for
Speaker 1: loss and risk. I would I would tell everybody in
Speaker 1: the world to learn to play that game, but view
Speaker 1: it as a small microcosm of your life um and
Speaker 1: the chance to learn about who you are as a person.
Speaker 1: I love that metaphor. I think that's that's great. Before
Speaker 1: your people like the control room on fire and drag
Speaker 1: you out of here kicking and screaming. Let's jump to
Speaker 1: our favorite questions. We ask all of our guests, starting
Speaker 1: with what's keeping you entertained during lockdown? What are you
Speaker 1: either streaming on Netflix or listening to in podcasts? Tell
Speaker 1: us what what's entertaining you? UM. I have been watching
Speaker 1: an enormous amount of Dave Chappelle. Enormous. I think that
Speaker 1: his stand up or the Dave Chappelle Show, we're both
Speaker 1: mostly stand up. UM. I just want to say that
Speaker 1: I think he is one of the most important figures
Speaker 1: in society currently today as a social critic or a
Speaker 1: comic or both. I think that he is also a philosopher.
Speaker 1: I think that he is a social critic more than
Speaker 1: he is a comedian. UM. And he's one of the
Speaker 1: most important voices in America right now because he combines this.
Speaker 1: I really look up to him. He's a hero of mine. UM,
Speaker 1: this elegant combination of intellect, empathy, but then fearlessness and courage. UM.
Speaker 1: And he fights for ideas and free speech in a
Speaker 1: way that I really deeply respect. UM. And So I've
Speaker 1: been addicted to Dave shipp I mean addicted. I probably
Speaker 1: I just watched now things over and over. I've run
Speaker 1: out of things. Have you spent much time with the
Speaker 1: original Dave Chappelle Show? I have, but I haven't. I've
Speaker 1: made an explicit decision to not go back to it
Speaker 1: because I've seen his evolution. Um, and I just get
Speaker 1: so much joy and I find myself still unpacking. So
Speaker 1: because I I don't listen to him anymore to laugh,
Speaker 1: I kind of listened to him to think, like, you know,
Speaker 1: he has a thing right now called Redemption Song, which
Speaker 1: is a small little clip on on on YouTube, and
Speaker 1: uh what he talks about just at the very beginning
Speaker 1: of this. I mean, the whole story is about him
Speaker 1: going to Comedy Central to get back the rights to
Speaker 1: the Chappelle Show. But the thing that he says up
Speaker 1: at the front about cowards and heroes, I would encourage
Speaker 1: everybody to listen to and just think about how that
Speaker 1: plays out in real life and social media. It's really
Speaker 1: powerful stuff, really good stuff. Let's talk a little bit
Speaker 1: about mentors who who helped shape your career. Um, I
Speaker 1: had a couple of people that I, uh so in
Speaker 1: all my phases, I've been very lucky. When I worked
Speaker 1: at a bank, I had these two guys that I
Speaker 1: worked for, Mike Fisher, Joel Prusky, um, who are just
Speaker 1: incredible human beings to me. Well, Joel was a bit
Speaker 1: of a jerk, but I'm just saying that to make
Speaker 1: one wonderful people. Um. Then when I went to a all,
Speaker 1: I had a person I worked for, Kevin Conroy, who
Speaker 1: made me basically like all that my toolbox comes from him. Um,
Speaker 1: you know I I and then I just picked up
Speaker 1: a lot along the way, UM, David Goldberg. Dave Goldberg,
Speaker 1: who was you know, sort of my big brother who
Speaker 1: passed away. Um. And then honestly my father, you know,
Speaker 1: again very complicated figure in my left, but in hindsight,
Speaker 1: really gave me a tool kit, and I'm very thankful
Speaker 1: to him for that. Let's talk about books. What are
Speaker 1: some of your favorites and what have you been reading recently? Um.
Speaker 1: So I'm reading the Narrative of the life of Frederick
Speaker 1: Douglas who who na Fyoto biography somebody else is the
Speaker 1: author of that. No, I think that's the title of
Speaker 1: the book by him. Uh and uh it's really a
Speaker 1: pretty powerful moving book. UM. I've read a lot on
Speaker 1: religion recently. Um, just because I've been very curious. I
Speaker 1: was raised the Buddhist, so I don't really understand Judaeo
Speaker 1: christian I just think all you people are crazy, and
Speaker 1: so I've wanted to really understand it and unpack it.
Speaker 1: So I started with you know, pre Christianity, sort of
Speaker 1: like paganism, I guess, just understanding it. And then I've
Speaker 1: moved on to read about Christianity and Islam and Judaism,
Speaker 1: and I found it all very kind of very interesting, um,
Speaker 1: because it's about like society and you know, the formation
Speaker 1: of ideas and governance and and and so I think
Speaker 1: there's a lot to be learned there. I I and
Speaker 1: then I just I've read this book. I've said many
Speaker 1: times it's worth reading. It's called Americana, which is like
Speaker 1: a four year history of American capitalism boost Reney Boston
Speaker 1: just the book book for the ages. It shows what
Speaker 1: happens when government and the private sector to partner. And
Speaker 1: I think it's a tremendous book, and wildly on the rats.
Speaker 1: It's it's a it's a tour to force. That's a
Speaker 1: that's a top ten book, you know, and then some
Speaker 1: blasts from the past. If you're interested, there's a great
Speaker 1: book called Fermat's Enigma by this guy Simon Singh, which
Speaker 1: is talking about you know, Fermat has this theorem which
Speaker 1: is extra the end plus by the unequal z to
Speaker 1: the end and it's this basically following the story of
Speaker 1: trying to prove it. Uh, fabulously written book, completely accessible
Speaker 1: to the general public, superb to the extent you think mathematical.
Speaker 1: You know, the nonfiction can be well, the history of
Speaker 1: trigonometry is is is right there? You know that? And
Speaker 1: then Liars Poker from Michael Lewis love that I really
Speaker 1: like I mythologize like Louis Ranieri and all these guys
Speaker 1: when I read it. Um, those are some books I think.
Speaker 1: Lewis said that that book surprised him because it was
Speaker 1: supposed to be a cautionary tale, and instead he got
Speaker 1: endless letters saying how do I get a gig on
Speaker 1: Wall Street? No, I had these pictures of Louis Ranieri.
Speaker 1: I was like, you know, I want to become this
Speaker 1: big dude with suspenders and a cigar. And let's talk
Speaker 1: about UM advice. What sort of advice would you give
Speaker 1: to a recent college grad who was interested in either
Speaker 1: technology investing, venture capital, UM or entrepreneurship. What advice would
Speaker 1: you share with them. I think that there's a really terrible,
Speaker 1: pernicious trick that's being played on you. So I'm speaking
Speaker 1: to this person, Um, there is nothing wrong with putting
Speaker 1: in the hours and doing your time and summer along
Speaker 1: the way. We were told and you. We told you
Speaker 1: that life is a democracy. It's not. It's an autocracy.
Speaker 1: And you need to learn that at some point your
Speaker 1: big leaps will come from the benefit of learning from others.
Speaker 1: And I think that I see so many young people
Speaker 1: quit too soon, leave things when things get hard. They
Speaker 1: go after labels, just the labels have changed to be
Speaker 1: a founder means something, and I think it means nothing.
Speaker 1: I was an employee until my early thirties, and I
Speaker 1: learned a ton. So I would just tell you, chill out,
Speaker 1: take a deep breath, get a decent job, work in
Speaker 1: an interesting place, and then grind and put in the hours.
Speaker 1: Prove you can be there for three or four years
Speaker 1: before you go off. You can't quit every six months
Speaker 1: to a year. That's not how you build a career.
Speaker 1: It's not how you learn anything. M quite quite interesting.
Speaker 1: And and our final question is a little bit philosophical
Speaker 1: What do you know about the world of technology and
Speaker 1: and venture investing in startups today that you wish you
Speaker 1: knew years ago when you were really just getting your
Speaker 1: feet wet in this space. I wish I knew well, gosh,
Speaker 1: I really didn't. I don't. I'm gonna I'm gonna say
Speaker 1: something different, which is, I have had major phases of
Speaker 1: ignorance in my life, and I'm really thankful for all
Speaker 1: of them because I've made enough mistakes to learn from them,
Speaker 1: to learn that mistakes don't matter. And so if I
Speaker 1: had been robbed of those mistakes, I'd probably be exceedingly
Speaker 1: arrogant and a complete douche right now. So I'll take
Speaker 1: the fact that says it's all been pretty good man, Like, um,
Speaker 1: you know, I've had some real blow ups. It's okay,
Speaker 1: you know, you live to fight another day. I'm in
Speaker 1: the arena, you know what I mean. You're covered in
Speaker 1: dust coming and fighting, and anybody that does that as
Speaker 1: a hero, You're all heroes. Love it. Chama, Thank you
Speaker 1: so much for being so generous with your time. This
Speaker 1: was really quite fascinating and I'm going to tell you
Speaker 1: my best conversations are where I don't bother with most
Speaker 1: of the questions. You um really gave the listeners something
Speaker 1: to think about, and UH, thank you so much. I
Speaker 1: really appreciate it. Thank you, Thank you cham for being
Speaker 1: so generous with your time. We have been speaking with
Speaker 1: Chamath Polly Hapataya, founder of Social Capital uh a O
Speaker 1: L Facebook, Slack, just really filled with so much insight
Speaker 1: into technology venture and the change that is taking place
Speaker 1: within capitalism. If you enjoy this conversation, well, be sure
Speaker 1: and check out any of our previous three hundred and
Speaker 1: any seven conversations we've had before. You can find those
Speaker 1: at iTunes or Spotify or wherever you get your podcast fixed.
Speaker 1: We love your comments, feedback and suggestions right to us
Speaker 1: at m IB podcast at Bloomberg dot net. You can
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Speaker 1: out my weekly column at Bloomberg dot com slash opinion.
Speaker 1: I would be remiss if I did not thank the
Speaker 1: Crack team that helps us put these conversations together each week.
Speaker 1: Michael Batnick is my head of research, Mohammed is my
Speaker 1: audio engineer. Paris Wold is our producer Atika val Braun
Speaker 1: is our project manager. I'm Barry Hults. You've been listening
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