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How to Choose Investments and Change the World - with Chamath Palihapitiya
30:37 with Pasan PremaratneChamath Palihapitiya is the founder of Social+Capital Partnership, a purpose-driven venture capital firm that invests primarily in healthcare, education and financial services . In this interview, Pasan Premaratne talks to Chamath about the reasons behind his investment choices and some of the challenges facing entrepreneurs today.
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[??] [treehouse friends] [P. Premaratne] Chamath, thanks for being with us today.
0:00
For those who don't know you, tell us a little bit about yourself.
0:04
[Chamath Palihapitiya - The Social Capital Partnership]
0:06
What did you do in the past? And what do you do today?
0:08
The past is pretty interesting, although I think it's not that interesting.
0:10
I grew up in Canada. I'm originally from Sri Lanka.
0:16
I came to Canada when I was about 7, went to what they call university, what we call college,
0:19
studied electrical engineering, and then in this weird twist of fate
0:25
ended up working at an investment bank for a year, really disliked it,
0:29
applied to all these jobs online so that I could move to California to be close to my girlfriend,
0:33
who is now my wife, and I ended up working at a company called Winamp,
0:37
which created a pretty seminal product which was a media player called Winamp,
0:41
at the time very much the largest and most popular media player on the Internet--
0:45
precursor to iTunes for those that don't know it.
0:50
That was bought by AOL, and I worked at AOL for a few years.
0:53
I ran the instant messaging division and then-- >>That's ICQ.
0:56
That's AIM and ICQ, A-I-M and I-C-Q.
1:00
I went to work at Facebook in late 2006 and worked there for about 5 years.
1:03
I was sort of 1 of the 5 executives that ran the company for a long time,
1:08
did a bunch of interesting things there, and then last July I left Facebook to start my own fund,
1:13
sort of to invest and start the next generation of companies. >>Okay.
1:20
Let's talk a little bit about Facebook.
1:24
Without getting into super details, how is it like there,
1:25
because I'm sure a lot of people who are listening to this want to hear about how it works.
1:28
It's amazing.
1:33
The place has really an exceptional culture,
1:34
and I think that's what's allowed it to be so successful.
1:38
The most important thing that we did right at Facebook
1:40
was we had a very decentralized, bottom-up philosophy of how things should work.
1:43
When you look at companies that are run well and things that can endure,
1:48
it's because really smart, interesting, creative people
1:54
that aren't necessarily in positions of senior management have enough say
1:58
to make the right decisions when it counts.
2:03
And I think that's something that Facebook has always gotten right,
2:06
and I think it's allowed it to attract really great people,
2:09
and I think it's what will probably allow it to be a really great company for a long time.
2:13
But it was a wonderful place to work. >>Very cool.
2:17
Talk a little bit about what you do today. What's your fund about?
2:20
When I left Facebook, the biggest thing that I realized--
2:23
and this is part of the work that I did there.
2:25
My team built Facebook Platform, then I sort of also built a lot of the mobile products--
2:28
or my team did.
2:35
And my biggest realization was, wow, we built a lot of this really interesting plumbing
2:36
for the Internet, this next phase of highly decentralized, largely social products,
2:40
but what was lacking was a lot of the really great things to sit on top of that infrastructure.
2:47
And what I was really interested in was pushing the boundaries beyond what was traditional.
2:54
Most people when they think about social stuff are thinking about games
2:59
and other very obvious categories, and I was asking the question,
3:03
"How do the new rules of the Internet change and reshape how, for example,
3:07
"the healthcare industry works or how we learn and how education works
3:13
"or how people get access to credit and how the financial services industry works?"
3:17
And so I wanted to sort of focus my energy on those,
3:23
which tend to be very kind of like big, hairy areas that traditionally
3:25
Internet people don't spend time in.
3:29
But I thought the rules had changed enough where it was possible,
3:32
and at the same time we as a society need to fix those areas if we're going to thrive.
3:35
Very interesting.
3:40
What is it about investing that attracts you?
3:42
What drives you to do what you do?
3:45
I know in previous interviews in the past you referred to analogies
3:46
between poker and startups and the thrill of both. >>Yeah.
3:48
Is it the same with investing?
3:51
I would actually say that I don't like investing.
3:53
I actually like company-building.
3:55
I really like the phase from an inception of an idea
3:58
to that second or third major iteration of a product.
4:03
That's where I feel the most comfortable, from 0 to a few hundred employees.
4:07
I love the challenge of being this David against some Goliath.
4:12
I like being an underdog.
4:16
I like just working all hours on something, being elbow to elbow with people
4:18
that just have nothing going for them other than just a lot of chutzpah.
4:23
And that's just a really, really cool, pretty bad-ass kind of environment for me.
4:27
I don't really like being some corporate executive type.
4:33
The problem is, I think the industry in general--and I think this is the world--
4:37
we all look at false idols a lot, and we kind of pick people and put them on a pedestal
4:43
and we want to emulate them.
4:47
And invariably what happens is it's the person who shouts the loudest that gets the attention.
4:50
And I think that ends up never working.
4:53
You don't get a lot of credit for being in the bowels of building companies at that phase.
4:57
But in my opinion, that's where the most value is created and for me it's the most fun,
5:03
so that's why I do it. >>Okay.
5:06
Correct me if I'm wrong, but the work that you do
5:09
tends to revolve around achieving social good,
5:13
and it might mean waiting longer between some of the returns on your investments.
5:15
No. I'm not that interested in a bunch of social good, to be honest with you.
5:21
I'm interested in change.
5:26
I'm basically convinced that people right now who are in positions of power
5:28
are there for completely the wrong reasons and shouldn't be.
5:32
And so the question is, how do you change the dynamics and the cycle of power
5:37
and the balance of power?
5:40
And in my opinion, when you empower individual people to make decisions,
5:42
they tend to make more coherent decisions and they tend to make better decisions.
5:46
And so when you look at a lot of the problems that are ailing the United States
5:51
or ailing the world, these are problems that bureaucracies have created.
5:56
Why is it that we all talk about how education is the most important thing in the world
6:01
and every politician to get elected has to have a position on education,
6:08
but there's more than a trillion dollars of student debt,
6:12
it's the most encumbered sort of thing that an individual has to deal with,
6:17
at the tail end of spending all of this money now, there's no guarantee of a job
6:21
or any really meaningful employment, and then the worst thing is if you actually go bankrupt,
6:25
that's the 1 thing that won't get expunged.
6:29
And so you can see how the system is sort of tilted against you.
6:32
It's really great rhetoric, right?
6:35
But all of these people have no incentive to actually change the system.
6:38
And so from my perspective, I'm more interested in creating a dynamic
6:42
where actually people are empowered and can live lives
6:46
where they are self-sufficient economically, they can do whatever they want,
6:50
they can buy the things they need, they can have a great life.
6:53
And if you look to these people who we've put as false idols,
6:56
they're just going to let you down, and they've let us down.
7:02
I feel like technology and smart people can creatively solve these problems
7:04
in ways that policy and other things can't.
7:09
I just want to do that because I think it's the right thing to do. >>Right.
7:11
You mentioned that you like investing in 3 sectors:
7:14
education, healthcare, and financial services.
7:18
Why those 3?
7:21
Let me go through each one.
7:23
Healthcare, the reason I love it is because I think--
7:24
There's a macroeconomic reason, which is obvious,
7:27
which is trillions of dollars of costs, costs spiraling out of control.
7:30
It something that will literally bankrupt the United States and most of the Western world
7:34
if we don't fix.
7:38
And what we need to fix is correlating investment to outcomes
7:39
and creating a cycle where the incentives aren't to crack your body open
7:44
and to do a bunch of random procedures but to do all of the stuff upstream
7:49
that actually allows you to live a healthy life.
7:55
And to me, there's a lot of really clever things that software and hardware
7:57
and products can do to do that.
8:03
And so I like healthcare because I just think that you can save so many people's lives
8:04
by doing interesting things. I'll give you an example.
8:09
So many people today don't even get a basic blood test.
8:12
It's irrelevant where you live--Western world, developing world, Third World--
8:16
it just doesn't matter.
8:20
But most of the major maladies of the world can be detected and fixed if you just had that.
8:21
The problem is you probably get a blood test once a year and it costs $1,000.
8:27
And you go to a lab and you sit there with a bunch of other people,
8:31
and it's impersonal, it's kind of antiseptic, and you don't like it.
8:34
And so we're building this product that basically decomposes this million dollar machine
8:38
down to a hundred dollar machine that works off of your cell phone camera chip sensor,
8:42
the same thing that you use to take pictures. >>Very cool.
8:46
The reason why that's transformational is now you reduce the cost to dollars,
8:49
and individuals can do it in their bathroom or their home,
8:52
and now all of a sudden you start to change the incentives
8:55
for people to care about their own body and to understand their own body,
8:58
and then they're empowered to actually do something.
9:02
So that's why I like healthcare.
9:04
Education, I think it's because policy is so fundamentally broken
9:06
we are letting down an entire generation.
9:10
And the problem with that is that it will create massive instability.
9:13
You're already seeing this now--people rioting in places like London a few years ago,
9:17
Paris a few years ago, Spain a few months ago.
9:21
When people rioted in the Arab Spring, that wasn't a political pushback;
9:25
that was a socioeconomic pushback by all these young people who were like,
9:29
"We're frustrated."
9:33
It was this fruit vendor that immolated himself that started the whole thing.
9:36
And so when you think about that, a third of the world is under the age of 18 now,
9:39
1/3 of the population--billions and billions of kids--
9:43
young people who have all this potential.
9:46
So how do you pay that off?
9:49
By tricking them and forcing them to get into $150,000 worth of debt
9:50
to go to a school to get a degree that maybe doesn't matter
9:53
where they can't get a job afterwards-- >>No.
9:57
just so you can get reelected? That's terrible. Those are lies, right?
10:00
And so I feel like if you can, for example, teach people how to code--
10:03
which, in my opinion, is the most fundamentally obvious blue collar job of the 21st century--
10:06
that's just a great thing, and you replace trillions of dollars of cost in debt
10:11
with hundreds of dollars of opportunity. It's just an obvious trade-off.
10:17
And then financial services, I just think there are a lot of people with great ideas,
10:21
and I think there are a lot of people when empowered with capital
10:26
can do really good things.
10:30
I'm really interested in ways where you can redistribute capital.
10:32
I think right now capital has been aggregated by a lot of these monolithic institutions
10:36
that aren't trusted for a whole host of reasons.
10:40
I think some are valid, probably some are not as valid,
10:43
but in general, what's happened is a very risk-averse culture
10:46
by people who control the lubricant that's necessary for economies to develop.
10:52
And so if you can develop these alternative capital flows and marketplaces
10:59
and systems that create liquidity for individuals, you give them the chance
11:03
to now build these businesses and do what they think they should do,
11:08
invest in the things that they believe are worth investing in,
11:11
and I think again, in general, individuals are better decisions makers
11:14
than these small groups of people that kind of live in ivory towers. >>Okay. That's very cool.
11:17
When you're looking for these companies that do what reflects your ideals,
11:22
what do you look for in a founder?
11:27
What qualities make a good leader, and how do you know that this person can make--
11:29
[Palihapitiya] This is a really interesting question.
11:33
I think a lot of people have these frameworks that they use
11:35
and very rigidly live within these frameworks.
11:40
The founder has to be technical, or the founder has to be between this age and that age,
11:44
or the founder is generally of this gender, or the founder has to have gone to these schools.
11:48
And so you develop all of these rules
11:53
mostly based on the historic look back of what's worked before.
11:57
And what I think that basically eliminates is this idea that most people have the ability
12:01
to be brilliant at something.
12:09
And for me, what I'm really trying to figure out is whether they have the right characteristics
12:12
that allow them to be malleable enough to seize an opportunity
12:20
because in the world of startups, in my opinion,
12:24
there is as much, if not more, luck than there is skill.
12:28
Timing, the right technology decisions at the right time,
12:32
a few critical hires at the right time, a few critical features at the right time,
12:38
and frankly, you can have a substandard group of people get those things right
12:44
and beat what is on paper a tremendously better group of people
12:49
who didn't make those decisions. >>Right.
12:53
So what you're really trying to figure out, in my opinion,
12:56
is how does their mind work?
13:00
Are they scrappy enough? Are they listening?
13:02
Are they cynical enough to push back?
13:05
Those characteristics are hard to define,
13:07
and I think they're manifested in wildly varying ways.
13:11
What I'm trying to figure out is whether those things exist
13:15
and can I plant enough seeds where the intellectual curiosity of the person
13:18
will guide the decision, as opposed to some great rhetoric that I may spew
13:23
and then they just blindly run into a brick wall because that's what they think I told them to do.
13:28
That's not important.
13:32
A lot of people out there think that you need to have this revolutionary idea
13:34
because there are so many ideas floating around now.
13:37
Do you think founders need to have revolutionary ideas,
13:39
or is it the execution of a normal idea?
13:41
Revolution starts in evolution.
13:44
You could have the biggest, craziest, audacious idea in the world,
13:48
but unless you can put 1 foot in front of the other
13:52
and make that first step, you're screwed and none of it matters.
13:54
And again, all it does is it may allow you to wrap yourself in some really elegant rhetoric,
13:59
maybe it allows you to be really followed on Twitter and appear at Tech Conference.
14:06
None of that matters.
14:11
All of that crap washes out in the end because if you suck, you suck.
14:13
You may be articulate, but if you suck, it doesn't matter
14:16
and you'll be revealed to be a sham.
14:21
What matters there is just that ability to understand
14:23
what that first specific set of things needs to be with that broader, bigger goal in mind.
14:27
But if you can't put your first foot in front of the other--
14:37
And you know what's amazing?
14:40
Most people can't because they get wrapped up in the rhetoric of the vision
14:42
and the mission and all of this grandiose blobbity blahing that they screw up
14:46
and they're their own worst enemies.
14:52
I like revolution, I like disruption, but I'm skeptical that things start that way.
14:54
Let's just say ultimately, 5 years from now we look back
14:59
and we think that there was a massive sea change politically in the Arab world
15:02
because of the Arab Spring.
15:06
That fruit vendor self-immolated because he was frustrated.
15:10
Now, maybe he started a revolution, but that took courage to do what he did.
15:13
That's not right nor wrong, in my opinion,
15:18
but my point is that's an example of how a revolution started with a small--
15:20
not a small thing, it was a big thing--but 1 thing that was tractable within him.
15:25
And I think these broad-based, gnarly expressions
15:30
of how all of these huge, crazy things can happen,
15:36
they happen over many, many, many, many, many years.
15:39
These are massive tectonic plates. It all boils down to 1 person doing 1 thing.
15:42
And I think that for a lot of people that's hard still.
15:46
[Premaratne] You sometimes like to take on a more hands-on role
15:49
with the companies that you work with. Is that normal of an investor or a VC to do?
15:51
I think it's probably atypical.
15:56
That's sort of why we've constructed this base that we've constructed,
15:58
which is to have a lot of these really interesting companies here very early on.
16:02
And what it allows me to do is sort of transfer knowledge.
16:06
Look, right now I've come out of 12 years
16:09
of operating some of the most interesting consumer businesses
16:14
that have been built on the Internet.
16:17
And I've been a part of now 3 massively seminal interesting products:
16:19
Winamp, AIM and ICQ, Facebook.
16:24
And so there's a body of knowledge there that's really relevant,
16:28
but it's only relevant for a short period of time.
16:33
Four years from now I'll be as dumb as any other VC,
16:36
but in these next 3 or 4 years I probably have some reasonable knowledge to transfer,
16:39
and so the best thing that I can do is make sure I'm in a position
16:43
to get that into as many people as possible
16:46
because then at that point what I'm hoping is then I'll be able to learn from them
16:49
because they'll really understand the rules of how the next 10 years will evolve,
16:52
and then I'll be able to learn from them and they'll feel a sense of not necessarily obligation
16:56
but maybe hopefully a little bit of gratitude combined with a little bit of pity,
17:03
and then they'll want to sort of teach me. >>Right.
17:10
How should someone approach you as an investor or VC?
17:15
You don't have to possibly talk about specifics on how you find companies that you work with.
17:18
But in general, if someone has an idea and is down the road with a startup
17:22
and is looking for a VC, what do you think is the best way to approach?
17:27
This is unfortunately the standard corporate response that every VC gives you,
17:30
and I don't really have a better one.
17:34
But the way that this culture works
17:36
is in many ways similar to how American Idol works, for better or for worse,
17:39
which is there's all of these intermediate levels of selection and filtering that happens.
17:43
So for example, you know somebody that knows somebody
17:50
that knows somebody that knows somebody that knows me or any other VC.
17:54
And typically what happens, it goes through this chain and people ask this question,
17:59
"Hey, does it pass my sniff test?"
18:03
And if it does, they pass it to the next guy because they want the next guy
18:05
to not look at him and say, "Why did you send me this thing?" >>Right.
18:08
So it's like if your idea is for chocolate-covered dog biscuits,
18:10
you're not probably going to go and try to pitch that to Kleiner or Sequoia.
18:15
And so somewhere along the chain someone is going to say, "You know what?"
18:18
"There's a more appropriate avenue of capital for chocolate-covered dog biscuits."
18:20
Now, if those chocolate-covered dog biscuits had some sort of biosensor built in to it
18:25
so that you can now map the intestinal tract of the dog
18:29
and prevent parvo and 9 other diseases, maybe, right?
18:32
So there's all of this filtering that happens,
18:36
and so by the time that it gets to these guys,
18:38
it's at a point where they can make relatively straightforward decisions.
18:41
That's typically how it happens is you know somebody who knows somebody
18:47
who knows a VC, and it kind of goes through that cycle.
18:50
That being said, there are still many, many people who, in my opinion,
18:53
should have access to capital to pursue their ideas and don't,
18:56
and that's why I think there are some amazing things that are happening right now
19:00
in this sort of financial services ecosystem that is, in my opinion,
19:03
transformational for capitalism and capitalism by individual entrepreneurs.
19:07
Specifically, a company that I think is doing amazing things, AngelList.
19:14
You could be in some small little town somewhere and it could be you and 3 people
19:18
who just have a really great technical idea,
19:26
and if you can explain that well and you can start to put out a beta version of a product
19:28
and be out there in the ecosystem and have credibility,
19:33
you could raise money there. So to me, that's amazing.
19:37
If I was an entrepreneur that didn't know anybody,
19:40
I would first try to go this path of AngelList and try to build some technical credibility
19:43
and product traction and use that as a conduit to get introduced to people via that chain.
19:48
Okay. This is a pretty long question, so bear with me.
19:53
When you left Facebook, you wrote a pretty inspiring message
19:57
that's on TechCrunch right now, and since then you've gone on to invest
19:59
and mentor many entrepreneurs and companies. [http://tcrn.ch/WpNeJn]
20:03
As an investor, when you encounter a founder who has had past failures,
20:06
do you view that as battle scars that make him stronger now,
20:10
or is it proof that that founder doesn't have a good track record? >>It depends.
20:14
It depends on how they failed.
20:20
I would say I still believe everything I wrote in that departing note
20:22
that I sent to the people at Facebook.
20:25
I had a functional role, but part of my job at the end
20:29
was probably to be this kind of curmudgeonly old-timer
20:33
who made sure that we never veered off of our Northern Star.
20:37
When companies work, the biggest thing that happens is you revert to the mean.
20:40
And what I mean by that is the mean is every crappy company out there.
20:47
And we all work at crappy companies. We've all done it.
20:52
We all look at our boss and think, "This guy is an idiot. How does he have this job?"
20:55
"This company is so stupid. I hate my job. Is it time to leave yet?"
20:59
We've all been in that position.
21:02
And so the real question that I was asking myself at Facebook was,
21:04
"What happens and how do companies end up in this situation?"
21:07
And my realization is every company gets there eventually.
21:12
But that last word is the most important.
21:16
And so the challenge of a senior executive team is to prevent that regression to the mean,
21:19
and culture is the only thing that does that.
21:24
And so I would always speak to all of the people that we hired every Monday,
21:28
and part of it was to scare the living shit out of them,
21:32
but part of it was to be unapologetic about a culture that valued transparency,
21:35
openness, authenticity, and value over perception.
21:40
So it's not about politicking, it's not about managing up, it's about doing good stuff
21:45
and that the engineer that could be the most junior person
21:50
has as much or more power than me.
21:54
And that's an awesome dynamic because it allows the smart people
21:56
who are capable to do the right thing.
22:02
So that's what I talked about.
22:04
When I left, that note was meant to encapsulate all of that.
22:06
I think I've realized that all of that is still the same.
22:09
So when I meet an entrepreneur and they've failed,
22:12
the thing that I'm trying to figure out is how did they fail?
22:15
And this is going back to what we talked about earlier.
22:18
Did you just not listen and keep battering your head
22:20
because you heard something or read something
22:23
and you just didn't refuse to pivot?
22:25
That kind of stubbornness can be good, but it can also be extremely destructive.
22:28
Did you fail because you got the market wrong but you built a great product?
22:34
That's actually not such a bad thing. That happens, right?
22:38
It happens to the best of us. I've failed more times than--
22:40
And then the last thing is are you comfortable with that failure?
22:44
The people that can own it, in my opinion, that's a very special class of person.
22:48
And part of it is just being around enough people.
22:54
That's why Silicon Valley is so great because it celebrates failure
22:56
as much as it celebrates success, and I think that's awesome.
22:59
I grew up in Canada.
23:02
I love Canada, but what's frustrating about being Canadian
23:04
is we don't celebrate failure.
23:07
And so it's all about mean reversion, it's all about managing the middle.
23:10
And so if you're an outlier, you feel extremely isolated
23:14
and you feel stupid when things don't go right,
23:19
as opposed to trying to learn from it, rinse and repeat, try again. >>Right.
23:22
So I'm trying to figure out how did they fail and what did they learn?
23:28
In general, I think it's a good thing.
23:33
In general, though, what I would say more importantly than anything else is
23:36
are you humble enough to realize that when things worked
23:41
it was you but it was also a lot of luck,
23:46
and then are you courageous enough to realize that when it failed
23:50
it may not have been as much you
23:53
but you've learned enough to now avoid the same mistakes?
23:55
Those are the 2 things that you have to figure out.
23:58
You have to be humble enough to realize timing is everything, people are everything.
24:00
The team, the conditions, your competitors--so many things came in to making something work
24:04
at that time. It's not so replicable.
24:09
Similarly, if you failed for the right reasons, that could be great DNA
24:13
to go again and try again.
24:18
A while back, in a bunch of other interviews you mentioned that in the past
24:20
you wanted to jump into the VC world, and you sent out internship letters, right? >>Yeah.
24:25
And you got a bunch of noes back, but you kept going and you found your way into this world.
24:29
No, I got no response back.
24:34
The 2 people that wrote me a no, which I remember to this day
24:36
because I still look up to these 2 people and they're the most incredible people in the world,
24:40
John Doerr and Vinod Khosla. They're the only 2 people.
24:44
And to this day they probably don't remember that they did it.
24:47
This was in 1997.
24:50
Maybe they do. I don't know. I've never asked them.
24:53
I can't find the letters now, which is a real shame.
24:55
I had them until about 2007, 2008.
24:59
And maybe it was just their EA that wrote it and they signed it.
25:02
I don't even know if it was a stamp. It didn't matter.
25:06
To me it was just like I really wanted to see what this world was about
25:09
because I was like, "Wow, these guys are creating the future."
25:11
"I'm going to create the future."
25:14
No one even gave me the time of day.
25:16
I literally sent 50 letters.
25:18
The only 2 people who were thoughtful enough to take the time
25:20
to actually send something back saying, "Thank you, but we don't hire interns,"
25:23
was these 2 guys. >>Right.
25:26
Going off of that, how should entrepreneurs deal with noes when they talk to VCs?
25:28
Does it mean that your idea is terrible, or does it mean that you're just not there yet
25:33
or you're not fit to run a company? >>It means neither of those things.
25:36
Listen. There is a massive lemming culture and mentality in most industries.
25:40
When you're looking on the outside in, the tendency is for most people
25:45
to assign more credit than most industries deserve.
25:54
So when I'm on the outside looking in to the hedge fund industry,
25:58
what I'm probably thinking is, "Wow, they're all geniuses."
26:04
"These guys just know what's going on. They're manipulating the world."
26:06
Capital flows, finance, the stock market.
26:10
And what you realize on the inside is, "Not really."
26:13
Most are bozos and most are following a few guys who really know what they're doing.
26:15
I could be on the outside looking in to the world of molecular biology and genetics and think,
26:19
"Wow, these guys have the keystone to understanding the human body."
26:25
And then you dig a little further and what you realize is, "Not really."
26:30
Most people are following the work of a few who are really leading the pack.
26:33
And I would say this industry is not dissimilar to any of those.
26:37
There are a few people that have the courage to have their own perspective
26:41
and do what they think is right, and then there's a lot of people
26:43
that do what those other people do and chase so that they're not late.
26:46
And so what you can't get tricked by are the educational qualifications of people--
26:51
meaningless. It doesn't matter where you went to school.
26:57
It doesn't matter if you have an MBA from Harvard or Stanford.
27:00
There are a lot of idiots I've met that have MBAs from Harvard and Stanford,
27:03
and there's a lot of geniuses I've met that have dropped out of school.
27:06
I would say you should have a healthy skepticism to this industry,
27:08
like every other industry.
27:16
In most industries there's just a few people that are really good,
27:18
and most industries are cluttered with a bunch of people
27:21
who run around following those few people.
27:23
Do you think VC funding is always necessary?
27:26
Some companies have an explicit goal of, "I'm going to take this idea,
27:28
"and once I get funding I'm going to exit."
27:31
Do you think that funding is always necessary for a startup?
27:34
It's not necessary, especially now, because you can find very different forms of capital.
27:37
And that's why I think it's a very healthy dynamic
27:41
because now the entrepreneur becomes more empowered
27:44
to build the type of company they want, the type of culture they want to stay in.
27:46
For example, I know a lot of really, really great entrepreneurs who have taken capital
27:50
from some of the most prestigious venture capital firms in the world, only to get fired.
27:54
And when you look backwards on that decision,
27:58
they think it's the single worst decision they've ever made.
28:01
Sometimes these companies have gone public, these people have become rich,
28:04
but it didn't matter to them because it left such a bad taste in their mouth.
28:08
You could look at that and say, "So what? You wouldn't have been public."
28:12
We don't know that, right? The counterfactual is impossible to know.
28:16
But what it does tell me is now that you can go to AngelList
28:20
or if you're building a product you can go on KickStart and deficit finance a bunch of stuff.
28:25
It creates all these competitive forces that now rationalizes power
28:29
back to the individuals who are starting and working at companies,
28:35
and in my opinion, that is much better.
28:38
I just think it will create better behaviors and better outcomes.
28:41
And outcomes may not mean splashy IPOs.
28:47
Outcome may just mean you can hire 50 people and you run a company that's profitable
28:50
and you're a great member of your community, you have a great lifestyle,
28:55
you spend time with your kids, your kids are normal,
28:59
all of the executives on your team are great people in their community, their kids are normal.
29:02
That will do more to change the world than being a douche and having a billion dollar IPO.
29:06
You know what I'm saying?
29:12
So legacy is a very tricky, interesting thing,
29:14
and I think people chase these societally defined norms of what success is,
29:16
and I think now that there's all of these different ways,
29:21
the real challenge is for all of us to deconstruct that and actually live our own lives.
29:24
To wrap it up, what advice do you have for future entrepreneurs out there?
29:29
I think it's very hard to give you 1 pithy sound bite.
29:33
But again, I think it's having the courage to be yourself,
29:38
healthy skepticism and cynicism.
29:42
Do not develop a sense of idolatry around any individual person.
29:47
Don't read the blogs, don't read Twiitter.
29:55
All of that stuff is a whole amount of self-reinforcing rhetoric
29:58
and promotional propaganda that can be informative
30:07
but needs to be balanced with your own internal sense of what you want to do,
30:12
how you want to do it. That's the most important.
30:18
A lot of false idols, so just be very careful. Listen to your own gut.
30:20
You're probably the best decision maker that you know.
30:26
Thanks, Chamath. Thank you for taking the time to do this. >>Thank you.
30:28
[treehouse friends] [??]
30:32
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