Chamath Palihapitiya on Venture Investments (Podcast)

I don't know what else to say other than strap yourself in. This is a great one with no further ado. My conversation with Chamath Polly. This is Mester's Business with Very Hults on Bloomberg Radio. I'm Barry Ridhults. You're listening to Masters in Business on Bloomberg Radio. My extra special guests this week is Chamath Pollypatia. He is the founder of Social Capital, one of the more interesting and successful

venture capitalists out in Palo Alto. He is also an engineer and team leader working at places like a O, L, Facebook, and Slack. He has been known as the Spack King for his numerous successful deals in that space, and he is also a ten percent owner of the Golden State Warriors. Chamat Polly Hapatia, Welcome to Bloomberg, Gary. Thanks, I've been looking forward to having this conversation for a while. Let's let's normally I start with people's backgrounds and we go chronologically.

But you have some quotes that I love, and I want to ask you about them and let you run while with them. Starting with venture capital properly deployed can solve the biggest problems, filling a void left by the

shrinking scientific ambitions of governments, foundations and international organizations. Explain, well, if you, um, look at what's happening in California or what's happening at the federal level of the United States currently, there's a really interesting thing that's happened, which is we have effectively single party rule. Um, you have a you know, elected leader that's of one party, you have a Senate

that's of that same party. House and then you know, in the case of California, mayors as well, all democratic in this case. And what's interesting is it also happens to be a moment in time where the societal problems that we've been facing are the worst they've ever been. Climate change is worse than it's ever been. We have a water crisis, we have an impending food crisis, homelessness, crime.

And you have to ask yourself, well, if a single party, like you know, when you have a typical normal, you know, political setup, you have these two opposing forces, then you have to find common ground. And each party says the exact thing, which is, well, if we had complete control, this would all be fixed. And it turns out that the two examples where you have complete control, in fact, nothing gets fixed, even less gets fixed than what got

fixed before. So why is that? It's that the tool kit of policy and the tool kit of society's has changed. It's no longer as much about laws necessarily, but it's about technology, it's about code, it's about very specific inventions of science. And the problem with that then well then you would say, well, great, well that's the solution to all of our problems. If we go in and figure out how to actually, you know, just have more of

all of that stuff, everything will be solved. Okay. Well, then then you go in and you decompose that problem to first principles, and what you find is, for example, in places like core scientific research, people care more about citations and papers and research. And it's also highly politicized and infested with all kinds of infighting, and so foundations can't fund the work that they used to. Universities aren't

nearly as good and actually promoting massive breakthroughs. So more and more of this responsibility gets put on for profit enterprises. But to be very specific, they have to be for profit and they have to be technical. And when you say it that way, the venture capitalist all of a sudden has this critical role in society that they didn't

have before because they are a translator. They are, you know, in a technical meeting, the smartest business person, but in a business meeting, the smartest technical person, and they're able to put these things together to solve problems. And so that's what I was trying to get across, which is we need more people building for profit technical businesses, organizing resources against problems. So so so let's stay with the concept of of venture capital being organized to solve problem and

talk a little bit about social capital. Tell us about your first couple of venture investments and who were your first limited partners. So I was at Facebook at the time, and um I had been doing a bunch of angel investing,

and this is maybe two thousand eight or nine. But I was the first solo g P. I think in many ways, UM, I was putting some money to work of my own money, small checks, Berry, ten thousand dollars, fifteen thousand dollars, early seed round early seed rounds in you know, two thousand and seven and eight, basically all the money that I had, and I had a win. UM. I met a guy named Rick Thompson, an amazing entrepreneur who started a gaming company, and I jumped in with

two feet. I invested my money. I spent a little bit of time. They're helping him, you know, certif I mean as a as a part timer obviously, because I was still working on Facebook at the time. And the company gets bought by Disney for like set million bucks and I made a few million bucks, and I thought,

this is it. I have my I have my escape Velocity, and um, at the time at Facebook, there were all these people that were trying to invest in the company, and Zuck basically said to me, hey, can you help sort out whose money we should take. I mean, and I was running Facebook Platform, I was building Facebook Mobile,

I was doing all of these products. So but I was like, yeah, sure, I guess and uh, I met the guys a Tiger Global Um Chase Coleman specifically, and we built a relationship and then you know, Tiger ended up investing in the business. And along the way, you know, I said, hey, I'm thinking of, you know, investing a little bit of capital on the side, and he goes, well, if you organize a little LLC, you know, I'm happy

to kick in a you know, a few shuckles. And so all of a sudden, I had this little group of me and my friends, and I just organized about eleven million bucks, you know, and I was like three or four of it, and like, you know, other couple of folks jumped in for fifty k there, there are a million there whatever. Um. And so while I was a full time employee and Facebook, I was a part time investor UM. And that's how I started. And so those are my first helps. Wonderful guys read Hoffman, Um.

You know a whole list of kind of like who who's the rest of that list? Because already I'm loving this group. The list was pretty impressive. I want to say, it was like Peter Thiel, Reid Hoffman, Chase Coleman, UM. I'd have to look that the slides to get the murderers row. Yeah, I was pretty Dave Goldberg. You know Xander Lurie, who's the CEO of Momentum AI. So a bunch of really great entrepreneurs and CEOs and investors. Anyways, I put the money to work, and you know, it

was non obvious that that fund was good. I was learning and most of the investments I made were way too ambitious and I was deeply under capitalized. Right, So you in two thousand and eight and nine, in hindsight, it was really dumb to make a bunch of deep tech investments. Now some of them have come home to roost and that fund has now tunned it. But we got very lucky and it did very well. But it took an enormously long period of time. So I put the money to work and I learned. I learned, Hey,

portfolio construction is important. I didn't get that right. I was way under capitalized, Like, hey, wait a minute, Like I needed way more reserves to defend these companies. And I had to think about duration, meaning I can't solve twenty year problems in a ten year fund. I need to solve five year problems, and a ten year fund if I want to be in the fund business. And you know that obviously changed in seventeen when I just

basically consolidated with my own money. But so then I left Facebook inven and I went back to these same folks and I said, guys, let's go much bigger. I think I know what I'm doing UM, and we created My first fund was two fifty or sixty million bucks.

I put up sixty and then it was really like you know, John Door, Peter Thiel, Reid Hoffman, Leeka shing Um, you know, just I ran the table, Georgia Pawel Lehman, like incredible people and a handful of really great institutions, Mayo Clinic, you know folks that I was really proud to make money for UM. And I said, this is like a great intersection of entrepreneurs and you know, investors in philanthropists and foundations, and you know, I'm gonna go

and try to find great businesses. And that's how it started. So from there, what was the subsequent funds that came out of that? Because that you know, funds that run a seven or a ten year lifespan, and some companies, some vcs will just do fund to fund three fund four. You didn't exactly go in that direction, you know, I can tell you so like the returns as of this last quarter, because I just I had I had a little advi as board meeting. You know, I put about

a billion one in the ground. Um that is worth today just a little under five billion dollars. And this was so this was I raised about a billion dollars over four funds, over five funds, sorry, in the first five years basically, so a two fifty million dollar, sixty million dollar fund, another to sixty five hundred, and then I had a small hundred million dollar fund and in a thirty million dollar opportunities fun kind of so about

one point one billion dollars. And you know, so far we've returned a little almost a little under two extra capital so cash on cash, we've returned about two some odd billion. The carrying value is a little under five billion. And I think that you know, when I look in the next in the next few years, that will turn one more time. So basically you know, one billion will

turn into ten billion. And the returns are you know probably well right now they're in the high twenties nets and it will be in the probably the low thirties nets when it's so as all that comes up, are you just going to roll that over into another fund? Or are you looking to spread this into different spaces? Because I'm aware you are a man of many interests, You're not just I find the world really fascinating and curious and looking at what you and ved Ston I

can tell you approach the universe the same way. Right, so along the way, I think in what I realized was running funds doesn't accomplish my goal, and it took me some number of years to figure that out. I loved working inside of these companies. I loved trying to make some of these businesses work. I loved taking really big moon shots on technical problems that I wanted to solve.

I didn't like the constraints of a fund. I didn't like managing LP relations because by that point, you know, as you know Barry, when you're in the fund business,

then it's all about quantity of LPs. And so the LPs had grown beyond my co cohort of people, right, because it's not as if their money is infinite either, right, And so then we have fund of funds and other organizations who are in the business of, you know, being investors in these organizations, and it became very administrative, and a lot of my time was spent fundraising and managing

those relationships as opposed to investing or starting companies. And so that was one big error of judgment that I felt I needed to fix. The other one was I was looking at myself thinking like, well, am I going to be able to defend the ownership of these best companies? And think about what happens in a fund. If you make an investment and it's working, you have all this

pressure to double down. But when there's something smaller and more technical, where there's way more asymmetric risk, it's much harder to convince other that you should continue to invest in that as well. So let's stay with that a second,

because that's there's some really interesting things. When I hear someone like you say double down, what I'm usually thinking of is, hey, we made a small investment in the seed round, and now it's the A of the beam round, and we're gonna have to step up and five hundred thousand is now a fifty million, or two million becomes a hundred million dollar. Is that what you mean by double down versus now I mean the following decision, which is very hard. So let's just say, and we use

explicit examples because it's easier. So let's just say we invested in a crypto business and a software as a service startup on the same day, ten million dollars in each. The SAS business has a much higher probability of short term progress. I sold you know, x amount of software. Here's my bookings, here's my revenue, high probability of modest success, high probability of modest success. Most people are, you know, enraptured with that. That's what well, that's what the SMP

fire is for. If you want a high probability of modest success, go by the spiders. But I imagine people come to venture because hey, I have all my conservative stuff so that I'm looking for you to hit me. It's not true, it really it may be listen. So there there are two conundrums here. The conundrum number one

is if you're a limited partner. If you're a limited partner right now sitting inside of a foundation or a pension fund, and you have to return capital and you have to get over your hurdle, you need an allocation inter venture. But those allocations are minuscule. Um. Nobody's getting you know, huge allocations into sequoia, right because the opacity

is has limited allocations into benchmark. You know, these are five hundred million dollar funds, you know, and I you know, in my example, I was thirty percent of all the capital. So there's just not a lot of room for others. Number one. And then the more insidious problem is actually the human capital inside funds themselves. And what I mean by that is not that they're bad people. They're wonderful people, but there are products of a very specific and very

rigid um hierarchy. Um. You know, they typically went to a handful of schools. They typically are educated in exactly the same way. They typically um you know, have the exact same kind of risk tolerance as a result of all those things. And so when the rubber meets the road, this Harvard NBA or the Stanford MBA, they want to treat the venture capital organization as their version of the sp very predictable, steady eddie, let me make you know,

a good salary, don't rock the boat. So what happens Crypto stuff gets underfunded until it's obvious, you know, hard tech and and you know, life sciences get underfunded until it's obvious. Sas gets overfunded until it's obvious. And that's the whip saw that you face. Now there are a handful of organizations that have fought against that and have

done it brilliantly. So when you look, for example, like Founders Fund, I'll pick an example incredible set of investors who are iconoclasses to the one, atypical on every dimension. There's not a single drop of real pedigree amongst them, except they're all incredible entrepreneurs. If you look at coastal Ventures, same situation, incredibly atypical in their intellectual makeup and the way they think and what they value, and to a one,

they're generally great entrepreneurs. So you see this recurring theme. So you know, for me, what I've tried to do is recalibrate my time around that realization I have a fixed amount of capital. If I surround myself with these good they're good people, it will lead me astray because I will get risk off. And the whole goal of this business, as you exactly well put it, is to be one percent massively risk on. And so that's how

I live my life. I have a small allocation of capital in case all of this goes to zero, but otherwise my net worth and wealth is massive risk on that. That's quite quite fascinating. I keep wanting to go to some of my questions, but you keep saying things that make me have to respond. I'm still kind of struck by your LPs needing management. And what I mean by that is, someone runs a successful fund, there's a very limited amount of slots for money to come in. I

just imagine it's like, here's the deal. I have a slot for a hundred for you. I'll send you the annual updates, will have an annual meeting, and I don't want to hear from you the rest of the year. You can't take a step broach. It doesn't work well.

It's not that easy even for the best organizations. Um. You know, when you're dealing with these large pools of capital, there are large bureaucracies, and in fairness to these bureaucracies, there's there's really important guard rails of risk management right and legal and operational due diligence that they have to do. Because again, it's the fireman's pension, it's the teacher's pension, it's the you know, it's the foundation. It's that they're

all doing good work right. So it's not like, you know, they have a right to be cavalier um, but it creates an infrastructure of folks UM that approached their job in a very specific way that for me didn't make sense. For others, I think it does make a ton of sense because you know, they look, there's a trade off. Today, that trade off, by the way, has rewarded them more

than me. And what is the tradeoff? When you're a successful investor, you'll get to a fork in the road at a certain level of assets where you have to go on the path well traveled or the path less traveled.

The path less traveled is what I've taken. You're low, meaning you're by yourself, all your own money, all risk on the path while traveled, says, syndicate the risk, let the let the returns decay, build an a u M machine, monetize the fee income, sell a percentage to dial or to whomever, and then eventually sell the GP to somebody and you're done. And you know, if you have enough capital M at some point you're like, well, why don't need any more money? This is a safer route to take.

I am of this different view, which is I want very specific kinds of progress that will not happen unless I am a tip of the spear on a bunch of things that I want to change. And I'm using my money as a mechanism of showing the change that I want to see in the world, with the idea that if free markets are ultimately efficient, other money will follow and it will unlock and create change. SPACs are a perfect example. We're gonna talk about SPACs in a

little bit. I'm fascinated by the path less traveled UM and I'm kind of reminded of an old joke of friend used to say, what's the difference between having a billion dollars or having two billion dollars? And the answer is really nothing? Um, nothing, right, isn't it? What is the difference? So, so once you wrap your head around that, why build an a UM machine? Why take a GP and do all the things you don't want to do just so you can say, look, I think there's something

very valiant in building a company of any kind. I don't care what it is, because you end up hiring people, you end up creating your own little economy. You know, by hiring good people and paying them, you're giving them a path, You're giving them, you know, some amount of purpose in their lives. So, you know, any form of company building I think is heroic. The person that chooses to build a company, I don't care what it is. It could be a garbage business and a u M business.

You know, Um, they're all to me where I look at the founders of those things, like you, and you're in a class of hero for me. Um. Everybody may not view with the same you know. Sometimes now founders unfortunately sometimes can get vilified for being an entrepreneur. Um. But in general I think they're heroic. Um. But again, that's not what I was trying to do my returns in society. I wanted to be expressed by a different kind of change and a different kind of purpose, which

was a practical problem solved. You know, I want reforestation to be, you know, done differently. I want a gene editing solution to be so cheap and so fastly available we can eradicate, you know, the thirty two thousand inherited Mandelian diseases. You know, I want to figure out how to get you know, sub hundred dollars solar on everybody's roof, and to build a massive distributed energy utility in America.

It turns out I'm doing all those things now I can do that with my capital, and that's really great. That capital may go to zero UM. But you're saying that if you had these institutional endowments and other maybe large more conservative investors who were more concerned about I r R, then moving the needle short term I r R because you know, again, they have a job to do. They have pension obligations to make, they have, you know, other things that they're funding. They have the lifestyle they

want to pay for, um. They have their own annual reviews and bonuses and things. So you know, it's not to debate the validity of it. It just exists. And I'm not willing to sign up for that because durationally, and by the way, you can see that certain funds

have realized that that durational limitation doesn't work in tech anymore. Right, So now you're seeing these fifteen year funds, right, Some of these climate funds are really long dated so that they can take huge, long risk with very sticky money. I think that's moving in the right direction. You know what, I raise a you know, a twenty year fund. You're how old? Forty five? All right, So you could do with twenty year funds if you want to move the needle,

but a ten year fund I will never do. Well, never say never, but I you know, it would be a very very high bar. Quite fascinating. Let's talk a little bit about social cap all social media and being a lightning rod. I kind of get the sense that you like mixing things up and getting people upset by saying things that are contrary to commonly accepted beliefs. Well, I mean, look, here's what I'll say. Um, I really like saying what's on my mind. Um, I think it's

really important. It's sort of one of the advantages of you know, being free, right and living in a free society. And so I really take that to heart and I love that. And you know, along the way, sometimes I do get a you know, some some giggles out of like trolling some folks on Twitter, which is fun. So

let's talk about trolling. You mentioned you were up one quarter three point six percent compared to the SMP which was only up two point three percent, and you said, hey, I'm doing fifty six percent better than the index, which is technically true. But the enumerates on Twitter lost their minds. Tell us what was that? An example of trolling? Absolutely? I got such a kick out of that. People just

lose it. It's so delicious, Um, you know. I I think what's important is that a lot of those things are probably saying more about them than they are about me UM, and their own insecurities and whatever they're dealing with. I think there are a lot of people, in fairness to them, that are trying really hard and treading water. And I think one thing in fin twit that you'll see a lot is folks that are out there, you know,

in the arena. As Roosevelt used to say with the dust on his face, Guys like me UM can be viewed as polarizing. And it's not because of what we do or our success, but it's the actual act of doing because that's what other people are constrained by. And I think that tilts folks times. So so let me turn this away from them to you for a second, and pardon me if I'm projecting at all. So the twentysomething, thirty something Chamat who's an engineer and a team leader

and his confident of Zuck. That's a different person than the forty five year olds venture capital and someone looking to make a dent in the world. Have you found you had to sort of change your m O based on who you are and where you sit and have that's changed your outlook and job and complete reputation? How

is that morphed over the years? I think the the best way to save Barry is that UM, in the in the absence of a very few people, most of us bring into adulthood a ton of baggage and a lot of folks are dealing with baggage from how they grew up. And I am sort of exhibit a of that. You know, you leave a country because of a civil war. You know you settle in a different country, where in Canada in this case, where you know you come as refugees. You know you live above a laundromat, you take you know,

used hand me down clothes. Um, you live on welfare. UM. You know your dad has you know, issues with alcohol, depression, employment. Those are not unique to me. Those are unique to so many people in the United States end in Canada. What happens though, is that then it creates these very subtle loops of self sabotage. So when you're young, you

can overcome that by sheer brute force. And when I was young, I was, you know, more mathematical than other people, more technical than other people, just more clever than other people in the jobs that I did. So I could overcome my tendency to give myself a hard time and make my life more difficult than it needed to be. Then you slowly become Then I slowly started to become successful. And for whatever reason, the biggest thing was I said, I gotta go and fix those holes because that baggage

is becoming way too heavy for me. How did you come to that realization? Because most people present company included meander through life oblivious, leaving awake of death and destruction behind them, and through distress, really through distress. What was the distress that led you to that? Inside, I had a six month period where my father died, So he was he died at seventy two. Right at that time, you know, I was already very successful, um, and so

I had all this money. But my dad had been a lot lifelong diabetic, no credible path to a kidney transplant. He had a cardiac arrest. He was he was an end stage renal failure and he died October. And then six months later in May, my best friend died. We were all on vacation together in Mexico and he died. UM. And so it was just this gut punch, this one too gut punch. One person who is this very complicated figure in my life, and another person who is my

bigger brother and very much my protector. And without these two, I was a little listless, to be honest. And that's when I said, I have to figure out what's going on and get to the bottom of this um. And I don't know to this day why, because the other you know, the other modality when you're like, if you ask anybody you look at it really performing, you know anybody who's really good at anything who grew up in a really shitty environment. Sorry, you could say that, we'll

just be The reaction is to suppress and compartmentalized. That is the most powerful coping mechanism you have. And for whatever reason, in my mid thirties, I finally stopped trying to do that as much. And then I found people in my life who became these outlets that just start

pulling stuff out of me. Now this sounds really soft, but it goes to when you look at the future or when you look at your like when I look at my heroes, one of the things that I see is the common through line is that they've all become exceptionally comfortable with themselves. They're not necessarily palatable to other people. It means, it means nothing, but they they have done that work and that's what allows them to be highly functional.

And when you look at folks like Buffett, or you look at folks like Mike Bloomberg, how are you functional and competent and so on point through so many decades and changes, it's because they know who they are. They're not asking you to like who they are. They like who they are, and so I embraced that process. And so it's a journey. So I am seven years in to a journey, and these last seven years have been very powerful because of that. I feel like I've been unshackled.

But those were those were uh, those are handcuffs that I had made for myself. But that's still pretty young to be that enlightened and self aware. Those of us who have found that and and a lot of people eventually find that, but it's not at thirty seven. It's usually a little later in life. So first, kudos to

you for for picking that up so early. But second, do you look around and see other peers and other colleagues and say that guy would be great if or that one will be fantastic if only he was a little more self aware of the less it's less judgmental than that, because that that is like if the if only part. No, But I have now become hyper attuned to the things that used to hold me back when it manifests in other people, and I see it everywhere. But I have a lot of empathy for that now.

So as whereas before I think I would have been much more judgmental, Um, I'm a lot calmer about it, and I and I and I'm more empathetic. And where it helps, very practically speaking, is I'm still you know, big shareholders in many companies, and the people that get the benefit of that training for whatever it's worth to them, or all my CEOs, as all the founders, they get it. And uh, and I think I'm the edges on the margins. I think some of them really appreciate it. I don't know.

I don't ask them, but not everybody is that zen when real money is involved. Is that well, will it's gonna be? What it's going to be? I could share my wisdom. Is the biggest distraction you can create for yourself if you want to do something useful. Isn't that fascinating? Go and read the obituary of Steve Jobs that his sister wrote in the New York Times. And I've said this a couple of times, and I'll just repeat it because it's so powerful. When he's on his deathbed, he's

not saying I invented the iPhone. He has his family around him, and he's saying, oh wow, repeatedly, oh wow, oh wow, oh Wow. My interpretation of that is that he is talking about something that is so much more important than money and accomplishments. It's a journey, it's an evolution. It's basically feeling like you've had these great, beautiful relationships,

right and accounting, a real life accounting of your progress. Uh. And I want to be on that journey so that fifty years from now, sixty years from now, seventy years from now, you know, touch with is as far away as it takes. I want to be able to do that, and so it allows me to not care one sintila. Like I said, I have a little bit of money that I put away to protect myself, but I don't need the house I live in. I don't need the plane I have. I don't need any of that crap.

I use it to make my life efficient, but I don't need any of it. It doesn't define me. I don't let how other people view me and let it impact me. And that's really powerful. So let's stay with the concept of money as getting in the way of accomplishing things or of decision making. Right. I'm fond of saying money is a tool and all a hammer could be used to build a house or to break a window.

It's tools can be used and misused. But I want to talk about this within the context of what you've described as activist capitalism, and then we'll we'll get into crypto shortly after that. Tell us what is activist capitalism. If you want to make enormous amounts of returns, you have to go where there is the most risk. So meaning if if you if I said to you, hey, Barry, can you become a trillionaire investing in bonds, you would say, chamath not in a trillion years, right, There is zero

risk in that market. The returns are meager. But if I said to you Berry, could you make a trillion dollars in crypto? You would say absolutely. I don't know how, but it's possible. But now think of what it really means. It doesn't mean that you're taking massive, huge bets of capital. In fact, you could make enormous returns. And you know, I mean I have. I've made billions of dollars in crypto, investing millions of dollars. So you didn't need to have

billions of dollars. What did you need? You needed to have an extremely different point of view, and in many ways that point of view isolates you, and so you become a little bit of an activist. You have to believe something that everybody else doesn't, that in that moment is a little bit countercultural or counterintuitive, and you have to hold the line. That's what activist capitalism is. It's the ability to have these non consensus ideas and perspectives

and hold on for dear life. So let me push back on that a touch only by saying you're located in Palo Alto. All the other venture capitalists out in California are mostly there on Sandhill Road and around it. Wouldn't the more contrarian perspective be let me get out of California and go somewhere else where I'm not part of the same crowd looking at the same deals. I

think that's I think where you live is irrelevant. You know, I live where I live because I like it, and I like my backyard and uh, you know, I haven't you know, nice house, and uh time, it's great, my friends are around. Um, that's why I live where I live. Um. The ideas that I find in our yard oftentimes are really countercultural to what the orthodox perspective is in that moment, I don't need to move to Austin or Miami to

find that. I can find that where I live. It comes down to are you willing to buck the establishment and how the establishment measures you to be an activist? So let's stay with that. And there's another quote of yours that I have to bring up, Crypto destroys capitalism and that's better for the world. Explain that, because that's quite a nuanced perspective. We're replacing what capitalism is. There are small pockets of how it will work in the future.

I think venture capital is an embodiment of that. But the overwhelming amount of capitalism today is inefficient, and it's supported by decision making and constructs that are artificial. So let me be specific. Today the entire financial infrastructure of the world is in part merit, and in part historical artifact, and in part um establishment and prestige. I go to a good school, I play lacrosse. I'm a three letter athlete. I get into an IVY. I go through IVY, then

I go work at a bulge bracket firm. Then maybe I go and I get an m b A at one of these said ivys that I go back to said bulge bracket firm. Then I go to the buy side. I work at a blue chip hatch fund. Maybe I start my own. I know all of my buddies, My buddies did the same things, and eventually what happens is there's not enough diversity. And I don't mean diversity and like skin color and religion and sexual orientation. I mean diversity in your mind. You know which is you have

been playing by a very rope playbook. And if everybody else that's also at the top echelons of a pecking order are playing by that same playbook, you all become a monoclass. You're predictable. The same factory is producing the same thing. You could be. You could be brown, yellow, black, white. You went through them. You could be male, female, it doesn't matter. You went through the same things. You were rewarded by the same mechanisms. You were taught Pavlovian like

a Pavlovian dog to behave in one way. And then you armed people with money and say go do what you think is right. Imbue the markets force into the world, and they're all going to do the same. They're all going to do the same thing. That's why capitalism isn't working. It's not working for enough people because we have a mono class of people that control the money. So what's

the solution to that. So when you look at Defy, and when you look at Bitcoin, and when you look at Ethereum and Salana and all of these projects, are three principles that rip that industry and entitlement and establishment apart. Number one is that it's completely decentralized. So instead of having these centers of power. You have loose affiliations. Why is that so disruptive? It's because you can't go and get a gold star from working at x y Z organization. Right,

there's no more hierarchy. There's no ladder decline, no middleman charging a fee in between every no different There's no place where you can say I worked at x y Z, so I am as a result, smarter than you. Right, if you work at a bulge bracket firm, you look at people that haven't worked there as lesser than you. That's what people do. But in a world of decentralization, where there's all these projects and you know there's there are no companies anymore, um, you have completely different ways

in which organizations get built. You have completely different ways in which regulations have to adapt because you can't control these projects. Um. And as a result of all of these things, you have very different outcomes. And the outcomes are now you have diversity. All kinds of crazy random people thinking, all kinds of crazy random things are now acting through these tools to rebuild capitalism the way they want. I want, you know, checking accounts to work this way.

I want mortgages to work that way. I want credit scoring to work the other way. I want insurance to work this way. By the way, it's not just finance. I want art to work in the other way. That's how n f t s are right. I want music to work in this way. I want social networks to work in the other way. There are thousands and thousands of these projects being built that are completely decentralized, completely democratic,

you know, completely a p I ified. It's hugely disruptive for capitalism because it introduces massive heterogen eighty right, massive diversity in the people that control the allocation of the money. Number one, and then number two. Of the reason why it's super disruptive is all of this either damage your progress. Depending on which side of the ledger you want to can get started with a few thousand, ten thousand, hundred

thousand dollars. And so now you don't need five hundred million dollars, You don't need to go to four growth funds to raise half a billion dollars because you're one thousand. You know, you're one thousand. Dollar investment can literally become half a billion dollars. So now you democratize who can play the game. You can democratize the capital allocation. So now there's a diversity of ideas, there's a diversity of people putting money to work. It's a brave new world.

What's the third bullet point you had, you had referenced, So it's democratization, it's decentralization, and then it's what I call decompose ability, meaning um, the beautiful thing about this brave new world as well is without company, ease and without project, without you know, hierarchy, there's enormous amounts of cooperation. And the basic way to think about this brave new world of crypto is using legos. I have an idea, I build something with all the legos that have come

before me. But there's only one rule, Barry. If you use the legos, you yourself have to be a lego to somebody else. And that's what compose ability and decomposability means. Those are the three pillars of this brave new world, and it's going to rewrite capitalism. I build an organization that doesn't have a company around it. I make everything hyper transparent. It takes small amounts of money to completely blow up entrenched interests, and then all of that value

I must make available to anybody else. And I cannot say no to them. Think of how the world today works. That's not how it works. If you wanted to build an app on the Apple App Store, they can say no, you got to get their approval, And if and even if you get their approval, there's nothing that prevents them. As epic games have slurens of saying, we're gonna pull back. We don't like what you're doing. So so let me

ask what I think is an obvious question. Capitalism has proven itself extremely adept at co opting challenges to itself. The old line um capitalism, which capitalists would sell you the rope to hang himself by, turns out not to be all that true, because the capitalist is also gonna be selling tickets to the crowd and building hotels, and before you know it, what was going to be a

single event becomes a giant economic engine. What's going to prevent those existing bulge bracket firms, Ivy League schools, endowments, the usual uh capitalists from plowing into crypto and blockchain and all the fun stuff and but co opting it so it becomes just part of a capital firmament. It's not you're saying, it's not. It's not cooptible. It's not. But I think that they should be a part of it. I I don't like exclusion. I am like a inclusion maximalist.

Like you know, what is the like the mission of social capital, right or a vision? I have a vision at our firm. We right, We talked about it all the time. Which is even the starting line. Now, imagine you had a world where you could find the smartest rocket scientist, the smartest mathematician, the smartest biochemist, the smartest materials engineer, the smartest AI person, the smartest artist, the

best seamstress, whatever it is. The world today doesn't allow us to find the best human capital, as expressed in any of the things we need to move the world forward. Why if you're a woman in the wrong country, you're screwed. If you're a colored man in the wrong country, you're screwed. If you're you know, Jewish or not Jewish in a certain country, you're screwed. If you're you know, gay in this country or that country, you're screwed. If you're in

the wrong cast in this other country. I mean, like the amount of limitations we put on maximizing human potential is insane. Half the world doesn't allow people to reach their potential. It's probably more um and it's all by design. We choose to let these inefficiencies compound. And so you know, I believe that we are way better off where there's a race, right. My My vision is like there's a

starting line, the gun goes off. Everybody on the earth is on an even playing field to start, not to end, but to start, and some people will take the off ramp and become, you know, a fashion designer and you would say, how did this guy come out of nowhere to become you know? Or some people go off and do music in a way that you never thought was possible,

and there'll be such a renaissance of possibilities. So I'm an inclusion maximal, which is, let's get everybody into the party, gave everybody the same tools, and then let's see what happens. It's so fair and just for people. And what I don't like is because I went to x y Z school, or because my last name is x y z, or because you know I worked at x y Z place, I should have some advantage and I don't think that's right.

So I'm am I being overly optimistic in saying that world you've described bulge bracket farms, big banks, ivy league schools. It's a very twentieth century construct, and it was pretty clear early in the twenty one century that that was losing its grip on on the economy, on the government, and on capitalism itself. Or am I am I just

being too pollyanish with that. I think you're I would not include like you know, Look, I think the financial organizations have enormous potential to adapt and be an incredible participant in the future. And I think that there's so many good people inside these banks and organizations that I think will thrive. So I'm kind of convinced they're they're on the side of history going to be judged well.

I have much more of an issue with universities. I think they're fundamentally on the wrong side of history, and I think that they have done an enormous disservice to so many of our kids and parents because basically in the nineteen look, if you take the cost of a university education and you graph it as a function of time, and you put one single dot on it as a trigger for price inflation, I would annotate that dot as the two U S News and World Report that started

to create university rankings in America. It literally you can see that costs were contained until that stupid magazine tried to create this insert to sell ads. By the way, so what were they motivated by. They were motivated by, you know, selling CPM inventory to like R. G R. Reynolds and Ford. Right, paper ads in a magazine has all of a sudden tricked university administrators to think that this is a luxury good that should be meted out like a reservation line to get a nerm as person.

That is insanity. And especially in the world where we can have you know, uh, pervasive internet connectivity, where we can find the best grade five science teacher, you know, the best you know, AP calculus teacher, that we're not letting all of humanity benefit from that to me is insanity. So and then on top of that, there's this moral overlay now inside of universities where they will also then

now make judgments about what you can be taught. And so what that effectively does is rob people from the ability to learn from first principles, right to attack idea down to the basics and build a back up, which is a tool. Kid, It's a process thing. So I I am very negative on universities and what they've done

culturally and academically and institutional in societally in America. Uh less so about Like you know, I think financial firms in general will be great participants of this new capitalist ecosystem, but I think the universities have completely failed. That's quite an interesting take, and I know a few people who share versions of that perspectives on both the left and the right. The criticism of the of the US college and university system is is pretty robust. Let's stick with

one more um criticism. We'll talk about zombie companies. You had criticized the pandemic bailout of companies by the US government. Tell us what you specifically, Uh, we're unhappy with when it came to entities like airlines, I have no issue. I want to be clear with airlines. Um, and quite honestly, I have Uh. You know, look, when a company, I

just want to set the table stakes. When a company goes through bankruptcy, any company, you know, it can happen in a way that preserves employment for all of the employees. It can happen in a way that preserves pensions. Now, you know, rapacious people who take over companies and force them into backgrountcy can do all kinds of bad things, but it's also possible that you can do it in this other way as well. What I was reacting to in that moment was that we were about to reward

a behavior. So I had no issue with airlines, but I had I had an issue with the following behavior. Barry. We have seen R and D investment inside of America's companies effectively go to zero over the last twenty years. We've seen instead buy backs replace R and D investment. In that same period of time, we've seen compensation plans get written by boards that completely reward a manipulation of

earnings per share. And then we see c e O s optimizing earnings per share by pilfering all of this money that should go into R and D into buy backs. And the airlines, to be very honest, were one of the worst offenders of that. The airline's new climate change was coming. Did they invest in a fuel stock that was basically more carbon efficient over the last years, Did we figure out a way to do more efficient plane routing? Did we influence how Boeing and Airbus really built those

airplanes to be you know, to have better wing designs. No, they optimized for massive free cash flow, and they optimized for share buy backs, and they optimized for massive compensation plans to the CEOs of those companies. Now, in fairness to the airlines, it wasn't just them, it was entire industries. And then the idea that you go on you bail them out before you bail out individual folks on main street,

to me seemed very unfair. And I thought, what would be better would be to show people that actually we want to reward R and D, you know, we want to make buy backs harder. And by the way, if you look at what's proposed in the current you know, plans that are in front of Congress, there are elements of what I proposed. Right, folks are being forced to basically, they will be taxed on buy backs. Great idea. I think the tax should be much higher, um and then

they should be there. And there are some incentives for R and D, and I wish those incentives were higher. Now, put all these things together, why is that idea so powerful today? Sitting here in two thousand and twenty one. Um, yeah, we're in September. We're seeing China unravel, right, We're seeing the great vertical integration of the second largest economy in

the world. And what that's going to create is a national security interest for us to be reliant on ourselves and to be diversified in who we work with around the world. That requires an enormous amount of R and D. So you cannot keep doing share buy backs and compensation schemes to CEOs. The right CEOs in the SMP five should be planning twent of free cash flow to solve these problems because these are of national interest and national security. That's a really interesting place to take it. I was

not expecting you to go there. We think of China as both a I'm not going to use the word that everybody uses and it's terrible, but both uh a industrial real ally and an economic competitor. You're taking this to the whole next level. National security requires us to bring back a lot of the manufacturing that we've outsourced to China, whether it's semiconductors or something less sophisticated. China

is a friend of me. That's the word I was trying to avoid there an exceptionally intelligent, brilliant freen of me, and so we have to be extremely thoughtful and strategic and how we engage in them with them. But here are a couple of things that I think will come to pass. G is the new Mau. There is only one economy, and then that's China inc. And China will have to deal with their you know, a lot of all of this, by the way, is motivated, is motivated

by demographics. China is a demographic time bomb and it's probably already gone off. And this is why I think G is acting much more aggressively than he has when you say demographic time bomb. It was the single child, single child policy for far too long. There's not enough girls, there's too many men, and they're they're an aging population. I mean all of those boundary conditions. You know, young

capable men. We're great fodder for industrial manufacturing and automation and exports during the nineties and two thousand's, but now these men are forty and fifty. There's not enough women, there's not enough kids, and so it's a huge problem for China. And you know, right now, I think the forecast is you know, again, the outside in projections, are China's gonna shrink by half by the end of It's probably worse than that, based on my observation of how

she is acting now. Because if you can vertically integrate the economy, you control upcomes better and then you can basically have a software landing for the people that are there. That's but as that's happening, it is beyond the shadow of a doubt that China at some point will engage in some sort of foreign adventure. The only foreign adventure that makes sense for them is time, and so we will be pulled into an enormous decision. What do we have to do today? We have to invest, but not

just in semiconductors. It's an example of a problem where China controls the overwhelming majority of the rare earth. So to the extent that we believe in electrification, we have to do stuff there to the to the extent we believe in solar panels. Even a lot of the you know, polycar silicon carbonate is made in China. Why, by the way, because China has coal and you need enormous heat and

enormous energy to produce solar panels. So that raises a pretty obvious question, how do you compete with the country that thinks in terms of decades. When we were recording this a few days before the death ceiling vote takes place, we can't even think in terms of hours and days. How do you compete against the country that thinks in terms of decades and century. It's an elegant big I would go back. It's an a good way to tie

back to the beginning. The venture capitalist and the engineer and the entrepreneur are the most important that they've ever been. And when you marry that cohort of people with a more decentralized form of capitalism, what I think eventually you will have is a lot more bets, a lot more ambitious bets, and some bets that are frankly more duration

weighted twenty year bets. You know, and you see some folks right now that have done this, the work that Breakthrough Energy Ventures Bill Gates organization has done to fund nuclear. You know, I don't want to hear people's opinions on

nuclear because most people's opinions are uninformed. The real thing about nuclear is that if you strip away perceptional issues, this is a real technical solution to climate change in decarbonization, it just is um but it required, you know, a sentibillionaire to basically plow billions of dollars of his own any over twenty tens and twenty years at the time. So I think that we are solving the problem, but

we just need to accelerate it. The risk that we have is actually one of ideology, which is what you said, which is that we've actually unfortunately demoralized capitalists, We've demoralized entrepreneurs, We've demoralized engineers, we've demoralized moderates. And that is what we need to fix because sometimes I don't know if you feel this way. I wonder to myself, should I feel guilty for being a business person, you know, because it's like it's like there's a level of vilification and

vitriol that I think is it's it's it's misplaced. Well, there's this general frustration and anger, um. And we'll talk a little bit about social media that does such a wonderful job amplifying and misinforming people. But there's a sense that, you know, Apple and Amazon don't pay their fair share of tax is and that the system has been rigged

by the moneyed class. Who lobby Congress to get rules that pass for themselves, and that that the level playing field that you so eloquently described has been precluded by the has wanting to maintain what they have and not allow anybody else to even get a hand on the lowest wrung on the ladder. Absolutely right, all those things are right. So what the next question is what can

we do about it? If we're not sent to billionaires with the ability to bring thorium reactors or whatever Bill Gates is working on to the four what can the average person do to accelerate the change that we all know is so needed. A. There's a really beautiful question, and well said. People can vote with their time, and in order to do that properly, you need places to allocate that time that give you this kind of purpose.

And so there should be more nuclear reactor companies that exist so that more people can choose to work there. You don't need to be a nuclear scientist. They need accountants, they need lawyers, they need you know, all kinds of different people. I t people, you know, they need facilities people. So there's these breakthroughs in science. There should be more of these. The first part is really the critical part of what you said, we need to reframe the legislation.

We shouldn't be preventing people from trying. We should take or fix the laws that make trying hard. I'll give you an example. One of the most important things that we could do for society in the United States is to fix chronic kidney disease, hypertension, and heart disease. We all know three in the US. We either all have it or we all know people with it. We're all

taking some form of medication for it. Okay, there has not been nearly as much progress in these things over the last few years because, unfortunately, we have some legislation that says that if you want to go and you know, invest in diabetes type two diabetes solutions or you know, heart disease or whatnot, you have to also, after all of that work is done, which we already know costs billions of dollars, spend another couple billion dollars and have

a ten person longitudinal trial on cardiac safety as well. That's just kind of like a standard upbringing procedure. You know what that does. Well, if you take a billion dollars of costs and lay on another billion dollars of costs. What you basically say is like, well, maybe the available number of companies that could fix this problem or a hundred, you reduce them to ten. And they're all public, and

they're all beholden to public shareholders. And none of them are going to come out and put out a press release that says, now we're just gonna torch earnings for the next two years while we go off on this. You know, they're not gonna do it. So we need to change and refactor some of these laws. But we so I think I think the solution is to not demoralize the people who earnestly want to be on in the arena. You know, again, the Roosevelt quote is so good.

It's like, you want to be the person that's in the arena with the dust on your face. You're gonna have some wins, you're gonna have some losses, but you're not on the sidelines. And you just got to give those folks a chance to try. And I think if we can fix some of these laws and regulations, they'll be less entrenched interest and they'll be more entrepreneurship. Quite quite fascinating, you know. I've had people tell me to moth.

You got lucky. You've had far too many successes for me to think that this is the result of random luck, including you tried to buy the Sacramento Kings. It didn't work out, but a friend said, hey, you oh, this is back before the age of Curry, before the Warriors were Hey, you know, I'm looking to pick up the Golden State Warriors. Would would you like ten percent of it? You're like, well, okay, you put twenty five million into it last year. I think that million was worth half

a billion. What's it worth now is it? That's about half a billion? Alright, So that's what Uh, that's a lot of That's so anybody who says I just got lucky, you can't get that lucky that frequently and recognize opportunity when it comes along. So first I have to ask what's it like being a team owner or partial owner? It's incredible fun, right, You know that I built some deep relationships with a bunch of the players past and present. Um,

you know, we've had a lot of really great moments together, friendships. Um, you know, I found a lot of kinship in these players because they're they're a lot like me as well, like it's like you get committed to a craft, you get committed to excellence. We all had very similar backgrounds as well growing up, so there's a lot of you know, shared empathy and just having you know, tough childhood circumstances

and fighting through it. Um They're they're great. I mean there there are are they are there are three Um of all of the guys I've that I've become unbelievably close to. Um, Um who I would say are my my dear friends. You know. So overall, the whole experience just sounds like it's just an absolute blast everything you Let's talk a little bit about SPACs. You've done really well with SPACs, including talked about twenty year time Horizon Virgin Galactic. I mean that is not a let's make

the next quarters numbers. That's a decade long process. What attracted you to that company? Um? When I got under the hood of Virgin, I was attracted to how complicated, um, the solution was and how many things they had to

put together. UM. Because so I had a different business at the time, which I still own a large piece of I'm the largest investor of, but it's the second most valuable private space company after SpaceX, it's called Relativity Space and Relativity had decided to try to three D print the whole shebang, the engines, the rock and everything and uh and and it was an incredibly ambitious project and it's you know, and now it's a multi billion

dollar company and you know, touch wood that it's successful. But in all of that, I had learned how technically complicated space was, and I fell in love with it. But I had also learned how building for space allows you to build for the Earth. So then when I encountered you know, virgin and Branson, uh, you know, I was like, I can't believe, Richard, you have spent so much time and dedicated so much money um to this endeavor.

These guys had created an revolutionary design and for a plane um and I say plane specifically because most rockets go up and down vertically, and Richard's you know, engineering was for a horizontal takeoff and landing. And when I explored that further, you know, his vision was not just to be able to go to space, but then to also go two different points on the Earth. And to use that same rocket, they had had to build their

own hybrid rocket engine. They had to design fuel. They had to all this incredible stuff, and to me, what I saw were a lot of embedded option value. Um and so I was really proud to be a part of that. And what they're doing, I think is very special. So you've also been very successful in the spack space, the special purpose acquisition UH Vehicle company. Tell us a little bit what attracted you to SPACs. They have a long history. I don't think the average investor realizes SPACs

have been around for decades. They just seemed to find a new popularity over the past a couple of years. So, um, yeah, I'll tell you my motivations um there too. One is very selfish, which is I want to own pieces of

great businesses for as long as possible. And there are businesses that I've known in Silicon Valley being you know, birthed and growing up over the years where for whatever set of reasons, I wasn't an investor in in the private markets, but I was like, Wow, these could be really great businesses, and you know, I wanted to get to know them, and in that process, SPACs were a

great way for me to compound my capital. Why because I am an enormously large investor in these things, right, So you know, the way SPACs work is that you put up a little bit of money for the potential of a huge return, and that's where most people start and stop. I do something additional, which is then I lead a pipe and I put a lot of my own money. Minimum the smallest pipe I've ever and there's a hundred million and the biggest I think is closer

to fifty. I can't remember the exact number. But the point is that I love the process of putting my own money to work in a way where I have to really pay attention and make a really good decision. It's an incredible process. So that's my part. But then the second part, back to what we talked about before, I do think this is a way of creating more

uh an even playing field. I think that you know, typically I p o s of hot shot tech companies are reserved to folks like me, rich guys with lots of assets, who have great relationships with the banks, and you just get fed these deals um and again, I think it's better where there's an even playing field and everybody has a shot to find these um to find these gems, and the spack is really clever because you can bet on the person who can find the company.

You can also then if you don't like the company, redeem and get all your money back. So there's this downside protection. You can buy it in so many different points in time in the cycle, you know, before you find a target, once you found a target, after the target has been you know, bought and despact. I think that embedded optionality is actually really beneficial for retail individuals because they have many bites at the apple to make

a good decision. And that's very different from when you know, you typically buy a stock, where you're now really wedded to that decision. Um. But the redemption features of this back I think are very powerful and and and not not talked about enough. So so let's stick with the concept of the laying level playing field and and not seeing deals only flow to folks like you. Um, let's talk about angel lists and influencers and others that are

have have great deals. So it's not just So the first question is a does this create competition for deal flow with folks like you? Yes, and I think that that's right and good and and be what is the result of that competition gonna be are are we going to see venture capital eventually decentralized? And I think that that's incredible really, So so what does that look like?

What does DFI VC look like ten years hence? So Phase one was things like Angelists, which was building the infrastructure so that um, smaller funds and SPVs like single purpose vehicles or special purpose vehicles could get created in an automated way. Step two is happening right now, which is that individuals are taking the leap and saying, I don't need to be a part of my you know, uh, an infrastructure. I'm gonna be I'm gonna hang a shingle and I'm gonna do it my own. And there's some

incredible solo gps. Some of them are some of the most successful investors in the world. Um, and I'm really fascinated by that. So now what's happening is sort of what I did back in the day. You know, in two thousand and ten I called Embarcadera Ventures because at the time I lived on Embarcadero Road and uh, but to see that to go from that to you know, folks like a lot gil or in Zev you know, Locky Groom, Um, you know, bridget loud. These people are crushing.

They're crushing, and I'm like, God, that's incredible. So that's the second phase. You're going from groups of people to individuals. And then the third phase after this as I suspect that you'll do a little bit more automated so that it's less biased than that. You know, for example, like you know a company, Like if you think about a company today, Barry, you're gonna build it on top of stripe, on top of quick books, on top of all of

this software. Why can't you just submit all of that data into some a p I and the next generation of you know, venture firms will just look at all that data and say this is good, here's your check, and be done with it. You know, no pitch meetings, you know, none of that stuff. That just seems so inefficient. So I think that's the acce iteration. It's inefficient, but it gives people places to go, excuses to maintain their authority, power and wealth. And who wants to give that up?

It's very challenging. No wants to give it up. I'm probably the only one that speaks about it all the time. Ah, and it probably you know, sometimes ticks off my peers. But it's better. It's like change, change is good. Let's just see what the other side looks like. So let one last question about giving a power. You you worked shoulder to shoulder with Zuck at at Facebook, but you've been somewhat critical about what Facebook has turned into. What sort of advice would you give Zuck today in terms

of putting Facebook back on a more positive path. Well, they are now operating from an enormous trust deficit. Um. I've worked with a lot of people. There are a lot of those folks that are in the senior ranks worked for me when I was there. I really love the people. Um. I think that the best path forward is to go to the regulators and figure out how to write a legislative framework that allows them to implement

some rules that are scalable. You know, I think the fig leaf is now pretty much gone about about section two thirty. You know, I think that they're a publisher. That's pretty much clear. Um. So it's about it's but but ultimately, honestly, here's the thing, Barry. You have an almost trillion dollar company. It's getting attacked by Apple, who is trying to literally eviscerate the Facebook business model and lift the value of the rest of the Internet and

the inventory on the Internet. You have all these decentralized projects now that are trying to reconstruct social hierarchy in a way that's more measurable and transparent. You have regulators all around the world that are clamoring for something to happen. And then you have these mental health issues now for for a parent with a child that you we all

have now a responsibility to deal with. I think if folks were willing to let that company be one quarter of its market cap, you can probably implement a bunch of rules. It would just mean that, you know, a small number of people would be much less rich. But then I think the rest of society wouldn't care that much and they would continue to use Facebook. Interesting, and before we get to our favorite questions, we ask all

our guests, I gotta throw you a curveball. Uh, you were pretty successful at the World Series of Poker events. You you one, you placed a hundred first, which is in the main event. Alright, that's that's a substantial number. What and totally card dead by the way, I mean, if I got if I got even a few cards, I could have made an even deeper. So so here's the question. What are the parallels between holds him no limit, texas holds him everything? And and venture and investing every

question I want in life? Everything explained. You start life in some situation. You start poker with a stack of chips. In life, you could be born to the richest man in the world. You could be born in poverty. You could be born with a disability. Right, so it's your Your stack is different, right. Some people have a huge stack, some people have no stack. Poker, same thing. There will always be somebody at the table who can buy in for more than you. In life, you then have to

make bets. You have to take some shots. Who do I trust, Who do I fall in love with? Who do I work with? Who do I go to school with? Where do I go to school? What job do I take? In poker, you make bets, which part do I play? When do I raise? When do I call? How much do I risk? In life, you sometimes make all the right decisions, horrible outcome, sometimes all the wrong decisions, great outcome, Sometimes all the right decisions, right outcomes. Poker, same thing.

Poker is a chance for you to see that pattern, take a step back and realize how much of is really in your control and how much of it is not. And if you really pay attention, poker teaches you that the process is in your control, and your reaction to the outcome is in your control, and everything else his luck right, the outcome is not within your control, just how you approach it. How you approach it, and then how you respond to it. And so you know, I

played poker for twenty years. There's games where I have literally millions of dollars playing poker at the highest stakes, the highest levels. I've played them, and I have crushed them, and they have also crushed and destroyed me, and I have had to learn to bounce back. I've also played at the lowest stakes and it built incredible relationships and bonds and learned things about people and my tolerance for

loss and risk. I would I would tell everybody in the world to learn to play that game, but view it as a small microcosm of your life um and the chance to learn about who you are as a person. I love that metaphor. I think that's that's great. Before your people like the control room on fire and drag you out of here kicking and screaming. Let's jump to our favorite questions. We ask all of our guests, starting with what's keeping you entertained during lockdown? What are you

either streaming on Netflix or listening to in podcasts? Tell us what what's entertaining you? UM. I have been watching an enormous amount of Dave Chappelle. Enormous. I think that his stand up or the Dave Chappelle Show, we're both mostly stand up. UM. I just want to say that I think he is one of the most important figures in society currently today as a social critic or a comic or both. I think that he is also a philosopher. I think that he is a social critic more than

he is a comedian. UM. And he's one of the most important voices in America right now because he combines this. I really look up to him. He's a hero of mine. UM, this elegant combination of intellect, empathy, but then fearlessness and courage. UM. And he fights for ideas and free speech in a way that I really deeply respect. UM. And So I've been addicted to Dave shipp I mean addicted. I probably I just watched now things over and over. I've run out of things. Have you spent much time with the

original Dave Chappelle Show? I have, but I haven't. I've made an explicit decision to not go back to it because I've seen his evolution. Um, and I just get so much joy and I find myself still unpacking. So because I I don't listen to him anymore to laugh, I kind of listened to him to think, like, you know, he has a thing right now called Redemption Song, which is a small little clip on on on YouTube, and uh what he talks about just at the very beginning

of this. I mean, the whole story is about him going to Comedy Central to get back the rights to the Chappelle Show. But the thing that he says up at the front about cowards and heroes, I would encourage everybody to listen to and just think about how that plays out in real life and social media. It's really powerful stuff, really good stuff. Let's talk a little bit about mentors who who helped shape your career. Um, I had a couple of people that I, uh so in

all my phases, I've been very lucky. When I worked at a bank, I had these two guys that I worked for, Mike Fisher, Joel Prusky, um, who are just incredible human beings to me. Well, Joel was a bit of a jerk, but I'm just saying that to make one wonderful people. Um. Then when I went to a all, I had a person I worked for, Kevin Conroy, who made me basically like all that my toolbox comes from him. Um, you know I I and then I just picked up

a lot along the way, UM, David Goldberg. Dave Goldberg, who was you know, sort of my big brother who passed away. Um. And then honestly my father, you know, again very complicated figure in my left, but in hindsight, really gave me a tool kit, and I'm very thankful to him for that. Let's talk about books. What are some of your favorites and what have you been reading recently? Um. So I'm reading the Narrative of the life of Frederick Douglas who who na Fyoto biography somebody else is the

author of that. No, I think that's the title of the book by him. Uh and uh it's really a pretty powerful moving book. UM. I've read a lot on religion recently. Um, just because I've been very curious. I was raised the Buddhist, so I don't really understand Judaeo christian I just think all you people are crazy, and so I've wanted to really understand it and unpack it. So I started with you know, pre Christianity, sort of

like paganism, I guess, just understanding it. And then I've moved on to read about Christianity and Islam and Judaism, and I found it all very kind of very interesting, um, because it's about like society and you know, the formation of ideas and governance and and and so I think there's a lot to be learned there. I I and then I just I've read this book. I've said many times it's worth reading. It's called Americana, which is like a four year history of American capitalism boost Reney Boston

just the book book for the ages. It shows what happens when government and the private sector to partner. And I think it's a tremendous book, and wildly on the rats. It's it's a it's a tour to force. That's a that's a top ten book, you know, and then some

blasts from the past. If you're interested, there's a great book called Fermat's Enigma by this guy Simon Singh, which is talking about you know, Fermat has this theorem which is extra the end plus by the unequal z to the end and it's this basically following the story of trying to prove it. Uh, fabulously written book, completely accessible to the general public, superb to the extent you think mathematical. You know, the nonfiction can be well, the history of

trigonometry is is is right there? You know that? And then Liars Poker from Michael Lewis love that I really like I mythologize like Louis Ranieri and all these guys when I read it. Um, those are some books I think. Lewis said that that book surprised him because it was supposed to be a cautionary tale, and instead he got endless letters saying how do I get a gig on Wall Street? No, I had these pictures of Louis Ranieri. I was like, you know, I want to become this

big dude with suspenders and a cigar. And let's talk about UM advice. What sort of advice would you give to a recent college grad who was interested in either technology investing, venture capital, UM or entrepreneurship. What advice would you share with them. I think that there's a really terrible, pernicious trick that's being played on you. So I'm speaking to this person, Um, there is nothing wrong with putting in the hours and doing your time and summer along

the way. We were told and you. We told you that life is a democracy. It's not. It's an autocracy. And you need to learn that at some point your big leaps will come from the benefit of learning from others. And I think that I see so many young people quit too soon, leave things when things get hard. They go after labels, just the labels have changed to be a founder means something, and I think it means nothing. I was an employee until my early thirties, and I

learned a ton. So I would just tell you, chill out, take a deep breath, get a decent job, work in an interesting place, and then grind and put in the hours. Prove you can be there for three or four years before you go off. You can't quit every six months to a year. That's not how you build a career. It's not how you learn anything. M quite quite interesting.

And and our final question is a little bit philosophical What do you know about the world of technology and and venture investing in startups today that you wish you knew years ago when you were really just getting your feet wet in this space. I wish I knew well, gosh, I really didn't. I don't. I'm gonna I'm gonna say something different, which is, I have had major phases of ignorance in my life, and I'm really thankful for all of them because I've made enough mistakes to learn from them,

to learn that mistakes don't matter. And so if I had been robbed of those mistakes, I'd probably be exceedingly arrogant and a complete douche right now. So I'll take the fact that says it's all been pretty good man, Like, um, you know, I've had some real blow ups. It's okay, you know, you live to fight another day. I'm in the arena, you know what I mean. You're covered in dust coming and fighting, and anybody that does that as a hero, You're all heroes. Love it. Chama, Thank you

so much for being so generous with your time. This was really quite fascinating and I'm going to tell you my best conversations are where I don't bother with most of the questions. You um really gave the listeners something to think about, and UH, thank you so much. I really appreciate it. Thank you, Thank you cham for being

so generous with your time. We have been speaking with Chamath Polly Hapataya, founder of Social Capital uh a O L Facebook, Slack, just really filled with so much insight into technology venture and the change that is taking place within capitalism. If you enjoy this conversation, well, be sure and check out any of our previous three hundred and any seven conversations we've had before. You can find those at iTunes or Spotify or wherever you get your podcast fixed.

We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. You can sign up from my daily reading list at Rid Halts dot com. Follow me on Twitter at Rid Halts. Check out my weekly column at Bloomberg dot com slash opinion. I would be remiss if I did not thank the Crack team that helps us put these conversations together each week. Michael Batnick is my head of research, Mohammed is my audio engineer. Paris Wold is our producer Atika val Braun

is our project manager. I'm Barry Hults. You've been listening to Master's in Business on Bloomberg Radio