Chamath Palihapitiya, founder of Social Capital and Mark Milian, Technology Editor, Bloomberg. From the CB Insights A-ha! Conference, December 13, 2017. For more information visit events.cbinsights.com
United States


00:00:04CB insights presents a conversation with Jimmy Fallon Tapatia founder of social capital in legendary Silicon Valley venture capitalist the interviewer is Bloomberg's mark milley this conversation was recorded December 13th 2017 for more information about CB insights visit CBN sites.com here with chamoy baltia founder of Social Capital the owner of the Golden State Warriors former Facebook executive which is where we're going to start this conversation so something you said about Facebook and social media was in the news this week the 1st I should quickly disclose that my wife just took took a job there
00:00:53the great company okay so I know I know you later said that it wasn't meant to be a direct indictment of Facebook alone but I believe you said something along the lines of social media is ripping apart society and reprogramming our brains
00:01:13show me like that in response Facebook through a little shade and said you haven't been with the company for 6 years and it's very different place today what do you say to that response from them for second I mean that's an amazing company in the tragedy of my comments a month ago was it was a broad statement about my reaction to just social media in general and that's a lot of things of which Facebook is a pork but there are many other things and in the whole context of it is that all of these things in my opinion sit on top of a business model that allows us to conflate and now confused truth in popularity and it's come to a point where years ago maybe the context of you know the stuff that was awkward or uncomfortable would have been cyber bullying and maybe that was the extent of it
00:02:04but in 2017 and Beyond I think we all know now the extensive that very very small percentage of things that that may not go right are
00:02:16what warrants in his potential and so it was in that context where I made those statements and unfortunately because I was such a visible part of maybe that's it says it was easy to paint the brush of its this was me talking about Facebook it was not and which is which is awkward and terrible because it's like those guys made me quite honestly right and I have a deep friendship there and the people that I work with and can I work for Army in where are the first they just seem to me and then you found out that they're all these sort of like longtail outcomes and as a society got to figure it out and the reactions to figuring it out in part was societal part where the television companies in and parts were government music the same thing right print media the same thing where this first chapter has been
00:03:16Sterling mostly overwhelmingly good and now we have to pick a part then he wants is and fix them for the Future Sounds much Chris for now that's the time you know I was just kind of roofing and kind of damaging his social media in general is damaging to society what is valuable sometimes and I just wonder whether if I'm suffering from that confusion and I seemingly have
00:04:03enough signaling where I don't need the affirmation of the people around me I wonder how other people deal with it and forget maybe even adults dealing with it how do you know younger people deal with it or people that are dealing with more severe issues whether there are there mental or emotional or otherwise he's not spending 15 minutes picking out a filter for your why did Adam and I are out of date and I were in New York this weekend and I took a photo and I really thought about it and I think it's some level that's really okay but it's another level it's just consciously wondering to myself well that's not that was not a behavior that I even knew existed within my value framework a few years earlier and I'm and I'm trying to as I get older
00:04:55actualize around these kinds of things to ask the questions because I think they're worth asking and I wonder and I suspect other people think about it and if you have an opportunity to vocalize some of the stuff I just have to do a better job of how I do it in a part of my take away as well as like I have to kind of grow up and realize that I actually do for the most part say what other people are thinking but I have to do it in the morning start the way because I like this kind of press like he's completely unnecessary because it probably happened was more about the conversation starting versus like the neighbors of Facebook
00:05:41Fast and Furious dead
00:05:44more than half I'd say most Capital what are you tell them or if you were still at Facebook what we do tell them to do right now
00:06:04here's what I know which is I don't know the answer a lot of how we invest is in a process that we call becoming an exceptional learning organism now that may sound gobbledygook but let me just on packet for second today's world is so incredibly Dynamic everything is changing and the rate of change is so rapid and it's so multi-dimensional and so it to think that one knows the answer a priori is really really really scary to me lyrics my job but now it's my job to coach them that not knowing is okay and then it's my job to coach them on a framework that allows them to learn on the presumption that they will react quickly enough to the things that need to be fixed as they learn do whether it's cancer or diabetes or education or Rockets or social media.
00:07:04because nobody knows what's going to be around the corner in 3 months 6 months a year so yeah we have a bunch of these interesting social media to try to answer the question I don't know what the answer to the question is the internet
00:07:24is actually like at a very core fundamental level we are going to have to question the underlying business model and mechanics of modernization and economic viability that it is offering people we have thought that the only way to make money is via advertisement since 1996 when the first business on the internet started that's what we thought we were supposed to do maybe that's not the only way maybe subscription now should actually donate maybe they're all who hosted business decisions that we need to revisit in the context of empowering individuals and empowering companies to operate with more degrees of freedom problem
00:08:11right you have people here that like from Tampa to Enterprise software when you sell enterprise software the people that pay you or the people that use it in the people that then Kingdom and things of you right when you know for example were building these AI chips company called Rock. Customer say Hey listen here the power performance because we are the consumer product we have to listen to them because they're the ones paying as millions of dollars right the internet and sort of like medium businesses literally from 1996 to today don't operate that way you have for engagement over here and Coeur monetization over here and you try to roughly leave them together in a in a method that's roughly tolerable
00:08:58what are complementary and never necessarily added to America immigrants move to America on a TN Visa from Canada of the warriors were many of your players especially Steph Curry were Central figures in protest the base with President Trump I'm wondering what you would say is the most important political or cultural issue to you personally
00:09:35besides social media
00:09:41my story is emblematic of so many people in the following way most of us are not born with the deck stacked in our favor in all kinds of ways and some of us have many of those cards stacked against us whether its gender religion sexual orientation physical appearance sense of self-worth you know the way your parents right and whatever it is there's all of these things that we all accumulate as emotional baggage that retard Czar individual progress this year it's okay and so we all want to find people that have fought through that because those kinds of people give us energy about our own potential
00:10:23and I've been extraordinary lucky to fight through a lot of that to get to the other side and what I feel everyday is that I have a responsibility to then just be on Penta clean myself in a way that energizes other people who themselves feel like they're going through that struggle but to me that's the biggest thing I care about political concept of just like just the value of human capital is aqueous individuals can Franklin just get run over now with all kinds of small dollar influence whether it's the lobbying there gerrymandering whether it's through anal populism that gets perverted into like sort of you know kind of like these and these weird political manifestations and all of it slows down in a like if you take a sports analogy to America if you're running a sports team you look forward to free agency because in free agency it allows you to White Page and say to yourself okay
00:11:23the people I want on the field on the court why for what reason and then you can choose athletic capability cultural capability Wright teamwork all of these different characteristics and then around then you build the team that you want and then you go out and compete and you try to win simile for the United States wall that doesn't Express itself in the ear it's Express itself that way for hundreds of years write the laws of America is basically like the best run sports franchise you can mention Championship after Championship Championship exceptional job of being a beacon for guys like me from people like you the jacket kind of stacked against you and you're like that's the one place where I can flip all the cards of the other way and now you see it in a different light people don't want to come here
00:12:18CB insights the signs of Mosaic score to private company is based on the 3M money market in momentum we also provide company valuations learn more at cbinsights. Com all around the world who would otherwise everything that they have built up to come here and start with nothing to rebuild themselves on behalf of this team
00:12:48any idea that we wouldn't want the best of those people to help us to advance the ball and then to push everything to everybody else all around the world is insane that's happened in a year
00:13:02that will be truly changed in a year
00:13:06and that really saddens me
00:13:12my leverage in the world is hopefully to accumulate capital and directed in areas that are under invested in that right this wrong about the federal government does to substitutional please this election I would have said everything that we do we can do in the United States and that's 99% of us all because the best of the best are always going to be here if we solve cancer here we smell diabetes can still take them to the rest of the world now unfortunately we live in a much more balkanize polarized world where we're going to stress test these assumptions of globalism in that there are going to be pockets of companies that need to get built and rebuilt all over the world and so we as a byproduct of that I taken too much more Global orientation the best and the brightest part necessarily all aggregating here now in the
00:14:12getting used to it so we got to go to that open for business in ways that we were never open for business before but ultimately like we are now in out in this world if we agency with one hand tied behind her back and that's that was totally and completely avoidable
00:14:34you talk a lot about demographic diversity inside tech companies in BC firms has Valley made progress I can a nerve but I did it well you know comparing that to any of the last couple days meaning that's also something that I felt strongly about this is Elvis really this idea of being an outsider of not being credentialed not being packaged of not having the gold stars that direct me as being an anointed one and all of a sudden when you say it out loud everybody else is like me to write me to me too and then what has happened is were in The Room chapter 1 of the great unwind of the kind of like Venture aristocracy and at the end of chapter one which is roughly where we are is the great capitulation of the historical firms
00:15:34and what they're realizing is well we're probably going to have to do it so might as well just stuff the box with a couple color people and maybe some women now that's how it starts that's what they're saying to themselves and what they're going to find us some of us are actually pretty good
00:15:48eventually some of us will take over those organizations and unveil ripping apart from the inside and so you know if it took a couple of Articles and we work with the information in that case I wish that first list the partner with organizations who believe in that kind of stuff that was a great thing and we don't ever need to get any of the accolades for that but I will feel really proud that I was a part of that movement at least taking it all leave the old like liars and Sequoias are in a moment of change right now
00:16:30I think they're in a moment of soul-searching to figure out what the future looks like I don't think they particularly have a very good idea and so I think their version of the future will be some you know small modular alliteration of the past and that's fine you know it's not dissimilar for example two newspapers trying to sound more ads while Google gets created
00:16:53and I just think in our industry we are Google and that class are the newspapers
00:17:00social capitalism branching into all sorts of weird Financial vehicles in October do you start a new program where any company can go fill out a questionnaire upload some financial information or usage data and if you like what you see you'll write them a check sight unseen I guess so I'm wondering how many Nigerian princes have signed up their startups
00:17:26call Jordan, no sign of our business is our traditional Venture investing a really good job of partnering with entrepreneurs at the earliest stages to build vibrant companies in some really interesting areas companies that you guys know where we let you know that in the formal Siri days like slack and companies that are getting baked like rock companies like glucose I ought to take her so I RR high-touch Venture business is amazing but I kept again asking a question guys the rules of the game of changing more more entrepreneurs whether it's because of choice or other because of non optionality are not going to be in the United States they're also increasingly not necessarily going to be in Silicon Valley New York City because it just costs too much to be here so how do you find these people how do you go to where they are and the analogy of the following
00:18:25so I was in a situation where I thought about getting a massive line of credit from a massive Bank
00:18:35look I mean risk on all the time so it was a $1 credit I may do whatever I want with it all secure it against my you know PA let's go when somebody ask for that amount of money you get a meeting as you can imagine but I'm the same person that two weeks earlier applied on that same bank's website for a credit card because I needed to give it to her old pair and so that was like a Pinot $500 credit decision and this is an institution one is high tides and one is automated decision-making and might might might take away from that process was what is not how Venture should also work right when you want to raise a 10 to 15 million dollars series a of course we want to spend an enormous amount of time with you get to know you intimately well Ford relationship and work together
00:19:35but if you're all around the world or you can't necessarily even get into the United States but you're starting something that's by burn and it's working why shouldn't you be able to describe your business and really logical honestly right numerically and have people be able to back you and support you and so the way that we think about this service would be called Capital as a service isn't automated copy everything that we do that is off by touch business and are high-touch business will always be the center at all ways be the heartbeat we have a group of 8 people by the way half man half woman kick ass teen dating fucking rock
00:20:16which is Haiti or anywhere in the world 24/7 365 and you want money to move your business forward just fill out the form you promise to get back to you right away and in a lot of the case were able to say yes that's just a transformational thing and you know 7 months how many checks here in less than a hundred this year is to write a hundred our goal next year is to write a thousand and then our goal every year thereafter is to write 10000 check
00:20:54time will tell whether we can pull that off we don't know whether that's going to take an extra 4 years and you know all the companies that may want to support us in this process think of all the government that may want to support us in this process think of all the philanthropy all the foundation think of all the sources of capital the World Bank IMF all these people who want but we can enable in some small way which is people who can take control of their own future to self-actualize the economically self-sufficient everywhere in the world we know for a fact when you do that on a mini blind basic more women or minorities more people in the game that never would be in the game starts the past that you can on accessibility and that's what popped the prosperity that's the past the piece that take 25 years to build but you got to get these people in the game
00:21:54raining out. They want your help until we're like yeah let's go do it for entrepreneurship all over the world so be it I will be on a plane the rest of my fucking list which is sort of a way for a company to go public that actually doing an IPO what's going on with that
00:22:26read the latest from the CB insights intelligence unit learn about our expert intelligence reports brief and teardown CB insights. Com research when you when you look at the things that we do right it can be
00:22:44you can send confusing we are not in the business of confusing strategy and tactics those are all tactics and they also exist in every single stage of development early-stage are businesses in the job of supporting then we are in the business of entrepreneurial Finance entrepreneurial entrepreneurial Insight Business acceleration growth and so when we talked to them they're like really afraid of the IPO process we don't trust the bank and infrastructure we don't trust the process but we know we need to get liquid and we know we need to offer Downstream liquidity to our employees to retainment
00:23:37Tony Bates myself Marc mezvinsky Albert team-building how do we solve this problem
00:23:46and we found an existing instrument off the shelf right it's called us back it's existed for years it's been used for years and we restarted it to recreate the IPO process and really disruptive cheap and fast 60 to 90 days Republic I can't tell you what company were going to stop by bird now it's back it might be late but just cuz I believe reserved all the ticker symbol IPO A through Z so we'd love to kind of do this one after the other but what I will tell you is that I think within the next 30 within the first 6 to 9 months to see a really really iconic business potentially take a hard look at this and months of next year probably a couple quarters in April 2018 pretty cool glass question and then we're going to jump into the underrated overrated game before that you were reportedly hiring NBA start
00:24:46show me the way to be at your firm Central and David has invested in a bunch of stuff with us obviously I met him when he joined the Warriors this is a smart smart guy I mean good investor good Capital allocator he's managed his PA unbelievably well and you look under the hood and he talks about how he he is literally out and he's made an enormous amount of money and you see how is compounded you're like a really sophisticated guy and so we've done a lot of deals together I've seen it up close I'm not going to confirm or deny what we're doing but I think it's fair to say there's a future post basketball
00:25:31yeah it'll be in order by 2 bigger than his life in. All right under eight overrated so I'm going to name 11 topics rapid-fire answering one word if you think they're overrated or underrated Bitcoin underrated
00:25:50blockchain overrated
00:25:53Kai underrated
00:25:56Facebook underrating
00:25:59Google underhanded massively underrated
00:26:04autonomous cars overrated overrated
00:26:10Elon Musk underrated mass of the underwriting already venture capitalist
00:26:20Andreessen Horowitz
00:26:25Kleiner Perkins overrated all right
00:26:34CB insights creates the software platform used by companies like GE Cisco and Castro to predict emerging Trends see competitors Play Books stock the smart money and identify tomorrow's challenges to learn more about us visit CBN sites.com

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