Most of you know Chamath Palihapitiya as one of the most prominent and progressive venture capitalists working today. But before forming Social Capital, Chamath was an early employee at a startup we've already covered, WinAmp; was the head of AOL's Instant Messenger product; and of course, was an early employee at Facebook.

United States


00:00:35Welcome to the internet history podcast i'm your host brian makhan so for the second of my san francisco trip episodes thie good people at social capital were kind enough to host may for a interview with jamaat palihapitiya Most of you know jim off as one of the more
00:00:53prominent and progressive venture capitalist working today but before he formed social capital mammoth was an early employees at a started we've already covered women was the head of a wells instant messenger product when that really meant something And of course he was an early employees at facebook where
00:01:13eventually he was in charge of user growth on today's episode we get into all of this with the fascinating jamaat palihapitiya jamaat palihapitiya thanks for coming on the internet history podcast thanks for including so i think you're your story is somewhat well known that you grew up You
00:01:34were born in sri lanka move to canada age six i think it was you were essentially a refugee from civil war so you grew up in poverty generally but other people that i've spoken to that are either immigrants themselves or the children of immigrants there's a common theme
00:01:51which is that the parents never want the kids to do anything risky they always want them to be doctors lawyers something safe were your parents that way Yeah i think it's you know it's basically like this psychology that sets in when you make a lot of sacrifices so
00:02:09if you're on a path and then for whatever set of circumstances you take yourself off that path all you can think of is like how does someone or something in my life validate those choices and for a lot of uh parents there frankly the most important validation and
00:02:26being their children and so on you know i would say like my parents had a very traditional world view which is where they grew up in srilanka the smartest kids became doctors or lawyers or accountants um because in order to do those three things you had to you
00:02:41know maybe go and get a degree in the u k that's a big deal when you're in sri lanka and so yeah there their definition of success was myopic it was an incorrect it was just i think it was it was not the fullest what they probably could
00:02:56have been someone else told me i'm not remembering who at the moment but it's almost like the parents took this insane risk and so they assume i did this so that you never have to take risks i think that's also a part of it it's like if you
00:03:10think about it that is the most insane risk of all which is like you know ok like i say they are entrepreneurs all the time like there are so few life threatening decisions like what life threatening decision are you do you really you're faced with there are just
00:03:22there just on none but then when you think about like ok we emigrated there's a civil war you can't go back it's unsafe that actually is a life threatening decision and so in so many ways that yeah it's like it's they had to take the biggest risk uh
00:03:40and then they probably again coupled with that psychology they just want you to basically live a very different life because it it just allows them well a i think it allows that it allowed at least my parents specifically to feel like everything was safe and then i think
00:03:55the other part of it was they just needed a way to reclaim some sense of stature because i think and at least in my case they just went through a lot of stuff where they never was able to live up to their own expectations of themselves what was
00:04:07your but your parents professions well my dad worked in the health ministry in sri lanka but when we moved to canada he worked at a photocopy most he was unemployed when he worked at a photocopy store and then he was a clerk in the federal government for a
00:04:25while and my mom was a housekeeper than she was a nurse's aide but she was a nurse back um so you attend the university of waterloo you know the big university for senate tech talent down here Sometimes your dream was in electrical engineering not not computer science and
00:04:44so but then you go into banking Why did the wai banking Well i think part of it is just because you well i was faced with a very short term problem which is just you know i had racked up about twenty seven or twenty eight thousand dollars of
00:05:00debt um student debt even though i was part of the coop program of water So you know you alternate work in school you get paid a little bit you use that to pay for school but there are still gaps so i had that to deal with number one
00:05:15in the number to my parents basically wanted me teo go to graduate school and i was like well this is crazy We're really poor uh i have all this debt and there was the's really great jobs on base streak which is the canadian equivalent of wall street and
00:05:35i got one and uh it seemed like all the money in the world like you know you get paid fifty five thousand i remember it like your first year bonus people say guaranteed at least twenty five k and you're like haiti grant i mean like i could make
00:05:47eighty thousand dollars and so it just seemed like the right thing to do was very prudent decisions where you good at it i think you were i was really i was really good at you know and what's funny is like i i found out something about myself which
00:06:01is i have uh both like proclivity for tremendous risk financial risk uh but i i think i make reasonably good decisions when i'm faced with little information and so when you put the two together you know while i was trading interest rate trudeau's on behalf of thank you
00:06:20montreal um i was also basically trading equities tech stocks and that's actually how i paid off my student debt one of my managing director's made so much money off of my stock picking he said he's an incredible guys he was mike richard and he'd literally wrote me a
00:06:36check for twenty seven thousand dollars he goes this is not for you it's for you know your student loans going paid off right now and i remember because we worked in this the huge office howard the bottom is a branch and i literally immediately walked downstairs i cashing
00:06:51the check for twenty seven thousand i paid off my student loans and i just remember feeling like wow like what a huge weight and it wasn't but like six months later i ended up quitting and that's all it took so if you really like if you think about
00:07:05it it's like there was a couple of other things like i didn't get a super bonus and a couple of but it's like you boil it all down it's like that twenty seven thousand drove so much of my decision making it released you to be ableto do twenty
00:07:18seven thousand dollars and then and then you think like what about the poor individuals now who have to deal with hundreds of thousands of debt How good must they be But then they they're not going to get lucky enough to pick a couple secs tech stocks a but
00:07:32then be not work for someone generous enough to actually just give you the exact amount of money you owe like so i don't know it just yeah it's twenty seven thousand so i ran in a couple places that you come to silicon valley because you're following your girlfriend
00:07:48Now my life now your wife um and so just to put this in context is it two thousand You come here frank so it's right with the bubbles bursting before right before it was before So it was like i remember she couldn't she she lived in burlingame and
00:08:07uh she worked apollo and i land here to go and visit her is like a february and it's there's not a drop of snow i've never been to california and it is beautiful and sunny and then she says great let's go i show you my office and it
00:08:23was like a saturday and we get on the to eighty and i'm driving down the two eighty and on the right hand side it's like this beautiful idyllic water and woods and all this stuff and i'm like where am i like what is this place and then we
00:08:38drive around paul wall toshi shows me stanford and i was like what am i doing because i was like i just wanted to be around and another one of our friends had actually also come down to two the bay area at the time and he was doing his
00:08:53master's a stanford and so the combination of those two i'm just looking at them like she's working at a start up or she's working at birth and young but working with many startups then she went to many start ups and then my other friend who has now started
00:09:07one of social capital's best performing companies uh i'm looking at these guys and i'm like and these guys were like really going for it like they're chasing their dreams and i was like i got to get him and so that's when i went back and i just started
00:09:21applying like randomly to every job possible you interviewed at ebay and did you get a offer for me May i interviewed in the corp dev group of ebay i want to get this right it's okay so for sure it was ebay and tibco and one of them was
00:09:35in corp dev and one of them was not one of them is more like technical product i think and i got an offer in the court deb job um i didn't get the other offer and i got an offer from when it was at the time of business
00:09:52development manager because what i i played up this whole oh i know business because i work in finance they don't even mean what they didn't know the difference between a trader ah banker they were like oh finance equals business you mean when tempted and what Anybody okay we'll
00:10:08get whenever yeah and so like friend mcintyre who interviewed me i'm sure he didn't know the difference and so but but he saw that i was technical he's like oh technical guy knows finance which means technical guide news business so which is higher man he'll do some business
00:10:22type stuff and i was just so happy because i was like uh it was like young people and i was like how are young people in charge of anything This makes no sense like i go back to bank of montreal and it's like my boss at the time
00:10:35her in his late thirties early forties his boss is in his mid forties his bosses in his mid fifties and his boss is in his mid to late sixty and that's all i knew and here you have eighteen nineteen twenty year olds running around like they own the
00:10:49joint And so it was it was who's crazy Well so i had justin frankel on the show so i want to go into this a little bit because the other thing about them at the time is there what five six guys It was it was originally five guys
00:11:05backed by justin I remember this correctly justin's father and like i think a father's friend and i think between justin's father and justin they like ninety seven percent of the company just basically they own the whole company and then there was the original five guys and then there
00:11:18is these four five of us that were hired in short order kind of like after that period it was uh there was like two guys from france and it's Really Actually i kind of feel bad because i don't remember most of these people's names that even but i
00:11:33promised to no remembering names there will remain and so it was like a couple of guys from france me a couple guys from you know san francisco and uh yeah like the whole team was at the time that probably grew at max maybe to seventeen eighteen people so
00:11:50for those listening reference the justin frankel episode for more in depth about this but you know winamp is this is slightly before but then in the mix with the whole napster era this is when music is being revolutionise so with no background no experience this is your first
00:12:09start up you're thrown into this and and what do you what do you doing in this My first deal deal that i did was unwinding there isn't it There is a there is an amazing time where they were uh i don't even know how to call these types
00:12:29of deals but it was like essentially like round tripping con deals were like you know you would buy services from me i would take that revenue and then buy services from you kind of people do that it was so your man i mean obviously you say today it's
00:12:45like of course that's illegal right back in the day it didn't it seemed like while we're all just doing business with each other and then even it was to unwind a deal with a company called my play which was essentially like dropbox at the time for storing music
00:13:01and so when apple's downloadable software and we had install screen on so you could package and cross sell different aps because plug ins and things like plug ins and things like that and so in our installer if we placed you correctly you would just get huge up lift
00:13:18because this is a product that had i think i want to say one hundred million right lets users um and so we negotiated some deal where like we got like five bucks per install or something i mean something crazy friend did friend mcintyre to this year that long
00:13:32story short like my plate odus like i don't know if i was a little bit of billion dollars like whatever it was it was just like untenable for this start up to pay and so we were and we were in the midst of unwinding it that was my
00:13:43first deal and there were and so it was a little bit bit of negotiating a little bit of modeling and it was a lot of interacting with the product because it's about extricating a bunch of stuff out of the code base and that's where i started mohr of
00:13:58a migration back towards more traditional product i wantto i want to get on that just real quickly because it's more common now but the fact that seven guys or however many less than ten guys got to a one hundred million user base and saying it zain i mean
00:14:16it's it is insane like even one hundred million users of anything today is probably aziza top fifty excellent but in an era when there's what the internet one hundred million people on thursday i think the internet was at least one a tenth of what it was so it
00:14:31just meant a lot more um and also i actually think to give justin credit it was also the first riel consumer facing development platform of any importance you know the number of skins and plug it's the one thing we never had was a really economic model but we
00:14:49had an unbelievable level of developer adoption and we actually showed that there is a way where once you had scale you can rewire distribution and give the massive long tail of companies access to a massive user base Today that's just seems like odo that's obvious android and you
00:15:07know obviously like ios the iphone but you can't back then it was still a really big deal because the only other way that you could do it was for example like you know a well would do these things called carriage deals and they would charge you an arm
00:15:19and like you would go and raise money from a venture capitalist you know here she would give you you know twenty million bucks and then a woman do a deal and take seventeen of the twenty third of them exactly promote you know like i remember for example there
00:15:33was this feur at the company because we ran greyhound racing adds one quarter because a well did some crazy deal with some like european betting company and you know this is before this kind of stuff was illegal and they were like all right we gotta stuff like two
00:15:51fucking billion ads down everybody's throat in the next like three days and so they took over every property and we had a little interstitial banner at the top of the a nip you probably don't remember people like i love dogs one of our one of our guys he
00:16:08was the cfo had a great rescue and so it was like the most comical thing because it was like it was the two worst things you could have done it was like betting racing gambling of a dog of which one of our executives had that expect scheme dog
00:16:25it was hilarious and on music application way sort of a lighted over this well but um winamp combined it with spinner is gonna react so basically what happened was like when i came in there was these two guys one that split his time on winamp one split his
00:16:42time uh this guy dave cotton on spinner and spinner was more internet radio so it's like kind of like pandora and itunes basically you know but but first generation versions and uh while justin remained intact that when ap the two founders of spinner kind of very quickly kind
00:16:58of transitioned away two great guys dave samuel and josh culture who now run freestyle bc and then it was this cohort of this amalgam of people and we have to run the two assets together So we used to call it spin in you know spinner in with him
00:17:16And uh and that was really cool because like i got exposure to both the the music streaming part of the business and then the more traditional sort of like you know bach software free where shareware kind of side of the business and both were very different culturally could
00:17:32not be more different Yeah well we'll get to that in a second I want it Just ask one question about what a well acquires because rob lord told me you know like if managed well there was no reason why winamp spinner that what a well had in like
00:17:47two thousand two thousand one couldn't have become itunes in two thousand six months So even more specifically i totally agree with rob because i want the record to state the actual first ninety nine cent downloads start was launched by me and a group of guys on a well
00:18:01servers and what happened was because we were in the middle of this merger we actually went to warner music we were merging with time where he went to warner music and we say hey we want to test this concept of ninety nine cent downloads because the only other
00:18:14way to consume these of music legally we're through these horrible products called music net like it was terrible with d r and i was just bad so water gives us like i don't know how many songs like calling fifty songs and so we allowed youto one click buy
00:18:31from ninety nine cents and charge it to your card on file which avery every able user had because they were paying for dallas all right it had unbelievable conversion rates and so we put the whole business case together and we went to jail management and we said we
00:18:46have to do this this is obvious and our boss great guy his name is kevin conroy goes and i with me and i mean i went with him sir you know we built the case and you had these like dopes that were running this company who are more
00:19:01concerned about politics and preserving their job and they killed it and uh it was it was a real shame and rob's right and then like i remember sitting in the new york offices of abel music this is probably in two thousand three or whatever when they like launched
00:19:21their own ninety nine cent downloads store whatever and you're just looking at it you're like you just felt like such a dope because you're like oh my god we did it it worked we were showing like you know seven eight nine percent conversion rates to download and by
00:19:34this music no no thank you so pretty for it on the dopes a little bit after the time warner merger just either personally your impression of working at a big company like a low or so i was very inoculated so the culture of so first let me unpack
00:19:51spinner versus went up we had we shared an office on alabama street patrol hill it was a huge converted sweatshop literally sweatshop the outer ring was all spinner employees the inner ring wass when it they tarped off the interior and turned off the lights so that they could
00:20:10live in a darkened work environment they then started to only show up at nights and on weekends so that's how toxic the cultural literally quarantining them i mean literally were like i haven't i want nothing to do with these other people that navigating by navigating that was hard
00:20:27enough but then every now and then we'd fly to the east coast and you're just confronted with these people who had a moment in time we're just unbelievably on top of the world and they basically wired up the united states and they did something truly revolutionary but along
00:20:45the way they conflicted luck and skill and some of them with all that money became super erratic and then that seeped into the culture and then the culture just became increasingly political and really that and so you have to interact with these folks and they would just be
00:21:05very vindictive and um you know unpredictable so even if you present all the data in the world if they didn't like you or they thought that you know kevin was going to accrue too much political capital with this win no no download store for you let apple have
00:21:23that whole business So you so i saw up front so many just really bad decisions that were basically made from uh the point of like personal ego and look every we all have you know i have a huge either but not like like you have to have an
00:21:41ego because it will help create self confidence and that then can be channeled to taking risk which is really where i think like at least i feel very comfortable and then and if i lose i don't feel bad about myself because i have self confidence because i have
00:21:57a reasonable legal so that's how i kind of think about it But where it gets perturbed is where it's like you have an ego you think very highly of yourself you think that you're capable of things that were frankly a lot of situational luck and timing and then
00:22:10you both prevent others from being in a position to challenge that and then you yourself basically start to decay and your skills going and that's i saw a lot of that a lot so it just it was like i don't i would not have changed anything because i
00:22:25have said this many times it's such a great opportunity to learn from things that don't work right that's your moment where you could see it you tried this it didn't work so you know in my opinion that that behavior or way of thinking or set of decisions was
00:22:42just totally wrong well i also wonder what you learn because you actually you know you stay with a well for a few years and he writes to the rink so you're sort of playing this game and i'm wondering if like that's an education as well because you're seeing
00:22:55it and you're thinking to yourself boy this is so just to give you can still play the game absolutely government i wanted to give you a sense like i'm in my early twenties and then i have a sponsor kevin conroy and he's promoting me so i was inoculated
00:23:09from a lot of the politics because he made me he pick me and basically tapped me on the shoulder and said all right i'm going to make you and everybody needs that everybody needs that so i had that and so i wasn't going to give that up and
00:23:22with it came a very practical thing for me as well which was all of a sudden i was making one hundred thousand dollars here one hundred twenty five thousand dollars you're one hundred seventy five thousand two hundred when i was a v p i think i was making
00:23:33two hundred fifty grand a year that's a lot of money and so i'm able to pay for everything i need i'm able to send three or four thousand dollars a month back to my parents which i did literally from the time i graduated until i was able to
00:23:44get my first slug of liquidity from facebook every month so even when i made to twenty five to twenty five and i was making one hundred then because one hundred twenty five x taxes went back to my family so i needed that um so i played the game
00:24:00until i i absolutely had to again for the historical context i want to give a little bit of time to aim and i secu which you eventually are the leader of that group essentially so in two thousand three what happened was so basically i go through the ranks
00:24:16of able music and then my boss goes and takes a bigger job at a wal broadband so hey well was going through its own transition and it had to disrupt itself and move from dialect to broadband and it wasn't doing it very well so they re jiggered the
00:24:31team in the hopes that they could figure it out They brought kevin in kevin brought me in and then as part of that they reorganized the whole bunch of assets within us and he got this portfolio of things and he turned to jeremy liew whose apartment light speed
00:24:45and so jeremy you run netscape and they turned to me and such mouth you're on a minute and i took it really fucking seriously because i'm like ok this is my path here because now it's like i had control of a product plus or minus you know i
00:25:01had i was relatively self contained um and i could really start to experiment and what i mean by that is how do you manage How do you motivate people there's a whole like me at a matrix to organization in a along So there are some people that reported
00:25:17to me there are other people that didn't you and you have to learn hajto like be a real like leader How to recruit well how to fire people how to hire people like how to set a vision how to implement a strategy how to stick to things when
00:25:32it got so it was it was a really it was really cool for me because it was and i was twenty seven and so i was like men uh like i'm learning this much faster than it probably thought i would and i was pretty sure that that would
00:25:48let me go to something else just a small segment so you ask this question earlier like you know like kind of like playing the game in a low there is a point of got frustrated and i'll never forget this um i got a call from a friend of
00:26:01mine he said hey skype is looking for a general manager in the united states and i like my eyes lit up on i'm like oh my god this is it this is my shot because i was like because to be quite honest with you when you're working at
00:26:16a well i tried to get a job at google very early on when i was trying to move down to united states i didn't get a job um and i never really evaluated leaving because i was also in this precarious immigration situation because i had an eight twenty
00:26:31seven and it couldn't back then you couldn't switch you are beholden to the company you're at until you got your green card lost our short if they fly me to london i get on the phone with these guys and i'm like here's how i think you should think
00:26:46about skype and you know here's how it would run the business in the united states and here's some really interesting partnerships and product things and they're like oh this kid's not an idiot why don't you fly to london And so my wife and i flew to london we're
00:26:58so excited we're like oh my god and i went through the interviews and i thought i really had a legitimate chance to get this job and i come back to the united states and like two weeks later i see this thing hit the wire ebay acquires sky tni
00:27:16and dude i'm telling you like i literally like it is like it's like if there was a single tear that could've been captured like tripling down my cheeks So that was the only other time by the way that i that i ever thought about like just quitting otherwise
00:27:29i was like i'm gonna learn as many things they can and i'm going to put points on the board and i'm going to at least give myself some bona fides i didn't know at the time that when apple matter i didn't know at the time that abel music
00:27:43would matter and you could claim today that they don't matter that much but i was pretty sure that a man is a huge thing would have mattered well let's just real quick to give credit to that I think people generally know that things like you know status updates
00:27:56the concept comes from a manned things like that but also before the current modern social era that was the platform that at least young north americans were on like that was how you did your social networking although it didn't have exactly the social functions but like that was
00:28:15the height of so you had status messages and away messages which now being co opted and different forms of status updates I think you also had a couple of other really think the really interesting things like you could share some forms of multimedia although it was sort of
00:28:29like you know one to one i think the other interesting thing that we did and this was a little segway to facebook we were mucking around with a whole bunch of different ideas and we decided to build an email screws and so we built this thing called a
00:28:47male and we launched it and we got a pretty decent a tax rate of aim Users who then also picked up a name email address and why that was important was we got all this feedback that said people hated their aol email address and so they were like
00:29:01give me anything else Yahoo gmail didn't exist at the time yeah who was a big one hotmail with somewhat important so we said ok let's launch a male but along the way we were we experimented and started to basically measure edges between different nodes of people in the
00:29:17network and so the manifestation of that and you can google this is this thing called game fight Oh i remember that and aim fight was just like a little splash page but you could put in your screen name and somebody else's screening and what we did was we
00:29:32actually did a very you know i would say like not complex but like a really interesting ed ranking of you and who you know them and who they know and we kind of gave you a score and who won and that's when i was like what is this
00:29:47and that's like you use the terms that you use so easily today Like you didn't say like network effects and you didn't save morality and we'll talk about it in those words And so like you're exploring these concepts of like why is this person interesting and connected to
00:30:01so many people and and then you can see like how this information flows and and again it manifested itself in kind of a crappy cute little tool but underneath that to me was a really important moment of learning because i was like holy shit like these kinds of
00:30:18businesses are really powerful and then that's when you know when i when i met facebook and it started to really see it that's when like the it's started to click for me as well because i know i'll help jump us ahead here um you from your days that
00:30:35went am pond and other things you you sean parker get to know sean parker you're still a tame sean parker says i'm waiting to meet this kid and you want to do a deal with facebook where you put a mme on facebook pages so i'm sitting in this
00:30:50meeting with parker and suck and bank off and i'm pretty sure john miller who is the ceo of the time there's a bunch of us and basically i said to bankoff we should buy this company bank always like there's no i think we're going to buy anything go
00:31:05back to your office and go work and i want to kevin and i said um i really think we should figure out a way to like a time it's called presence like a company in a great presence into facebook i think would be really cool and here's what's
00:31:19crazy i didn't go to an american university so i could not even use facebook so i had to get somebody else tohave a dot edu email address you know and like show me how the bloody thing worked and we took a bunch of screen shots and then we
00:31:32came back and were like hey like we'd like to propose this deal where we integrate presence into facebook and you can go into the way back machine to see what it looked like in two thousand five but the pages were very static and there was not a lot
00:31:44of functionality on there and what we would do is we would bind your screen name to your name and you could click on it and from the chrome of your pc he would i would pop came because to be clear there was nothing like do secure there was
00:31:58nothing there was there was nothing uh and i thought it was a fantastic deal and you know we got a lot of good pr for it and um i mean the most important thing is i got a chance to meet a lot of the phone oaks at ayman
00:32:15area had had facebook and obviously that helped when when when i was thinking of joining right so there's an intermediate stage where um your mayfield for a few months but then how is it that you you're either astor do you try to join facebook You know it was
00:32:38kind of like it was some combination of like mark was like hey why don't you interview with a bunch of the guys and you know we can talk about doing something i was like ok let's have these conversations and i you know i remember i met with o
00:32:51n than not adam d'angelo you know d'angelo now runs cora dustin moskovitz who now sasana matt cohler who's now a gp benchmark what was your impression of them so i think it was it was it was good but on it was like hard to really like did i
00:33:13say i had like an awesome instant connection with any of them know um but i but i like them but it was like you know i was like it was an interview and i was like or like you know getting to know each other and i was like
00:33:28yeah this is cool on honestly like i would say the same thing about marcus well like it's like when you see him today like i mean like the growth that he has gone through like this guy is like a top two or three person in the world like
00:33:46period and so and when you meet him he is now i mean he's still normal to me but but when you meet him back then he was he was like everybody else who's figuring it out right Ok you know and uh by the way he has a real
00:34:01humility about that which i think is really powerful and you know hopefully we all have that if we're in a position to be that both skillful and lucky but yes so he was he was cool but it was an obvious this then right by no means and um
00:34:21so it was kind of like yeah we spent time together and then um i had to go back to what i thought was important which is that that whole process of aim was like hey like these kinds of businesses air really interesting businesses eh And then be there's
00:34:39all these things that you could do if you can actually create this density and i took a shot and i mean i don't know i mean like i got really lucky i could have been i jokingly said this could be the indian guy at myspace and you would
00:34:54know what the hell am so it's and said on this we look at facebook so it's like it's a flip of a coin i mean you know well so when you do join what your marching orders what what do you do and actually what's the year it's after
00:35:08they've doesn't said it's after they've opened up got me all of this is funny so like you know i started full time full time so this is a weird time is all because in my life my dad went through a really tough health scare and he was like
00:35:23intubated and he had cardiac arrested and so i missed the launch of facebook platform i remember this because i was supposed to be there um and then i got back and i think i was in the seat like maybe in like the middle part of those seven okay
00:35:37and so you're your marching orders are to do uh it was it was a mishmash it was like i think was that call like product marketing and operations so it was like it was like everything it was like platform but it was also like customer operations i think
00:35:54at some point hr legal reported to me basically it was like this amalgam of all the things that were not under owen and specifically not core product and engineering which resulted that's marc's right And so it was like ancillary product um it was also a deconstruction of owens
00:36:17role in a weird way because that was like a really passive aggressive phase and the come transitioning out around that so so basically like you know my first year was was really working on the launch of these ad products uh beacon and the self service ad duel now
00:36:34the cell surface ad tool is just a huge six huge home run and the to the to the team that built it so small it was like a handful of folks and you know like the guys that like literally initially skilled it one guy this guy tim kendall
00:36:48fantastic guy who is now i think the number two guy pinterest and this other guy alex schultz who still today a well uh sorry facebook um uh and then you and then there was this thing called beacon which you know that was like me mark it was so
00:37:04funny the thing that we all spent the time because we thought it was the coolest me mark aditya agarwal was now the cto a drop box and deangelo uh was just a huge disaster obviously right Uh you know lawsuits and so you never know right The one with
00:37:19the smallest group of people is now a multibillion dollar the you know tens of billion dollar revenue channeled through facebook was beacon you guys his attempt oh not to dio adsense adwords but to all right we're going to revolutionise advertising the same way that they did not that
00:37:38you're you're trying to one up them but i'm saying was that your shot yet Like yeah the russians the game yeah the rhetoric that we had at the time was like social actions will create a lot more engagement and we can do a lot to drive demand fulfillment
00:37:53so we used to segregate the world and say there's demand generation which is getting people to want things and then there's demand fulfillment which is actually closing the loop and we thought social actions would close the loop and so how do we get social action so we'll just
00:38:07it's all a little snippet a j yes on this other website we'll figure out you bought movie tickets we'll take that action will publish it on your news feed and everybody will love it and it turned out that that was not but but now you look at it
00:38:19and it's like look you get retargeted there's so much i mean information stealing sharing whatever you want to call it it's gone so past the pale running but then also i mean in terms of lessons learned even the bad lessons are lessons learned even the accidents are lessons
00:38:37learned i mean that obviously had to lead to the better products that then allowed basement just because i think like you know a year later facebook comes out with facebook connect and then you know they've continued then they have the facebook ad network and they do some pretty
00:38:51powerful retargeting and other people now do all of this former retargeting and um yes so it is just a natural part of the world we live in today but it started in a very innocuous way just real quickly before we leave the beacon idea the concept of pissing
00:39:10off your user base you know facebook is famous for this concept of you know break things you know and um when you're dealing with a user base so big where if even five percent of the user base is pissed off that stale you know tens hundreds of millions
00:39:24of people what do you think you learned about um trying to push the envelope forward but then being able to listen to win you know what Either they're not ready yet or this was a bad idea Yeah i think this comes to really internalizing this idea that there
00:39:44really are very few life threatening decisions at a company number one and the number two is you want to be pushing the envelope with a healthy amount of ability to basically you know take a step back and reevaluate so it's kind of like you're very risk seeking But
00:40:00in many ways like you're pretty risk adjusted like you're thinking about expected value and when you're not seeing what you expect to see you're willing to kind of dalit back um that's probably the most important lesson now now what they do though is so much more sophisticated bring
00:40:16me back that it was like a delicious rip it in and it doesn't work well deprecating people about you know the world back not that we're uh now it's like oh well test for a thousand people that will test in two thousand in this country in that country
00:40:31and so you know i don't think they'll ever find themselves in that same situation but i also think the surface area of innovation is is just different now like you know look every company goes to an arc of innovation where the surface area overtime shrinks and the only
00:40:46way that you basically you know can get yourself back is to re invent a new demand curve and so you know i think what facebook is them brilliantly is by new demand curves you know they buy instagram by whatsapp oculus et cetera but if you can't reinvent your
00:41:06core demand curve the surface area of innovation tricks um and so there's less risk of getting things drastically wrong today than there was in two thousand seven on that point so you eventually your title is you're in charge of growth growth and mobile and international yeah specifically on
00:41:29growth i feel like now with passage of time in retrospect people could feel well they cracked the social so it was just available once you know it's a it's a ball that keeps growing a snowball going downhill but from being there from trying to get the growth toe
00:41:46happen what what what was the number one lesson in terms of was it just not screwing it up was the product good and we just don't screw it up or what were the things that you were trying to do they keep the numbers going up i mean i
00:42:01would love to tell you heroically that it would have failed but not for us i don't think that that's true but i do think that i can tell you confidently that it would be maybe half his big yeah maybe a little bit more than half his big or
00:42:13not as big yet it would have gotten there eventually but not as quickly as i think i think we i think we positively impacted the rate of compounding and that has a huge effect over many numbers of years and i think the things that we learned uh probably
00:42:29to me the thing that i took away the most is that we became so thoughtful had a per country level because we basically respected each country as its own country right Well actually language nuance culture for example you know remember cheryl once said to me about maybe you
00:42:54should think about going and you know talking to a bunch of these other american companies just to see what they went through when they were going overseas on basically came back and i remember telling the m team our management team i said guys a couple takeaways number one
00:43:12none of these companies what the fuck they're doing and number two we're not using this as a way for a bunch of overeducated mba is to get an expat package to travel the world Those are my only those are the only two things i could figure out by
00:43:24talking to all these companies because they were all unsuccessful And so the best thing that happened was we ended up hiring this guy on my team His name is javier early one spanish kid now a man and a big guy and facebook and it was amazing because like
00:43:41he just had like a cultural sensitivity to europeans and then specifically spaniards and then like the light bulb goes off and so i'm like great i want to hire javi and in japan tonight and we find this guy who worked at yahoo japan and he was incredible Then
00:44:00we find a person in india then we find a person in russia that we find a person in brazil and then we start to fill it in and it just becomes obvious because they're like here's the playbook and we experiment and each country could be treated differently and
00:44:16is it tweeting on the margins To to be sensitive to the differences and cultures but does the core product essentially work all over the world It's all the things around it as well Like for example like i remember in russia katarina who's our country better catch up she
00:44:32comes to us and she's like i think we should basically just create like static facebook profiles for every single russian on the off chance that they're narcissistic enough to click on search with her own name the whole end up laughing on this program and i remember thinking this
00:44:50is just absolutely insane and it frankly it worked and it's like you know it's like you have all of these people that are claiming their profiles and i suspect at some point like that's when v contacto realized oh my god we're going to lose and i also suspect
00:45:07that's roughly when yuri milner was like hey wait a minute this thing's gonna take over they need a piece of pieces but but the core products still function the same way i would say that ninety eight percent but look i would tell you you and i have less
00:45:24than one percent difference in dna but there's huge differences and so it's that last one percent that could make a big deal but they have to be interpreted culturally that was probably my biggest takeaway then the other thing was again i just think like when you have a
00:45:37culture of experimentation a culture of always learning a culture where you you don't celebrate the winds you celebrate the learning and you don't hold people accountable for being wrong as long as it's a first time mistake um two questions before we leave facebook about people what was sean
00:45:56parker's contribution to facebook It was unbelievably important and it is the most important thing that ever happened which is he architected a capital structure that kept suck in control you know park about a lot of the company for working every year and he's worth every penny of it
00:46:13because in any other situations up would not be running that company there's just no way the way that company of all no chance in hell yeah um and so parker deserves a commence amount of credit for that very specific and important thing you've spoken on this it's already
00:46:31slightly but um seeing mark evolve as he said and to now one of the greatest ceos the greatest human beings in the world that's right He said greatest human beings but specifically as this this this leader of a large organization do you feel like it was in eight
00:46:49in him when you first met him or was it literally a skill that he had choir I think they think that you're born with some innate capability and then i think the situation allows you to explore the depth of that capability and in mark's case it's extremely deep
00:47:07So could others have gotten two thirds as far Yes many people some subset will have gotten eighty percent as far some even smaller subset would have gotten ninety percent as far The question is how many people could have taken it this far A very very very rare few
00:47:23And fortunately we don't have to answer the question because he's doing it So when you move into v c i think i heard you tell kelly canis one time that even early on in your career you wanted to to go under the vc side When i was in
00:47:38when i was an undergrad i had to do coop terms And so there was a period where i applied for an internship at all the top silicon valley firms because i was very i mean i viewed this whole silicon valley really romantically And you know i would surf
00:47:52the web sites of these vc firms and he knew all the names and i knew all the names of the firms and i was got got rejected And so it was always in the back online if i ever get a chance to do this i wanted to do
00:48:03this This idea of like being at the foot of creating things for the future seemed so what an unbelievable pursuit to spend the rest of your life doing You like being in on at the very beginning very beginning like as an example like here like a social capital
00:48:16i am worthless when things start working because my brain turns i started to become worthless at facebook internally because i was like on board is it because you feel like there's Nothing that you can contribute anymore I have successfully got the engine turned over I've solved in the
00:48:30game when the surface area shrinks beyond a certain point You like the puzzle I lose interest because i've solved the game I feel like i've figured it out i'm not i'm not saying in the sense that i'm taking credit for it but it's like once i understand how
00:48:41the whole thing works it to me It's loses its appeal What's exciting is starting from nothing there's a jumble of puzzle pieces on the ground and you have to start that's a to me i get huge energy from that and once the whole picture starts to get filled
00:48:57in i get less satisfied now there are other people who are the exact opposite who when it's roughly filled in get immense pleasure from feeling in the lines and really bringing out the vibrancy of a picture that's great i love sketching and walking away two more questions you
00:49:15know i feel like you're one of the most public proponents of this concept of investing as sort of like a a social act as you know almost the word saluting me now but as as investing to make money but also to move the culture forward um and do
00:49:41you feel like that that's something that twenty years from now everyone will be doing like this is this is the new model this is the new model um here's activism that's the word of them it's almost like either investing as activists absolutely no i mean i mean what
00:49:57what do we think thomas edison is doing What do we think henry ford was doing What do you think bill gates was doing You know none of this sort of entrepreneurialism that really move the world forward came from a place where they were trying to do something incremental
00:50:09or tow you know to celebrate their you know their degree they got an mba school and i think unfortunately we've we've kind of like moved to an era where that's largely what people you think about companies has as a way to sort of like reflect some sort of
00:50:25societal signals that they've accumulated their entire lives and i think that just robs us all of like huge potential the reality is one it's cheaper and cheaper to start a business Two it's easier and easier to know whether you're tracking and three it's more and more possible to
00:50:42get people to give you money to then scale it So you're going to see an unbelievable expansion of the entrepreneurial class but as that happens unless we help them understand that the risk of failing starting a really ambitious idea is the same as the risk of failure for
00:51:02a marginal idea once they internalize that then what their point of view will be is well well i should really go after the big time idea because on the small chance that it works which is the same small chance of his other crappy idea is going to work
00:51:13i'm a hero and i'm zuckerberg and uh and i think once people understand that then they immediately go on they think about well what are the things that i care about And whenever you ask anybody what they care about i don't care about like you know let me
00:51:28let me get you know my food fifteen minutes faster because it really bums me out because you know my jeans are tight because like i really bought it extra size too short because you know said so and like this hipster blogged that i read what they say is
00:51:42my dad is suffering from diabetes that really affected me my sisters and a really tough spot she really wants to find a job that like allows her toe maximize your skill but you can't you know i'm really worried about the climate i get nosebleeds and asthma why does
00:52:01that happen more now like when you really ask people you know you care about your kids you know why aren't we then creating a platform that allows people to reflect that moral and ethical framework in what is the most important thing that they could do which is to
00:52:19start something that then pays that off And so i think it's in many ways a return to what's made america successful in the first place that's what's going to make america great again final question is i've always wondered if you own the team do you feel it The
00:52:36wins and the losses more than the fans because you're literally personally invested or that's a really great question you know what's been the most amazing thing about being involved the warriors quite honestly is i had been exposed to some of the most incredible men that i've ever been
00:52:58around and these air like young men that have literally like sacrificed their entire lives to perfect something which is just something like you just i don't think you can really appreciate it and to see it up close like the sacrifices in the span of the sacrifices that they
00:53:16make its it's not really describable in words like this whole like oh it's ten thousand hours it's just so much more than that It's the personal relationships it's there bodies it's the mind it's all of the stuff that's a but then be the complexity of their personalities like
00:53:34their intellectual curiosity about things and that's been so under fed because his other port they've had to feed this other part so i don't feel the wins and losses as much and i get it i mean i would probably pay them for what i get from some of
00:53:50these guys which is that when they come to my house and we sit down and we just talk like they're so thirsty to learn what's happening in the world and be a part of it and they view basketball for what it is which is really amazing thing that
00:54:04gives him a platform and there are a great example of like they have a moral and ethical perspective to a one at least for the warriors players i can't speak to other president and uh and so yeah it's uh almost what you're saying is is your experiences more
00:54:21on a personal level because you know the players personally so you're experienced that experience and through them i find it before i find it very hard frankly a to meet new people because it's just harder and harder and then be to meet new people where each of our
00:54:37guards khun b down where i'm not trying to impress that where they're not trying to impress me and that's a hard thing to find especially as you grow older so used increasingly spent time or with your family than anybody else As a result i find at this in
00:54:52my life and so what i find in them are is like a group of young people that you can just like you like your it's like you're back to you know a group of guys sitting and had some start up on you know on alabama street potrero hill
00:55:08and you're just you're both really optimistic about the future you're learning it's really it's really cool well tomorrow thank you for contributing to the project coming on the show and remembering here If this is the first time you're listening to this podcast please subscribe to us on your
00:55:31podcast app of choice there's plenty more great internet history where that came from and if you're a longtime listener than you know what to do to help us out great and review us on itunes Because itunes gives credit to reviews and ratings and the more great reviews we
00:55:48get the more people will discover us as always There's More info on our website Www Dot internet history podcast dot com shows twitter handle is at net history pod and my personal twitter is at brian mcc Thanks for listening

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