How to Choose Investments and Change the World - with Chamath Palihapitiya

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

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