Chamath Palihapitiya: People in Silicon Valley are Deeply Unhappy – Recode Decode with Kara Swisher

Key Takeaways

  • Even as a self-made billionaire, it’s possible to be absolutely miserable if you don’t have the right emotional toolkit
    • “All the money in the world doesn’t make you happier”
  • There’s a widespread amount of unhappiness in society which can be partly attributed to the effects of social media
    • Social media exacerbates unhappiness in many people because it offers a false comparison of other people’s lives
  • The massive amounts of information we consume on a daily basis probably impacts our mental health in ways we don’t yet understand
  • There should be a disclaimer you have to read before using Twitter, Instagram, or any other social media platform:
    • “The shit you are about to consume is not true. It may make you feel like somebody else is kicking ass while your life sucks ass. It’s not true. Now go on.”
  • Invest at the intersection of Hard and Courageous
  • The startup ecosystem is currently acting like a Ponzi Scheme

Books Mentioned

Intro

  • Chamath Palihapitiya (@Chamath) is the founder and CEO of Social Capital
    • He is an owner and board member of the Golden State Warriors
    • Prior to this, Chamath led the growth team at Facebook, helping it scale to a billion users

Chamath Opens Up About His Identity Crisis

  • After becoming incredibly successful as an executive at Facebook, and then as a venture capital investor, Chamath began exploring why this material success wasn’t translating into happiness
  • The “spark that lit the match” was the talk he gave at Stanford in 2017
    • In it, he claimed that “social media was ripping apart the fabric of society”
      • Present-day Chamath considers that “relatively true”
        • But he laments that it was not the right forum and dismisses much of the other things he said that day as “nonsense” that were a product of his unhappiness and insecurity at the time
  • Social media exacerbates unhappiness in many people because it offers a false comparison of other people’s lives
  • Chamath predicts that “almost every human in the world” will go through a similar experience in the next 5-10 years
  • This crisis culminated in a divorce, and massive changes at his firm, Social Capital

How did Chamath’s identity crisis affect his VC firm, Social Capital?

  • The origins of Social Capital:
    • Chamath wanted to leverage data to remove bias and emotion from investing
      • In theory, this would help VCs make more accurate predictions by focusing on results instead of stereotypes
    • In the very beginning though, Chamath employed traditional “straight-laced” MBA-types to secure the first few funds
      • In case he was wrong about his thesis on data-driven investing, having a traditional team capped his downside
      • Another way this helped:
        • Traditional investors (like pension funds) were more responsive to traditional pitches
  • After Chamath’s introspection:
    • He set out to build an organization that made really thoughtful decisions in industries that he really cared about, even when all the people around him didn’t understand or didn’t care
      • So many people ended up transitioning out of Social Capital with hefty severance packages
    • Now Chamath has 25-30 “partners” that help him operate and lead different areas (for example, one person might “lead a lot of stuff in space”)
    • It’s a benevolent dictatorship and everyone knows it
    • Chamath says his goal with Social Capital is to do what Charlie Munger and Warren Buffet did at Berkshire Hathaway
      • “Be evolving my mind, be increasingly detached and dispassionate, be more emotionally aware of myself, and make fewer much bigger decisions of impact”
      • “And then not answer to anybody except my life partner and my children. That’s it. And everybody else can go fuck themselves.”

On Happiness

  • Chamath believes that you need to be happy to pursue lofty goals because it sparks inspiration
  • The unhappiness of Silicon Valley:
    • “There has been a transition from achieving a mission to optimizing a business model”
    • You now see many famous builders leaving Silicon Valley
    • Chamath expects more big companies to emerge from outside of Silicon Valley in the future
  • The impact of the internet on happiness:
    • The massive amounts of information we consume on a daily basis probably impacts our mental health in ways we don’t yet understand

Why Chamath Considers the Current Startup Economy a Ponzi Scheme

  • As companies take their first venture capital, they’re pushed to “grow at all costs”
    • This basically translates to hiring a bunch of people and spending a ton of money on advertising and cloud servers
    • Investors are optimizing for this strategy because growth raises the probability that someone else will invest after them
      • VC investors themselves raise money from other investors called LP or GP (Limited or General Partners)
  • Once they grow, they raise more capital in a later round, at a higher valuation
    • This gives the first investors high return on their capital (on paper)
    • New investors also push the company to grow at all costs to “pass the buck”
  • This cycle repeats in later and later rounds
    • As this happens, VC investors can then go to their Limited Partners and show these higher valuations as proof of their skill, and raise even more money for their funds
    • As they raise more money, they’re incentivized to invest in more companies
      • “Which by definition means unless the quality of the companies increases, [they’re] going to be putting more money into crappier companies”
  • But in reality, all that happened was that the company’s costs were wildly inflated
    • “It’s not really any more incrementally successful”
    • These companies depend on further financing, which is an increasing macroeconomic risk

Chamath’s Thoughts on Investing

  • Chamath aims to take sectors that have historically behaved as non-profit and turn them into for-profit
    • 5 obvious areas:
      • Healthcare: supposed to be for-profit but really behaves like a pathetic non-profit
      • Education
      • Space (making us less reliant on the earth)
      • Climate change
      • Artificial intelligence (chips and chip design)
  • Hard Things & Courage
    • Chamath now looks for things to invest in that are hard to do, take little courage to start, but massive courage to scale
      • E.g. Airbnb:
        • Make all space behave like bookable hotel space = HARD
        • Initial courage threshold was scraping some Craiglist listings and putting them on another website = LOW COURAGE
        • Now they have to explore entering airline spaces, regulation, buying hotels, investing in experiences, etc = HIGH COURAGE

On Social Media

  • There should be a disclaimer
    • “The shit you are about to consume is not true. It may make you feel like somebody else is kicking ass while your life sucks ass. It’s not true. Now go on.”
    • People need to have good boundaries for themselves

Random

  • Most people don’t have the toolbox necessary to pursue emotional health
    • It has nothing to do with “rich or poor”, rather it has to do with how you grew up
  • “Money is an accelerant to finding your true self, so if you’re bent to be a jerk, you’re going to be a jerk…just faster”
  • Women outlive men by 7-10 years on average, and Chamath thinks it’s because they have a mental health advantage
    • They’re taught that it’s alright to have emotional intimacy from a young age whereas men are taught to shun it altogether

These notes were edited by RoRoPa Editing Services

Facebooktwitterredditmail

Add a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Don't Miss Out!

The top Takeaways, Lessons, Learnings and Quotes from the BEST podcasts each week in your inbox every Monday

Before You Go, Don't Miss Out!

The top Takeaways, Lessons, Learnings and Quotes from the BEST podcasts each week in your inbox every Monday