00:05Thank you so much for being here today.
>> Thank you for
00:06including me.
>> I'm so
00:07excited to dig into that career and
your thoughts on the Valley.
00:12And I'm going to start us off with one of
the things that jumped out at me in my
00:15prep for this interview.
00:18You are an extremely generous tipper.
>> Yeah.
00:23I would like to know why.
>> So, I mean,
00:28it's well known and part of why I'm so
open about this is that I think
00:34it gives permission for
other people just to be honest.
00:40I grew up in a very kind of
dysfunctional household on welfare.
00:44And that compounded a bunch of shit
in my life that was not great.
00:50We were very focused on money.
00:53It was a huge point of pressure and
tension in the family.
00:57It created massive depression
in my father, drinking.
01:01Just, it was very dysfunctional.
01:03And there was some point along
the way where I was like, okay,
01:06is money like really important or
not important?
01:10And I feel very lucky because I
don't think if you ask my sisters,
01:15they got to the same place that I did.
01:18But I ended up not coveting it.
01:21And I found it to be something
that I could use to really
01:25empower myself to do the things
that I wanted to do.
01:29And so, in a situation where you
know you go to like a restaurant.
01:33If you really empathize with
the people that are working there,
01:36I see people who are like me,
brown skinned,
01:41working hard,
creating these beautiful experiences.
01:46And then I can celebrate it by,
I guess, giving a YELP review.
01:51But you can't buy food for
your kids with a fucking YELP review.
02:00And, I mean, it gives me so
02:03much joy because it's like
you'll have a 3 or $400 bill.
02:09In some cases, you tip 500 bucks or
1,000, and you close it.
02:13And they're expecting $40.
02:16And, I mean,
I'll get a little emotional, but
02:20they will come out to you,
and it's transformational.
02:24And so it's so great.
02:26It's just like little things
like that mean a lot of people.
02:30And just to be anonymously
generous like that,
02:32I think it's a great gift that
I have the ability to do.
02:35That's why I do it, I love it.
>> And
02:37it sounds like the experience
of being seen.
02:40And you are seen and
the individual is seen, and
02:43you're sharing in that [INAUDIBLE].
>> Well I mean, it's funny.
02:45It's like 99% of the time
they don't say anything,
02:48because they do the bill thing afterwards.
02:52And they for sure can't pronounce my name.
02:54And so they for sure have no fucking
clue who it was that gave them the tip.
02:57It's fine, it's totally fine.
02:59But I love it, I absolutely love it.
03:02My friends freak out.
03:04Now it's caused tension actually,
03:05because now when I go out with my friends,
they know as well.
03:09And I've just made it very easy,
which is like, hey, if we're going out,
03:13let me just fucking pay.
03:14Just like, it's fine,
and it makes it simpler.
03:20I want to dig into what you were
describing about your upbringing and
03:23this unique position that you've gotten to
where you don't feel that you covet money.
03:28But you see it's power and
03:30the use that it has in furthering
some opportunities for you.
03:33How did you develop that?
03:36How do you distinguish between luck and
skill?
03:39How do you end up in that position?
>> So I,
03:46My parents craved money,
meaning they needed it
03:50because my dad was unemployed for
long stretches of time.
03:55My mom was the sole breadwinner.
03:57She was a housekeeper,
then she was a nurse's aide.
04:02And I would just see how she grinded.
04:05We didn't have a car for a long time.
04:06She takes the bus, we all take the bus.
04:09When I got my first job,
it was at Burger King.
04:12I'd take the money, and I had give it to
my parents, and we would buy bus passes.
04:16And I remember telling some of my friends,
I went to a very good high school,
04:20kind of like the rich high school.
04:23Not the high school I should've gone to.
04:26I was able to go to this
different high school.
04:29And I would tell them, like, I would be so
ashamed that I worked at Burger King.
04:34They would sometimes come by,
and I would just be like fuck.
04:37And then at some point,
it was this release moment where I was,
04:43I can't do anything about it.
04:45This is what it is right now.
04:47And I kind of had a sense that I could
figure some stuff out later, but
04:51I didn't really know.
04:53And so I just accepted it.
04:54And then the minute I accepted it,
I wasn't ashamed anymore.
04:57And then, when I wasn't ashamed I could
start to actually be inside my head, like,
05:01what really matters?
05:02So then what happened was there was these
massive racial riots in Los Angeles.
05:06And not as if the fucking American
government did anything about it.
05:09But the Canadian government was like,
shit, let's get all these black and
05:12brown kids jobs, because we don't want
the Rodney King riots in Toronto, and
05:17Ottawa, and parts of Ontario.
05:20And so I was able to take all of my dad's
rejection letters, call every single one.
05:24And one of them gave me a job.
05:26And I worked at the well known
telecommunication start up in Ottawa.
05:29Ottawa had a really burgeoning
tech sense at the time.
05:31And I worked in this organization that
was run by this really iconic guy,
05:36And he was a billionaire.
05:37And I was like,
what the fuck is that word?
05:39I mean,
I didn't even know a fucking thousandaire.
05:43I was like what is a billionaire?
05:45And this guy was risk on.
05:52And he was just so dynamic in
the businesses he had started and
05:58how he viewed his place in the world,
and I was enthralled.
06:02I was 9 degrees away from him.
06:05But the cult of personality around him in
that business, the lore, when it trickles
06:09down to you, was not about his
conspicuous consumption or anything else.
06:16It was about okay,
we're launching this frame relay switch.
06:20Now we're going to buy this company.
06:21Okay, we're going to pivot
the entire business to ATM.
06:23And you were just, it was an amazing time.
06:28And so I took the bus to Newbridge.
06:35Complete luck that the controller
of Newbridge would
06:40go from his nice neighborhood through this
shitty neighborhood to get on the highway.
06:44And so he would see this
guy standing by the bus and
06:47eventually he saw me inside the office.
06:49And one day he stopped.
06:51He said, you want a ride?
06:52Do you work at Newbridge?
06:55So in the car, he was in the front seat,
like beside Terry.
07:02And he was able to tell me how
this guy thought about this.
07:05because I would read it in the paper,
and I'd be like, why is he doing this?
07:10So it just completely
rewired what money was.
07:13For Terry Matthews,
money was an instrument of change, right?
07:17He had a market cap, he's like, wow,
that's 8 billion dollars of change,
07:2110 billion dollars of change,
15 billion dollars of change.
07:25Versus, there was another guy
building a company at the time.
07:27His name was Michael Copeland,
who ran a company called Corelle,
07:33And he was the exact opposite, had a messy
divorce, married some trophy wife.
07:39He took this obscene shiny glass from his
building and covered his house in it.
07:46And so you have this dichotomy of two
different characters at that time in
07:50the 90sm building really
interesting businesses.
07:53Correll, which was a regional business,
Newbridge, which was regional business.
07:58They were both very successful, but they
manifested money so totally differently.
08:02And I was like, I want to be this guy.
08:05I want to be this mega-compounder,
08:07swashbuckling around, trying to
do really cool shit in the world.
08:12And Sam helped me because you could
understand from him what Terry cared about
08:18and then, for me, I just copied.
08:19I mean a lot of my life, quite honestly,
is just copying the things that I see.
08:23There's not a lot of original
thought here, there truly is not.
08:27We can all pretend we're all fucking
geniuses, honestly, be good copiers.
08:31Do you know what I'm saying?
>> [LAUGH].
08:34>> It's the best thing in the world.
08:35Be around high functioning,
high quality people and
08:39just copy the shit that they do.
>> [LAUGH]
08:43>> Observe the shit that's kind of crappy
08:46and then don't do that stuff.
08:48It's not a fucking complicated formula.
>> [LAUGH]
08:53>> When did you use that best?
08:55>> No, all the time, now it's funny,
08:57it's like, you have a surface area of
ways to spend your time now, or I do.
09:03And I'm in this midst now where we
are really scaling up what we're doing as
09:09And I meet these people that to me are so
iconic that they were like
09:14arms length people that are now
sitting face to face and
09:18they treat me like a quasi-peer,
I wouldn't say peer, but quasi-peer.
09:24But what I see is,
I see some amazing stuff and I see some
09:29utter dysfunction in some of the richest,
most important people in the world.
09:34And I have to decide
how am I going to act?
09:37What am I going to embody?
09:39What am I not copying?
09:41And so I get a chance to now refine
my decision-making and discipline.
09:50And it's, so that's how it plays out.
09:52I don't know if I answered your question.
>> I'm thinking very,
09:55there's a deep connection between
money as an instrument of change and
09:59what you're doing now at Social Capital.
>> Look,
10:01here's the thing, there's about
150 people that run the world.
10:05Anybody who wants to go into politics,
they're all fucking puppets, okay?
10:12and they're all men that run the world,
period, full stop.
10:17They control most of the important assets,
they control the money flows.
10:21And these are not the tech entrepeneurs.
10:24Now they are going to get rolled
over over the next five to ten years
10:28by the people that are really
underneath pulling the strings.
10:32And when you get behind the curtain and
see how that world works,
10:35what you realize is, it is unfairly
set up for them and their progeny.
10:41Now, I'm not going to say that that's
something that we can rip apart.
10:45But first order of business is, I want to
break through and be at that table.
10:50That's the first order of business.
10:52And the way that I do that is by
proving that I can do what they do
10:56as well as they do it and
then do it better than how they do it.
11:01Because at the end of the day,
they are commercial fucking animals, okay?
11:05And they'll open the door
out of curiosity and
11:07they'll let me stay because I add value.
11:09And then once I'm there,
I can open the door for
11:11other people who can try
to do the same thing.
11:14So my entire goal now is that,
is to be in a position to aggregate enough
11:19of the capital of the world, to then
reallocate it against my world view.
11:25And I'm not saying my world view is
the best or right, but it is mine.
11:29And at the end of the day, there are 150
other fucking guys with their world view
11:32and they don't give a shit what you
think about their fucking world view.
11:46And so in my life now I'm
just kind of like, why not?
11:49Why the fuck not?
>> [LAUGH] [APPLAUSE]
11:56[APPLAUSE]
>> So you have these 50 year goals for
12:01Social Capital, three of them.
12:03Can you give us your world
view through those goals?
12:09>> So my 2045 ambition for
12:11the organization,
this is as I see it right now, 2045.
12:16Is I would like us to employ at
least ten million people through
12:20the businesses that we own.
12:21I would like our businesses
to positively affect at least
12:26a quarter of the world's population and
12:29I would like us to have made
cumulatively about a trillion dollars.
12:34That's my 2045 ambition.
12:35I think if we do that, we are the modern
face of capitalism for the next 50 years.
12:43So, how we do that now
becomes really important.
12:47So if you think about building businesses
today that could do any of those three
12:52things, you have to be technological,
you absolutely just have to be.
12:57You are not going to build a brick and
12:59mortar business that gets anywhere close
to those three things, number one.
13:03Number two is,
you have to think very broadly
13:07about building things that
can stand the test of time.
13:10Those businesses are by definition
hard and non-obvious and so
13:14they compound in scale very slowly.
13:17And that's really counterintuitive to
the overriding logic of Silicon Valley,
13:21which says, quick, fast, go, right?
13:24But that kind of premature ejaculation
doesn't work if you're trying to fucking
13:29You gotta be in the flow for
decades, that is hard.
13:35It tests people's patience,
it tests people's resolve,
13:39it tests people's really
intellectual incision.
13:42And this is where everybody gives up,
everybody gives up.
13:45I had this moment today, just a total
different way of describing this.
13:51Through the Warriors,
I've met a lot of players obviously,
13:54one of them who I had become
unbelievably close to is David Lee.
13:58David Lee just got engaged to this
unbelievable woman, Caroline Wozniacki,
14:03We were working out this morning, okay?
14:07Couples work out, me and
my wife, him and his fiancee.
14:10>> So we're doing this thing,
14:11this treadmill thing,
which my trainer concocted.
14:16And I'm in pretty good shape.
14:18And then you see what it really means to
be extremely dedicated, in their case,
14:25to something which is physical fitness
because they're professional athletes.
14:29When I give up,
when the average human gives up,
14:33their brain goes into fucking overdrive,
okay?
14:36And they're like,
there's this next level burst.
14:42It's like when things get
hard can you double down?
14:45A different example, we had yesterday,
14:47we do these things every quarter called
quarterly portfolio reviews where
14:51incredibly intensive review of our entire
portfolio, revisiting our strategy,
14:55talking about all the things we're doing
to make sure we're on the right track.
14:59And I had this observation which was,
I started a diabetes business.
15:03My dad died of diabetes three years ago.
15:05Most of my relatives have it.
15:06I express the gene that makes me
disproportionately susceptible to it.
15:10So it's something that I
personally care about.
15:13But that business took seven years
15:17to get to a place where we even
have a chance of being viable.
15:22And I think to myself, in that example,
I embodied a bit of Caroline Wozniacki.
15:28When things got hard,
I pushed through the pain.
15:31Now in my case, the pain was the fear of
failure, continuing to write more money,
15:36a belief that I had that this
business was going to work.
15:39And today,
that business manages a million diabetics.
15:43And I think there is some kid out there
whose family will be slightly less
15:47dysfunctional because their
parent's disease is better managed.
15:50It's not going to go to a place where
like, they're getting dyalized, or
15:55they're on an organ registry.
15:58And that value for
that kid in our world and
16:00all of you that benefits will never be
connected the dots, but that’s okay.
16:05But it required, just,
resilience and I'm proud of that.
16:10And so I want to bring back a little bit
of that here so that it's not, quick,
16:16fast, five million users, ten million now,
flip it, sell it, great celebrate.
16:23It's like,
hey let's work on some hard shit together.
16:25Let's buckle down,
look each other in the eye,
16:27and say we're going to
support each other here.
16:29This is going to take seven or
eight years, but if it works,
16:32it will really mean something.
16:35It's something that matters to you for
16:37something that's other than just simple
motivation of the social capital you get
16:41from your friends or
money in the short term.
16:44And winning bigger longer term.
16:47We're missing that and
16:48I think part of our success will
be if we can stay focused on that.
16:52Our education portfolio is another thing.
16:54It literally looked like a train wreck for
16:57three years, where everybody has always
said you never invest in education.
17:01And my thing was,
it's not about education.
17:04This is about human capital development.
17:05It's about, for every one of you who is so
smart, that got into Stanford,
17:09think of all the people
who could be as capable.
17:12I'm not asking you to empathize with them,
but I, as a capitalist, want a starting
17:17line where all of those people can run
a race so that I can pick the winner.
17:21No offense to any of you here.
>> [LAUGH]
17:25>> And it took us three years we're now at
17:27those building blocks exist and
I'm like wow.
17:30How many times did I have to
look at my partners and say no?
17:33The easy answer is to walk away,
the hard answer is to double down,
17:36we have to support this business.
17:38That culture's missing here.
17:40So part of what we're trying to do to
achieve those goals is take really
17:44big audacious points of view on the world
and then train ourselves to be patient.
17:49And it's really, really hard.
17:51The entire society is set up
to not be patient anymore.
17:55>> And I'm hearing also a conflict with
17:58this fail fast and learn mentality
where if you're taking a deep and
18:04big bet,
like you want it to be the right one.
18:08How do you know when that's true?
>> I think that that stale fast approach
18:12works in consumer Internet businesses,
but I don't think it works for
18:15anything that really matters.
18:17>> [LAUGH]
>> Basically.
18:24>> Consumer Internet businesses are about
18:26exploiting psychology, and that is one
where you want to fail fast because
18:31you know people aren't predictable and so
we want to psychologically figure out how
18:34to manipulate you as fast as possible and
then give you back that dopamine hit.
18:39We did that brilliantly at Facebook,
Instagram has done it,
18:42WhatsApp has done it,
Snapchat has done it, Twitter has done it.
18:46So there are great examples.
18:49There are great examples of
failing fast is the right
18:52path to exploiting psychology
of mass populations of people.
18:55But it is not how you solve diabetes.
18:57It is not how you use precision
medicine to cure cancer.
19:00It is not how you educate broad
swats of the world's population.
19:04It's taking a point of view and
being methodical.
19:09It's hard, no it's hard.
>> I'm glad that you're
19:13taking a stab at it.
>> By the way, if it works,
19:16it's where all the money comes.
19:19If you talk about where all of the gains,
where all of
19:23the value will be created over the next
50 years, it'll be in those hard things.
19:27And the reason is because those
white spaces are so wide open.
19:31The competitive pressures
are non-existent.
19:33For example, today, you have this weirdly
academic argument about climate change.
19:41It exists, it doesn't exist.
19:42Well, we were in an Ice Age,
now it's warm, of course the earth.
19:48What's undeniable is that we're ripping
apart the biodiversity of our planet.
19:52What is undeniable is that we as a human
population will be forced to concentrate,
19:57because certain parts of the world
will get basically subsumed by water.
20:02We do not have food supplies that will,
these are conclusively known to be true.
20:08Yet nobody is really working on a problem.
20:10And part of it is because the people won't
have the ambition to try to go after it.
20:14The capital markets don't reward
that kind of decision making.
20:18But if somebody were to solve it, don't
you think they are, in economic terms,
20:23a multi-trillionaire?
20:27You think food delivery is
where the next great fucking
20:29breakthrough is going to come?
20:32You're all hopped up on
fucking marijuana and
20:34you need a fucking brownie?
>> [LAUGH]
20:35>> Like what a joke.
20:39>> Go and look through Crunchbase and
20:40all the shitty, useless,
20:42idiotic companies that have gotten
funded doing garbage like that.
20:45Versus climate change.
20:49Think about that when you guys eventually
find your partner, your significant other,
20:53your husband, your wife.
20:54You get married, you have kids, you will
not be able to hand off a planet that they
20:59can predictably live in, you will not.
21:02And nobody is fucking
doing anything about it.
21:07So the capital markets are just
completely, completely out of their minds.
21:11And so, yeah.
>> [LAUGH]
21:23>> I want to bring us back to the point
21:24that you were making about exploiting
consumer behavior in a consumer Internet
21:29You said that this is a time for soul
searching in social media businesses, and
21:33you were part of building the largest one.
21:37What soul searching are you
doing right now on that?
21:39>> I feel tremendous guilt.
21:44I think we all knew in the back of our
minds, even though we feigned this
21:49whole line of there probably aren't any
really bad unintended consequences.
21:56I think in the back deep,
deep recesses of our minds we kind of knew
22:02something bad could happen.
22:05But I think the way we
defined it was not like this.
22:08It literally is a point now
where I think we have created
22:12tools that are ripping apart
the social fabric of how society works.
22:17That is truly where we are.
22:19And I would encourage all of you
as the future leaders of the world
22:24to really internalize
how important this is.
22:27If you feed the beast,
that beast will destroy you.
22:31If you push back on it, we have
a chance to control it and rein it in.
22:35And it is a point in time where
people need to hard brake
22:40from some of these tools and
the things that you rely on.
22:43The short-term, dopamine-driven feedback
22:47loops that we have created
are destroying how society works.
22:53No civil discourse,
no cooperation, misinformation,
22:58mistruth and it's not an American problem.
23:01This is not about Russian ads.
23:03This is a global problem.
23:05So, we are in a really bad state of
affairs right now, in my opinion.
23:11It is eroding the core foundations
of how people behave by and
23:16between each other, and
I don't have a good solution.
23:20My solution is I just don't use these
tools anymore, I haven't for years.
23:24It's created huge tension with my friends,
huge tensions in my social circles.
23:29If you look at my Facebook feed,
23:31I probably haven't, I've posted
maybe two times in seven years.
23:35Three times, five times,
it's less than ten.
23:41And it's weird, I guess I kind of just
innately didn't want to get programmed,
23:45and so I just tuned it out.
23:47But I didn't confront it.
23:49And now to see what's happening,
it really bums me out.
23:55Think about there are these examples
where there was a hoax in WhatsApp,
24:01where in some village
24:04in India People were afraid that their
kids were going to get kidnapped etc.
24:09And then there were these lynchings
that happened as a result
24:13where people were like
vigilante running around.
24:16They think they found a person,
and they I mean,
24:19I mean seriously,
like that's what we're dealing with.
24:26Imagine when you take that
to the extreme where bad
24:31actors can now manipulate large swathes
of people to do anything you want.
24:39It's just a really,
really bad state of affairs, and
24:43we compound the problem, right.
24:45We curate our lives around this
perceived sense of perfection,
24:49because we get rewarded in these
short term signals, hearts, likes,
24:54thumbs up, and we conflate that with
value, and we conflate it with truth.
25:00And instead what is really is,
is fake, brittle popularity.
25:04That's short term and that leaves you
even more, and admit it, vacant and
25:09empty before you did it.
25:11Because then it forces you into this
vicious cycle where you're like what's
25:14the next thing I need to do now,
because I need it back.
25:18Think about that compounded
by 2 billion people, and
25:21then think about how people react
then to the perceptions of others.
25:25It's just a it's really bad,
it's really,really bad.
25:28>> It sounds like you're taking deep
25:31personal responsibility
also in being a part of it.
25:37I did a great job there, and
25:38I think that business overwhelmingly
does positive good in the world.
25:44Where I have decided to spend my time,
is to take the capital that they rewarded
25:47me with and now focus on the structural
changes that I can control.
25:52I can't control that, I can control my
decisions, which is I don't use this shit.
25:56I can control my kids' decisions,
which is they're not allowed to use this
26:02>> And then I can go focus on diabetes,
26:03and education, and climate change.
26:05And that's what I can do, but everybody
else has to soul search a little bit more
26:10about what you're willing to
do because your behaviors,
26:13you don't realize it but
you are being programmed.
26:18It was unintentional, but now you gotta
decide how much you're willing to give up,
26:22how much of your intellectual
independence, and
26:25don't think, yeah, not me,
I'm a fucking genius, I'm at Stanford.
26:29You're probably the most
likely to fucking fall for it.
26:33>> because you are fucking check
26:34boxing your whole God damn life.
26:37No offense guys.
>> [LAUGH]
26:45>> So, you've been outspoken about
26:47the Trump's Administration's
position on immigration,
26:51these things are going to collide
in government and business, right?
26:55That's happening now, so what do you
want these future business leaders to
27:00do about it once they get into that spot?
>> Get the money, get the money,
27:05and then let's get around a table and
let's create new rules.
27:12Literally that simple,
get the fucking money.
27:15I'm serious, do not get it, it is going to
be made, it is going to be allocated,
27:20and you have a moral imperative to make
sure that if you have a point of view
27:25that matters and
you want to reflect it, you get it.
27:30I'm going to go get it,
other people are going to go get it, and
27:34then it will be about
a competition of views.
27:38And don't wrap yourself in all this
27:42liberal kind of bullshit about my God,
money, blah, no, stop.
27:47Here's how the fucking world works, okay?
27:49It drives the world for
better or for worse.
27:53Economic incentives drive entire swaths
of populations to behave in very,
27:58very predictable, and then when you
take it away, unpredictable ways.
28:09Ask anybody in your class that's
from a developing nation,
28:12ask anybody in your class who has seen
that play out from where they're from.
28:15So, that's what you have to do,
you gotta go and get it.
28:19If you control the capital and
you have a point of view, you can now,
28:22then the question is, don't be a sell out.
28:27Whatever your world view is, you should be
spending time to think about what that is.
28:32So that when you control
some of these purse strings,
28:35you push that view into the world.
28:38I will never judge you, and you should
not judge me for what that worldview is.
28:44But the point is the more
diversity of those views,
28:47the more rational actors we have and
the more of a balanced,
28:50fair system,
that is what diversity really means to me.
28:56It doesn't mean let's manage back
to a quota, it doesn't mean,
29:01okay, we need a black guy, a brown guy,
we need a few, that's not what it means.
29:05This is what it means, right?
29:08There are people in this audience
that have probably dealt with
29:12the same kind of like life
that I've dealt with.
29:15You have a very unique
worldview that matters.
29:19In the absence of capital,
you're irrelevant, with capital,
29:27And then you decide in small ways,
in medium size ways,
29:31in large ways, right, and it just depends
on the scale of capital that you have.
29:37And so
that's what's necessary now in capitalism,
29:40which is that we have to come
back to what is it really?
29:44Is it an economic system, yes.
29:46But it is a philosophy as well, right?
29:49And it's a philosophy that
says we will vote for
29:53the change we intend based
on the views that we have.
29:56And when you look at the most successful
people that operate in these tentacles,
30:02that's what they do.
30:04Look at the Koch brothers,
that's what they do.
30:06They have built a network of
influence based on capital.
30:11Their world view is propagated into the
world at an unbelievably aggressive rate
30:17that has been compounding for
decades, that is genius.
30:22It is genius, it doesn't matter whether
you agree with their world view.
30:27The question is, what's
the counterweight to their world view?
30:33Can you name a group of people that
operate in the exact same way,
30:38methodically, meticulously
assembling capital, influence,
30:42assets who believe the opposite?
30:45Irrespective of what
you think of the Kochs.
30:48You want both views out
in the world at scale.
30:52Well right now, you have this and
you don't have this.
30:56And there are many examples of that.
30:58And so get the money and
31:02don't lose your moral compass when you do.
>> You've
31:07said that you think VC is
a horrendous allocator of capital.
31:11So if we need to go get the capital,
how do we do it better?
31:16Well, we are chipping away,
I think other people will copy us.
31:22Venture is basically just a bunch of
31:26soulless cowards.
>> [LAUGH]
31:29>> They're well intentioned, but
31:33they're well intentioned soulless cowards.
>> [LAUGH]
31:40>> They have fallen for what everybody
31:44else falls for,
which you can't blame them for.
31:49Which is here is this gold star and
they're like, wow,
31:53I've gotten a gold star.
31:55And then the minute you do that what you
do is you start to just choke it really
31:58tight and you're like I don't
want to lose this gold star.
32:00And then what happens?
32:05And then what happens?
32:06Your behaviors are about protecting
the seat of power that you have,
32:09the social definition that
that seat affords you.
32:13And so now instead of being an accelerant
of a progressive worldview,
32:17you become a retardant to
a progressive worldview, right?
32:21Your risk appetite shrinks,
32:22the surface area in which you're
willing to make decisions shrink.
32:26And when you are a critical
part of the future, again,
32:28going back to how I started, the most
important part of capitalism is going to
32:32be the folks that are driving
the technological change.
32:35Well, as a class,
that's what VCs are supposed to do.
32:39But they're by and large,
in my opinion, the wrong people.
32:44You have to make it more systematic,
you have to make it more data driven,
32:47you have to strip out the bias,
you have to be open 24/7.
32:50You can't have these dumb rules of like,
32:53I only do deals if they're within
15 miles driving distance.
32:58How can the most important part of,
>> [LAUGH]
33:03>> I mean, can you imagine if I walked
33:05into Zuck's office, Facebook, where
I'm like, I have a great fucking idea.
33:09Facebook is only going to be open for
business Monday through Friday.
33:16>> 10 to 5, because we want to get home.
33:18Summers we're going to take off, and
so but just going to show a 404 page.
33:24>> Does it make sense?
33:29we only want you to search
during business hours.
33:34>> And so you have to be open for scale,
33:38you have to be global, you have to do
all of these things so that you can get
33:42the money into the hands of the people
that deserve it and then help them.
33:47And by helping them, what you have to do
is actually address the core structural
33:51parts of business-building
that are not done well today.
33:54And the best analog is AWS.
33:57If you were starting a business 15 years
ago, I can even tell you a decade ago,
34:01we were racking servers at our data
center, because the growth was great.
34:09And somewhere along the way,
Amazon said, you know what?
34:12All of that complexity is necessary, but
34:14it's not sufficient to building
Facebook or any other great company.
34:18So let me abstract that for you.
34:20Let me go and replace all of those
good people with an API, and
34:25I'll take those good people and
they'll be celebrated at Amazon.
34:31And initially a few people said yes, and
people thought in 2007 AWS was a joke.
34:35And we used to laugh at it.
34:37We were like,
why would anybody do this stuff?
34:39And now see how fast a decade later
you're on the other side of the fence.
34:44If any of you guys start a business and
you're not on AWS,
34:47you would be the joke, right?
34:50So what did they do?
34:51They basically said, here's all this stuff
that's necessary to building a business.
34:58You probably don't want to do it.
35:00You're probably not going to do it well.
35:02And so let me just replace
it all with an abstraction.
35:04Your company can be smaller, leaner, more
efficient, and now the money you raise
35:09can be used for things that
approximate core product value better.
35:13Okay, now in 2017, ask the same question.
35:16What's the next set of
things that make sense?
35:19And in my opinion, what we uncovered at
Facebook is what every company needs,
35:23which is how do you shift from
an anecdotal, political capital,
35:28social capital-oriented way of
making decisions inside a company
35:32to a very precise, unemotional,
data driven process?
35:37And the way you do it is by building
a bunch of data infrastructure,
35:39by collecting a bunch of data itself,
35:41by helping you optimize your business in
a bunch of obvious and non-obvious ways.
35:46And so what we believe is that we should
take that capability that my team
35:50built at Facebook and abstract it for
all of you who intend to start a company.
35:55So now in the future,
what should happen is, you'll go to AWS,
35:59you'll get some infrastructure,
you'll go to socialcapital.com, and
36:02you'll get some insights and knowledge.
36:04And it's all interacting via APIs.
36:06It's all interaction via endpoints and
primitives.
36:10And what happens is we can
now learn from the feedback,
36:14from your data, how you're doing.
36:17We can merge those learnings across many,
many other businesses.
36:21We can find things in some remote
part of some company over here and
36:26translate that as value for you over here.
36:28Wouldn't you want that?
36:30Of course you'd want that.
36:32What if we could do more
efficient customer acquisition?
36:34What if we could figure out churn better?
36:37So all of these things now are what
we are going to bring to the market,
36:40systematic capabilities.
36:43And I think over time what that does is,
36:44again, it moves to a much more progressive
view of what capitalism should be.
36:49It's not the few that matched
a human driven pattern, but
36:54it's more about taking big shots, scaling
up the money, being able to support people
36:59in structurally predictable ways, and
allowing them to build better companies.
37:03Those companies, I suspect,
will be as profitable.
37:05But they'll be smaller.
37:07They'll be more efficient.
37:08They'll have more revenue per head.
37:10All the things that you would want over
time so that instead of having four or
37:14five mega companies,
you could have millions and
37:17millions and millions of smaller,
better run companies.
37:20And that's my world view.
37:21And I think if we do that,
37:23we achieve our goals, all of that stuff
comes together if we enable that.
37:27So what you're seeing from us is that.
37:30And it's really upsetting and
disconcerting to the established
37:33sort of venture classes, because it
up-ends how they've defined their value.
37:38It's a very classic inventor's dilemma.
37:41They are like,
in my brain is pattern-recognition.
37:46But we know that that's not true, and
the data shows you that that's not true.
37:50Simple question for all of you guys
that love the allure of Silicon Valley.
37:54From the 70s when Microsoft was founded
to now, if you look at all the major
37:58companies that have been created,
major, say over 50 billion,
38:03over 60 billion, what percentage of
the Series A investors overlapped?
38:08You did the A of Microsoft, and you did
the A of Google or you did the A of Uber,
38:14Like for pattern recognition, again,
it's non-numerical, right, it's about wow,
38:18I like the cut of this guy's jib.
>> [LAUGH]
38:24>> Well, the answer is it's less than 2%.
38:28So what does that mean?
38:29Everybody's bullshitting,
that's what it really means, right?
38:33If you're in a seat, and you have good
deal flow, and you have precious capital,
38:39and there's a massive tailwind
of technological change,
38:43over time you get one of the 20,
and you look like a genius.
38:48That's basically what's happened, and
38:50nobody wants to admit that,
but that's the fucking truth.
38:58So if anybody looks at you and
39:00tells you they know what the fuck
they're doing, they're lying.
39:03They're lying, they are lying
to themselves at a minimum, and
39:07at a maximum they're lying to you.
39:10Because the data does not support
that claim, and that's irrefutable.
39:16So I don't want to be one of those
people that stumble into a company and
39:19look back and like,
yeah, we were geniuses.
39:22I want us to be systematic.
39:25And I want us to be able to deploy tools
and capabilities that get us closer and
39:31And that is what if you're again,
39:33a traditionalist, freaks you out.
>> And that's what allows you to make
39:37these much longer term commitments
to businesses that are going to
39:41address healthcare, education.
>> Well, no, that's just because I'm rich.
39:46>> But just to be honest.
39:48I don't need anybody else's money.
39:50Look, this is not a popular view.
39:52So the first fucking billion
dollars is mine, and
39:57then I have to prove it and
then other people glom on.
40:01But, I mean Many of them
started by caring, but
40:05I suspect over time, if we end up
with a hundred, two hundred or
40:09five hundred billion dollars, how much
of that last 50 to 60% really care?
40:14That's okay, I want the fucking money.
40:19I will play the goddamned game and
I'll win, because I want the money.
40:24because I want to extend my influence,
40:26do you know what I'm saying?
>> Yeah.
40:28>> They want to return, it's fine.
40:30>> Yeah, he wants the money.
40:34>> because I want to win, I so
40:37deeply want to win.
>> How,
40:41I'm just going to say this
exactly as it's coming, how do
40:46you keep that power from corrupting you?
>> I have no idea,
40:51that's the honest answer, I have no idea.
40:58I've become increasingly isolated,
it's harder and harder for
41:02me to connect because I'm so
in my own mind.
41:06Like, how does this all play out?
41:11How do I help facilitate good investing
decisions which really means,
41:15how do I help this really great think
about a more platformized approach.
41:20And in that, I just get really Isolated
and so I don't have a good answer.
41:28I like things like this and I like to say
the things that I do and maybe it helps
41:34you in your own lives, but to be honest,
it's very selfish, it helps me because,
41:39like it reminds me, when I'm in a place
like, it reminds me of these stories.
41:43Just reminding myself like I made
$4.55 an hour at Burger King,
41:48I would get a $50 check and
I'd buy bus passes.
41:52That's awesome, I just,
I don't ever want to forget that and
41:56I'll go months and not remember that, but
41:59now as I say it, I'm like okay,
I started as a good earnest person.
42:04And I need to stay a good earnest person,
so I don't have a good answer.
42:10And I'll tell you of those 150 people,
maybe it's a little bit more,
42:13but I've met a lot of them,
it's really hard.
42:18It's very easy to end up
really drunk with power,
42:25it's really hard.
>> I really
42:30appreciate that candor because I don't
think that we get it very often.
42:34And you've laid out
an incredible vision for
42:38money as an instrument of change, so I'm
really grateful that you are here to share
42:42it with us today.
>> Thank you.
42:44>> We're going to open it up now to
42:46questions, I'm sure that there are many
followups on what you've explored,
42:52but really-.
>> Any feedback?
43:10I'm Dana, I'm second year MBA at the GSB.
43:13Thank you for being with us today.
43:16But I'm not here to give feedback,
but I have a question for you.
43:20You just took Social Capital
of the public.
43:23I wonder what's your plan
to run this public fund?
43:26How would that be different
from running a private fund?
43:30>> Or it's just another
43:34way to get money
>> [LAUGH].
43:49So one of the things that I think about
a lot is, if I'm in a position to reshape.
43:55I've been in a position where
I was a part of a group
43:58that helped shape psychology of society.
44:00That's been a great experience and
I learned a lot.
44:04And so now in this position
what I say to myself is,
44:06what are the psychological
things I'd love to change now?
44:09And one of them is around
this idea of patience.
44:12And what's counterintuitive and I said
this earlier when we were just talking,
44:15is that, I think bringing
liquidity into companies sooner
44:21will actually allow companies to
bake longer and more patiently.
44:26And so part of what this vehicle
is is about bringing liquidity
44:29sooner in a company's lifecycle.
44:31because if we can take this company,
use it to acquire something else and
44:35that CEO is now able to
compensate their employees.
44:39As counterintuitive as it sounds,
44:40I suspect that they
are less likely to leave.
44:44And so now you could have employees stay
at a business for seven, eight, nine,
44:47ten years, which used to be
the historical norm and now it's not.
44:52Most of you,
probably are thinking to yourselves,
44:57well I'm going to get
a great job after the GSB.
45:00But I should probably portfolio manage my
career for the next six or seven years.
45:0518 months here, 18 months there,
18 months there, and
45:08then I'll decide what I really want to do.
45:11And part of it is because
there's an incentive to sort of
45:14build this kind of portfolio approach.
45:17But I suspect if you knew that
liquidity was a more traditional,
45:20predictable thing, many people
would actually say, you know what?
45:23I like these people here,
I like the mission of the company,
45:26I want to continue to
help advance their goals.
45:29And now that you've actually
solved my compensation problem,
45:32I'm willing to commit.
45:33So part of this vehicle
is trying to turn back
45:38the incentives towards people staying at
companies longer which I think is going to
45:42be required if you're going to
try to solve hard problems.
45:45because right now, the Silicon Valley
attrition rate in most companies is 20%.
45:49That means every five years,
your entire employee base is turned over.
45:52Think about that,
how do you do anything valuable,
45:54if everybody is new every five years?
45:57How is that possible?
45:58It's probably not possible.
46:00So that's what I would try to change and
46:05get the money.
>> [LAUGH]
46:09>> Hi, I'm Carolyn, I'm also an MBA too.
46:11Your sports analogy of kind of buckling
down and going into hyperdrive really
46:15resonated with me,
I also realize that that can go too far.
46:19So I'm curious to hear how you make some
of the tough calls on whether it's not to
46:22participate in the next
round of fundraising or
46:24whatever that looks like to you.
46:25How do you make those decisions?
46:30This is, honestly, this is, so yesterday,
46:33we spent an inordinate amount
of time talking about this.
46:37We've made a bunch of decisions
that I deeply regret,
46:41because they were entirely
monetary in nature.
46:44And what I said to the team was, I'm fine
with us making purely monetary decisions,
46:49but we didn't even do those well.
46:51It's not as if we had a predictable
rate of return on that that said,
46:55We're just going to close our eyes here,
double our money, and walk away.
47:00And so,
the reason I brought that up to them,
47:03was I was like our decision-making
can't bleed over time.
47:09And right now, it's very hard for
us as an organization to know
47:15how much should be mission driven,
how much should not.
47:17When should we really double down
on things that are not working,
47:20When should we just give up,
because its just either the timing is
47:24not the right time and quite honestly
I don’t have a very good answer.
47:29But if it is the thing
that we are now the most
47:34emotionally sensitive to, because for
example the opposite may be true.
47:40So if the diabetes business turns out to
work, does the hundred and first person
47:44that works at Social Capital say fuck it,
we're just going to buckle down and when
47:47they're writing checks all of a sudden
we're 50 million deep into something that
47:51is clearly not going to work was that a?
>> So,
47:53I don't have a really good answer but it
is the thing that I think about the most
47:57when do you know how do you
know to keep going for?
48:01When do you know that it's just too much?
48:03When do you know that your decision
making is bleeding into a vein that
48:06is not constructive?
48:11So it's a great question,
I think about that a lot.
48:16By the way, a lot of things, it's really
powerful to be able to say I don't know.
48:21I mean, I would just encourage you guys
all to just be like, I don't know.
48:24This culture, American culture is
this weird thing of know-it-alls.
48:29Everybody doesn't know everything.
48:31How he fuck can you ever learn?
48:35When is that going to be valuable?
48:37Don't be the, just own that one line,
I don't know.
48:45And as I kind of get more abstracted,
when I meet people, and
48:49I ask them things, it is is so
endearing to hear, I don't know.
48:54Because behind that is just
the self-awareness and
48:57confidence that I think
is increasingly rare.
49:02Now you guys are like, I'm going to
fucking grin fuck this guy and
49:05just keep telling everybody, I don't know.
49:07>> [LAUGH]
>> I mean really own it.
49:08If you're going to say it,
really own it, but
49:11I really think it's a very powerful
thing to be able to say, I don't know.
49:18Hi, my name is and
I'm a first year MBA student.
49:22I'm also a Canadian who went to Waterloo
and my first job was at Burger King, so
49:26I really see you as a role model.
>> You're like my fucking
49:29>> I mean no literally,
49:30you look like me too, it's crazy.
49:32It's the weirdest thing.
>> [LAUGH]
49:34>> Are you planted, are you an actor?
49:36I swear to God.
>> Well,
49:38you're really freaking me out right now.
>> [LAUGH]
49:42>> What do you want?
49:46>> So my question for you is,
49:48a of couple years ago at an event at HBS,
49:51you mentioned that MBA students
are typically at a disadvantage.
49:55With respect to getting capital if they
pursue entrepreneurship Do you think that
49:59still holds true today?
50:00And if so [CROSSTALK].
>> So, that's a perfect example of me,
50:03before Cas, which Dean Leven talked about,
expressing my bias.
50:10And I think part of my bias came from my
insecurity about not having a grad degree.
50:14Part of my bias was looking at
people like you and saying, wow,
50:18I just feel inferior to folks like you,
I have felt for huge amounts of time.
50:24And so it's a perfect example, where
even though I can say it, what I said at
50:29that HBS thing was me just spouting off,
making myself feel better about my biases.
50:35And what I would tell you today is,
it can matter, it doesn't matter.
50:39I would rather say that there are ways
of figuring out how valuable you are,
50:43that are independent of
those traditional signals.
50:45Whether you have them or not.
50:48So I would say today I've changed my mind.
50:49But by the way, that's another thing.
>> [LAUGH]
50:54>> Changing your mind.
50:59>> I mean, fuck, change your mind.
51:01It makes for really,
really, really, bursty,
51:04difficult marriages at times.
>> [LAUGH]
51:06>> My wife will tell you.
51:09But man, is it powerful in business.
51:12Change your mind all the time.
51:16again, where you'll find really good
scaled leaders want the right answer.
51:21And they're fine with capitulation,
they're fine with change.
51:24They really are,
because they just want the right answer.
51:26And then you just get so
invested in an answer.
51:29And then you build up all this
superficial logic to reinforce it,
51:34versus saying I don't know,
you know what, I changed my mind.
51:38Wow, another powerful thing I think.
51:41I change my mind all the time.
>> I think this is going to be our last
51:44question.
>> My name is.
51:48I saw some of the venture work at banks,
some of the tech world and
51:51you said something about amassing capital.
51:54Today, what do you think is one of
the best ways for us to amass capital on
51:57a risk adjusted basis?
>> I mean, the last part is
52:02just such as sellout part.
>> [LAUGH]
52:04>> A risk adjusted base,
52:05I don't know, fucking buy some bonds?
52:07I mean, I don't know.
>> [LAUGH]
52:10>> Here's what I would tell
52:11you, man.
>> [LAUGH]
52:13if you ask me,
who's building the most important,
52:17indelible company in the world,
I've been very public about this.
52:20I think it's Jeff Bezos.
52:21Part of what he realized was
the value of slow-compounding.
52:25So here's my little theory
about company value creation.
52:28The faster you build it,
that is the half-life,
52:31it will get destroyed in
the same amount of time.
52:34And so when you think about a lot of
social businesses, that's played out.
52:38And when you see what sort
of the tops are like,
52:43does it take, eight, nine, ten years to
build a really great consumer business?
52:47It'll take 8, 9, 10,
12 years to destroy it.
52:51And we may see the tipping point now
in a couple of these businesses.
52:54Right now we may be seeing it in front
of our eyes, regulatory or otherwise.
52:57So why is that an important statement?
53:01Amassing capital to me,
is about finding a smart,
53:04useful solution to a very hard,
practical problem.
53:08And being slow and methodical.
53:11And again, that's what I'm saying,
you have to rewire your brain for
53:16How do you, in year two or year five,
[COUGH] come back to this room for
53:22your, what is it called when you get-
>> Reunion.
53:27>> [COUGH] And say I'm still
53:30working on the same thing, and
when somebody says, and how is it going?
53:33You have the courage to say, it's hard, I
haven't figured it out yet, I don't know.
53:39But if you figure it out and you have this
moderate growth, moderate compounding,
53:45that is the key, that's cool.
53:49I look at our returns and it's so
funny, because you can get so
53:54enthralled by IRRs in our business.
53:58And I have friends who run
other organizations, and
54:02they're like, we posted 92% IRR,
and I'm like,
54:06well you can't eat IRR.
>> [LAUGH]
54:09>> What does it really mean?
54:12And when you unpack it, what you realize
is, fast money returns can completely,
54:17really decay long-term thinking and
sound judgment.
54:20And so I'm like wow, I would really
love to just compound at 15% a year.
54:26because if I can do that for 50 years,
that's 250 fucking billion dollars.
54:30It's some crazy number,
it's just enormous, so it's slow and
54:34steady against heart problems.
54:37Start by turning off your social apps and
giving your brain a break.
54:42because then you will at least
be a little bit more motivated,
54:44to not be motivated by everybody
else fucking thinks about you.
54:47Do you know what I'm saying?
54:48It's hard, think about how all
this stuff plays together.
54:50How does trying to get,
posting your fucking waffles online,
54:55relate to me starting a business and
54:57accumulating capital.
>> [LAUGH]
55:00>> This is wiring your brain for
55:01super fast feedback.
55:03It's the same brain you're
using to build a company.
55:05Don't think they're not the same.
>> [LAUGH]
55:08>> Do you know what I'm saying?
55:17So you're training your brain here,
whether you think it or not,
55:19whether you know it or not,
whether you acknowledge it or not.
55:22Acknowledge that these things,
where you're spending hours a day,
55:26are rewiring your psychology and
physiology.
55:29In a way,
that now you have to use to go and
55:31figure out how to be productive
in the commercial world.
55:35So if you don't change this,
55:37you are going to get the same
behavior as over here.
55:41Change this, there's a reason why
Steve Jobs was anti social media.
55:47I'm not on these fucking apps, I'm not
him by any stretch of the imagination.
55:52But I am proactively trying to rewire
my brain chemistry to not be short
55:59I'm telling you they're linked.
>> Kumar,
56:02thank you so much for being here and
enlightening all of us.
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