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20VC: Chamath Palihapitiya on Why IPOs and Direct Listings Are Broken, Turning Social Capital Into A Combination of Berkshire Hathaway, Koch Industries and The Red Cross, Why Forecasts Are Worthless, What Creates True Defensibility & Why You Have To Be Pr

Jul 13, 2020

Chamath Palihapitiya, Founder and CEO of Social Capital and former Facebook executive, shares his journey from tech to venture capital. He argues that traditional IPOs are flawed and champions the SPAC model for its advantages. Chamath discusses the pitfalls of forecasting, suggesting that founders should prioritize real growth and integrity in partnerships. He reflects on his experiences at Facebook, emphasizing the importance of defensibility and how personal growth shapes his investment philosophy. A deep dive into the evolution of entrepreneurship in a global landscape rounds out this insightful conversation.

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ADVICE

Integrity Over Capability

Prioritize integrity over capability when hiring partners, as integrity compounds infinitely.
Assess integrity through longitudinal observation over time, not short, intense interactions.

INSIGHT

Action vs. Inaction

Chamath's investment philosophy shifts from action to inaction with larger check sizes.
With bigger checks, optionality comes from waiting; with smaller checks, deploy capital quickly.

ADVICE

Structured Inaction

Structure periods of inaction as learning processes; research, refine, and write a narrative.
Distill months of knowledge into a concise investment thesis.

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Chamath Palihapitiya is Founder & CEO @ Social Capital, the organisation on a mission to transform society by using technology to solve the world's hardest problems. Social's portfolio includes the likes of Slack, Yammer, Front, Intercom and Carta to name a few. As for Chamath, prior to founding Social, he spent an incredible 4 years at Facebook including as the original exec in charge of FB Platform as well as being responsible for overseeing core growth components and overseeing FB's mobile efforts. If that was not enough, Chamath is also an owner @ The Golden State Warriors & Chairman @ Virgin Galactic.

In Today's Episode You Will Learn:

1.) How Chamath made his way into the world of tech and startups, came to be a VC with Mayfield before joining Facebook and then starting Social?

2.) What were Chamath's biggest takeaways from his team building the growth team at Facebook? Why does Chamath believe that forecasts are worthless? What should founders focus on instead? What did Facebook teach Chamath about defensibility and moat building?

3.) What was the realisation moment for Chamath that the venture firm he was building with Social was not what he wanted to build? Why does Chamath believe the biggest mistakes he made were "compensation and partner selection"? How would he do them differently now? What does he look for most in partners today? How does he detect for integrity?

4.) Why has Chamath doubled down on the SPAC model? What are the core benefits both to the founders and investors? What are the core challenges with both direct listings and IPOs? How does Chamath think about scaling his SPAC strategy? What are the core challenges in doing so?

5.) Facing alcoholism and psychological challenges with his parents, how did Chamath deal with becoming a carer sooner than expected? How has becoming a parent changed Chamath's operating mentality today? How does Chamath analyse his relationship to money today?

Items Mentioned In Today's Show:

Chamath's Fave Book: Liar's Poker: From the author of the Big Short

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