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  • [MUSIC]

  • Thank you so much for being here today. >> Thank you for

  • including me. >> I'm so

  • excited to dig into that career and your thoughts on the Valley.

  • And I'm going to start us off with one of the things that jumped out at me in my

  • prep for this interview.

  • You are an extremely generous tipper. >> Yeah.

  • >> I love that and

  • I would like to know why. >> So, I mean,

  • it's well known and part of why I'm so open about this is that I think

  • it gives permission for other people just to be honest.

  • I grew up in a very kind of dysfunctional household on welfare.

  • And that compounded a bunch of shit in my life that was not great.

  • We were very focused on money.

  • It was a huge point of pressure and tension in the family.

  • It created massive depression in my father, drinking.

  • Just, it was very dysfunctional.

  • And there was some point along the way where I was like, okay,

  • is money like really important or not important?

  • And I feel very lucky because I don't think if you ask my sisters,

  • they got to the same place that I did.

  • But I ended up not coveting it.

  • And I found it to be something that I could use to really

  • empower myself to do the things that I wanted to do.

  • And so, in a situation where you know you go to like a restaurant.

  • If you really empathize with the people that are working there,

  • I see people who are like me, brown skinned,

  • working hard, creating these beautiful experiences.

  • And then I can celebrate it by, I guess, giving a YELP review.

  • But you can't buy food for your kids with a fucking YELP review.

  • >> [LAUGH]

  • >> So I want a tip.

  • And, I mean, it gives me so

  • much joy because it's like you'll have a 3 or $400 bill.

  • In some cases, you tip 500 bucks or 1,000, and you close it.

  • And they're expecting $40.

  • And, I mean, I'll get a little emotional, but

  • they will come out to you, and it's transformational.

  • And so it's so great.

  • It's just like little things like that mean a lot of people.

  • And just to be anonymously generous like that,

  • I think it's a great gift that I have the ability to do.

  • That's why I do it, I love it. >> And

  • it sounds like the experience of being seen.

  • And you are seen and the individual is seen, and

  • you're sharing in that [INAUDIBLE]. >> Well I mean, it's funny.

  • It's like 99% of the time they don't say anything,

  • because they do the bill thing afterwards.

  • And they for sure can't pronounce my name.

  • And so they for sure have no fucking clue who it was that gave them the tip.

  • It's fine, it's totally fine.

  • But I love it, I absolutely love it.

  • My friends freak out.

  • Now it's caused tension actually,

  • because now when I go out with my friends, they know as well.

  • And I've just made it very easy, which is like, hey, if we're going out,

  • let me just fucking pay.

  • Just like, it's fine, and it makes it simpler.

  • Okay, yeah.

  • I want to dig into what you were describing about your upbringing and

  • this unique position that you've gotten to where you don't feel that you covet money.

  • But you see it's power and

  • the use that it has in furthering some opportunities for you.

  • How did you develop that?

  • How do you distinguish between luck and skill?

  • How do you end up in that position? >> So I,

  • My parents craved money, meaning they needed it

  • because my dad was unemployed for long stretches of time.

  • My mom was the sole breadwinner.

  • She was a housekeeper, then she was a nurse's aide.

  • And I would just see how she grinded.

  • We didn't have a car for a long time.

  • She takes the bus, we all take the bus.

  • When I got my first job, it was at Burger King.

  • I'd take the money, and I had give it to my parents, and we would buy bus passes.

  • And I remember telling some of my friends, I went to a very good high school,

  • kind of like the rich high school.

  • Not the high school I should've gone to.

  • I was able to go to this different high school.

  • And I would tell them, like, I would be so ashamed that I worked at Burger King.

  • They would sometimes come by, and I would just be like fuck.

  • And then at some point, it was this release moment where I was,

  • this is my life.

  • I can't do anything about it.

  • This is what it is right now.

  • And I kind of had a sense that I could figure some stuff out later, but

  • I didn't really know.

  • And so I just accepted it.

  • And then the minute I accepted it, I wasn't ashamed anymore.

  • And then, when I wasn't ashamed I could start to actually be inside my head, like,

  • what really matters?

  • So then what happened was there was these massive racial riots in Los Angeles.

  • And not as if the fucking American government did anything about it.

  • But the Canadian government was like, shit, let's get all these black and

  • brown kids jobs, because we don't want the Rodney King riots in Toronto, and

  • Ottawa, and parts of Ontario.

  • And so I was able to take all of my dad's rejection letters, call every single one.

  • And one of them gave me a job.

  • And I worked at the well known telecommunication start up in Ottawa.

  • Ottawa had a really burgeoning tech sense at the time.

  • And I worked in this organization that was run by this really iconic guy,

  • Terry Matthews.

  • And he was a billionaire.

  • And I was like, what the fuck is that word?

  • I mean, I didn't even know a fucking thousandaire.

  • I was like what is a billionaire?

  • And this guy was risk on.

  • And he was just so dynamic in the businesses he had started and

  • how he viewed his place in the world, and I was enthralled.

  • I was 9 degrees away from him.

  • But the cult of personality around him in that business, the lore, when it trickles

  • down to you, was not about his conspicuous consumption or anything else.

  • It was about okay, we're launching this frame relay switch.

  • Now we're going to buy this company.

  • Okay, we're going to pivot the entire business to ATM.

  • And you were just, it was an amazing time.

  • And so I took the bus to Newbridge.

  • Complete luck that the controller of Newbridge would

  • go from his nice neighborhood through this shitty neighborhood to get on the highway.

  • And so he would see this guy standing by the bus and

  • eventually he saw me inside the office.

  • And one day he stopped.

  • He said, you want a ride?

  • Do you work at Newbridge?

  • I'm like, yeah.

  • This guy, Sam Legg.

  • So in the car, he was in the front seat, like beside Terry.

  • And he was able to tell me how this guy thought about this.

  • because I would read it in the paper, and I'd be like, why is he doing this?

  • So it just completely rewired what money was.

  • For Terry Matthews, money was an instrument of change, right?

  • He had a market cap, he's like, wow, that's 8 billion dollars of change,

  • 10 billion dollars of change, 15 billion dollars of change.

  • Versus, there was another guy building a company at the time.

  • His name was Michael Copeland, who ran a company called Corelle,

  • also a billionaire.

  • And he was the exact opposite, had a messy divorce, married some trophy wife.

  • He took this obscene shiny glass from his building and covered his house in it.

  • And so you have this dichotomy of two different characters at that time in

  • the 90sm building really interesting businesses.

  • Correll, which was a regional business, Newbridge, which was regional business.

  • They were both very successful, but they manifested money so totally differently.

  • And I was like, I want to be this guy.

  • I want to be this mega-compounder,

  • swashbuckling around, trying to do really cool shit in the world.

  • How do I do that?

  • And Sam helped me because you could understand from him what Terry cared about

  • and then, for me, I just copied.

  • I mean a lot of my life, quite honestly, is just copying the things that I see.

  • There's not a lot of original thought here, there truly is not.

  • We can all pretend we're all fucking geniuses, honestly, be good copiers.

  • Do you know what I'm saying? >> [LAUGH].

  • >> It's the best thing in the world.

  • Be around high functioning, high quality people and

  • just copy the shit that they do. >> [LAUGH]

  • >> Observe the shit that's kind of crappy

  • and then don't do that stuff.

  • It's not a fucking complicated formula. >> [LAUGH]

  • >> When did you use that best?

  • >> No, all the time, now it's funny,

  • it's like, you have a surface area of ways to spend your time now, or I do.

  • And I'm in this midst now where we are really scaling up what we're doing as

  • a business.

  • And I meet these people that to me are so iconic that they were like

  • arms length people that are now sitting face to face and

  • they treat me like a quasi-peer, I wouldn't say peer, but quasi-peer.

  • But what I see is, I see some amazing stuff and I see some

  • utter dysfunction in some of the richest, most important people in the world.

  • And I have to decide how am I going to act?

  • What am I going to embody?

  • What am I copying?

  • What am I not copying?

  • And so I get a chance to now refine my decision-making and discipline.

  • And it's, so that's how it plays out.

  • I don't know if I answered your question. >> I'm thinking very,

  • there's a deep connection between money as an instrument of change and

  • what you're doing now at Social Capital. >> Look,

  • here's the thing, there's about 150 people that run the world.

  • Anybody who wants to go into politics, they're all fucking puppets, okay?

  • >> [LAUGH]

  • >> There are 150,

  • and they're all men that run the world, period, full stop.

  • They control most of the important assets, they control the money flows.

  • And these are not the tech entrepeneurs.

  • Now they are going to get rolled over over the next five to ten years

  • by the people that are really underneath pulling the strings.

  • And when you get behind the curtain and see how that world works,

  • what you realize is, it is unfairly set up for them and their progeny.

  • Now, I'm not going to say that that's something that we can rip apart.

  • But first order of business is, I want to break through and be at that table.

  • That's the first order of business.

  • And the way that I do that is by proving that I can do what they do

  • as well as they do it and then do it better than how they do it.

  • Because at the end of the day, they are commercial fucking animals, okay?

  • And they'll open the door out of curiosity and

  • they'll let me stay because I add value.

  • And then once I'm there, I can open the door for

  • other people who can try to do the same thing.

  • So my entire goal now is that, is to be in a position to aggregate enough

  • of the capital of the world, to then reallocate it against my world view.

  • And I'm not saying my world view is the best or right, but it is mine.

  • And at the end of the day, there are 150 other fucking guys with their world view

  • and they don't give a shit what you think about their fucking world view.

  • That's the truth.

  • And so, why not me?

  • Why not?

  • Why not one of you?

  • Why not?

  • And so in my life now I'm just kind of like, why not?

  • Why the fuck not? >> [LAUGH] [APPLAUSE]

  • >> Fuck it!

  • [APPLAUSE] >> So you have these 50 year goals for

  • Social Capital, three of them.

  • Can you give us your world view through those goals?

  • >> So my 2045 ambition for

  • the organization, this is as I see it right now, 2045.

  • Is I would like us to employ at least ten million people through

  • the businesses that we own.

  • I would like our businesses to positively affect at least

  • a quarter of the world's population and

  • I would like us to have made cumulatively about a trillion dollars.

  • That's my 2045 ambition.

  • I think if we do that, we are the modern face of capitalism for the next 50 years.

  • So, how we do that now becomes really important.

  • So if you think about building businesses today that could do any of those three

  • things, you have to be technological, you absolutely just have to be.

  • You are not going to build a brick and

  • mortar business that gets anywhere close to those three things, number one.

  • Number two is, you have to think very broadly

  • about building things that can stand the test of time.

  • Those businesses are by definition hard and non-obvious and so

  • they compound in scale very slowly.

  • And that's really counterintuitive to the overriding logic of Silicon Valley,

  • which says, quick, fast, go, right?

  • But that kind of premature ejaculation doesn't work if you're trying to fucking

  • be around forever.

  • You gotta be in the flow for decades, that is hard.

  • It tests people's patience, it tests people's resolve,

  • it tests people's really intellectual incision.

  • And this is where everybody gives up, everybody gives up.

  • I had this moment today, just a total different way of describing this.

  • Through the Warriors, I've met a lot of players obviously,

  • one of them who I had become unbelievably close to is David Lee.

  • David Lee just got engaged to this unbelievable woman, Caroline Wozniacki,

  • tennis player.

  • We were working out this morning, okay?

  • Couples work out, me and my wife, him and his fiancee.

  • >> [LAUGH]

  • >> So we're doing this thing,

  • this treadmill thing, which my trainer concocted.

  • And I'm in pretty good shape.

  • And then you see what it really means to be extremely dedicated, in their case,

  • to something which is physical fitness because they're professional athletes.

  • When I give up, when the average human gives up,

  • their brain goes into fucking overdrive, okay?

  • And they're like, there's this next level burst.

  • And so it's that.

  • It's like when things get hard can you double down?

  • A different example, we had yesterday,

  • we do these things every quarter called quarterly portfolio reviews where

  • incredibly intensive review of our entire portfolio, revisiting our strategy,

  • talking about all the things we're doing to make sure we're on the right track.

  • And I had this observation which was, I started a diabetes business.

  • My dad died of diabetes three years ago.

  • Most of my relatives have it.

  • I express the gene that makes me disproportionately susceptible to it.

  • So it's something that I personally care about.

  • But that business took seven years

  • to get to a place where we even have a chance of being viable.

  • And I think to myself, in that example, I embodied a bit of Caroline Wozniacki.

  • When things got hard, I pushed through the pain.

  • Now in my case, the pain was the fear of failure, continuing to write more money,

  • a belief that I had that this business was going to work.

  • And today, that business manages a million diabetics.

  • And I think there is some kid out there whose family will be slightly less

  • dysfunctional because their parent's disease is better managed.

  • It's not going to go to a place where like, they're getting dyalized, or

  • they're on an organ registry.

  • And that value for that kid in our world and

  • all of you that benefits will never be connected the dots, but that’s okay.

  • But it required, just, resilience and I'm proud of that.

  • And so I want to bring back a little bit of that here so that it's not, quick,

  • fast, five million users, ten million now, flip it, sell it, great celebrate.

  • It's like, hey let's work on some hard shit together.

  • Let's buckle down, look each other in the eye,

  • and say we're going to support each other here.

  • This is going to take seven or eight years, but if it works,

  • it will really mean something.

  • It's something that matters to you for

  • something that's other than just simple motivation of the social capital you get

  • from your friends or money in the short term.

  • And winning bigger longer term.

  • We're missing that and

  • I think part of our success will be if we can stay focused on that.

  • Our education portfolio is another thing.

  • It literally looked like a train wreck for

  • three years, where everybody has always said you never invest in education.

  • And my thing was, it's not about education.

  • This is about human capital development.

  • It's about, for every one of you who is so smart, that got into Stanford,

  • think of all the people who could be as capable.

  • I'm not asking you to empathize with them, but I, as a capitalist, want a starting

  • line where all of those people can run a race so that I can pick the winner.

  • No offense to any of you here. >> [LAUGH]

  • >> And it took us three years we're now at

  • those building blocks exist and I'm like wow.

  • How many times did I have to look at my partners and say no?

  • The easy answer is to walk away, the hard answer is to double down,

  • we have to support this business.

  • That culture's missing here.

  • So part of what we're trying to do to achieve those goals is take really

  • big audacious points of view on the world and then train ourselves to be patient.

  • And it's really, really hard.

  • The entire society is set up to not be patient anymore.

  • >> And I'm hearing also a conflict with

  • this fail fast and learn mentality where if you're taking a deep and

  • big bet, like you want it to be the right one.

  • How do you know when that's true? >> I think that that stale fast approach

  • works in consumer Internet businesses, but I don't think it works for

  • anything that really matters.

  • >> [LAUGH] >> Basically.

  • >> [LAUGH]

  • >> Consumer Internet businesses are about

  • exploiting psychology, and that is one where you want to fail fast because

  • you know people aren't predictable and so we want to psychologically figure out how

  • to manipulate you as fast as possible and then give you back that dopamine hit.

  • We did that brilliantly at Facebook, Instagram has done it,

  • WhatsApp has done it, Snapchat has done it, Twitter has done it.

  • So there are great examples.

  • WeChat is doing it.

  • There are great examples of failing fast is the right

  • path to exploiting psychology of mass populations of people.

  • But it is not how you solve diabetes.

  • It is not how you use precision medicine to cure cancer.

  • It is not how you educate broad swats of the world's population.

  • It's just not.

  • It's taking a point of view and being methodical.

  • It's hard, no it's hard. >> I'm glad that you're

  • taking a stab at it. >> By the way, if it works,

  • it's where all the money comes.

  • If you talk about where all of the gains, where all of

  • the value will be created over the next 50 years, it'll be in those hard things.

  • And the reason is because those white spaces are so wide open.

  • The competitive pressures are non-existent.

  • For example, today, you have this weirdly academic argument about climate change.

  • It exists, it doesn't exist.

  • Well, we were in an Ice Age, now it's warm, of course the earth.

  • Who cares?

  • Who cares?

  • What's undeniable is that we're ripping apart the biodiversity of our planet.

  • What is undeniable is that we as a human population will be forced to concentrate,

  • because certain parts of the world will get basically subsumed by water.

  • We do not have food supplies that will, these are conclusively known to be true.

  • Yet nobody is really working on a problem.

  • And part of it is because the people won't have the ambition to try to go after it.

  • The capital markets don't reward that kind of decision making.

  • But if somebody were to solve it, don't you think they are, in economic terms,

  • a multi-trillionaire?

  • Of course.

  • You think food delivery is where the next great fucking

  • breakthrough is going to come?

  • You're all hopped up on fucking marijuana and

  • you need a fucking brownie? >> [LAUGH]

  • >> Like what a joke.

  • >> [LAUGH]

  • >> Go and look through Crunchbase and

  • all the shitty, useless,

  • idiotic companies that have gotten funded doing garbage like that.

  • Versus climate change.

  • Think about that.

  • Think about that when you guys eventually find your partner, your significant other,

  • your husband, your wife.

  • You get married, you have kids, you will not be able to hand off a planet that they

  • can predictably live in, you will not.

  • Your generation.

  • And nobody is fucking doing anything about it.

  • So the capital markets are just completely, completely out of their minds.

  • And so, yeah. >> [LAUGH]

  • [APPLAUSE]

  • >> I want to bring us back to the point

  • that you were making about exploiting consumer behavior in a consumer Internet

  • business.

  • You said that this is a time for soul searching in social media businesses, and

  • you were part of building the largest one.

  • What soul searching are you doing right now on that?

  • >> I feel tremendous guilt.

  • I think we all knew in the back of our minds, even though we feigned this

  • whole line of there probably aren't any really bad unintended consequences.

  • I think in the back deep, deep recesses of our minds we kind of knew

  • something bad could happen.

  • But I think the way we defined it was not like this.

  • It literally is a point now where I think we have created

  • tools that are ripping apart the social fabric of how society works.

  • That is truly where we are.

  • And I would encourage all of you as the future leaders of the world

  • to really internalize how important this is.

  • If you feed the beast, that beast will destroy you.

  • If you push back on it, we have a chance to control it and rein it in.

  • And it is a point in time where people need to hard brake

  • from some of these tools and the things that you rely on.

  • The short-term, dopamine-driven feedback

  • loops that we have created are destroying how society works.

  • No civil discourse, no cooperation, misinformation,

  • mistruth and it's not an American problem.

  • This is not about Russian ads.

  • This is a global problem.

  • So, we are in a really bad state of affairs right now, in my opinion.

  • It is eroding the core foundations of how people behave by and

  • between each other, and I don't have a good solution.

  • My solution is I just don't use these tools anymore, I haven't for years.

  • It's created huge tension with my friends, huge tensions in my social circles.

  • If you look at my Facebook feed,

  • I probably haven't, I've posted maybe two times in seven years.

  • Three times, five times, it's less than ten.

  • And it's weird, I guess I kind of just innately didn't want to get programmed,

  • and so I just tuned it out.

  • But I didn't confront it.

  • And now to see what's happening, it really bums me out.

  • Think about there are these examples where there was a hoax in WhatsApp,

  • where in some village

  • in India People were afraid that their kids were going to get kidnapped etc.

  • And then there were these lynchings that happened as a result

  • where people were like vigilante running around.

  • They think they found a person, and they I mean,

  • I mean seriously, like that's what we're dealing with.

  • Imagine when you take that to the extreme where bad

  • actors can now manipulate large swathes of people to do anything you want.

  • It's just a really, really bad state of affairs, and

  • we compound the problem, right.

  • We curate our lives around this perceived sense of perfection,

  • because we get rewarded in these short term signals, hearts, likes,

  • thumbs up, and we conflate that with value, and we conflate it with truth.

  • And instead what is really is, is fake, brittle popularity.

  • That's short term and that leaves you even more, and admit it, vacant and

  • empty before you did it.

  • Because then it forces you into this vicious cycle where you're like what's

  • the next thing I need to do now, because I need it back.

  • Think about that compounded by 2 billion people, and

  • then think about how people react then to the perceptions of others.

  • It's just a it's really bad, it's really,really bad.

  • >> It sounds like you're taking deep

  • personal responsibility also in being a part of it.

  • >> I kind of look,

  • I did a great job there, and

  • I think that business overwhelmingly does positive good in the world.

  • Where I have decided to spend my time, is to take the capital that they rewarded

  • me with and now focus on the structural changes that I can control.

  • I can't control that, I can control my decisions, which is I don't use this shit.

  • I can control my kids' decisions, which is they're not allowed to use this

  • shit. >> [LAUGH]

  • >> And then I can go focus on diabetes,

  • and education, and climate change.

  • And that's what I can do, but everybody else has to soul search a little bit more

  • about what you're willing to do because your behaviors,

  • you don't realize it but you are being programmed.

  • It was unintentional, but now you gotta decide how much you're willing to give up,

  • how much of your intellectual independence, and

  • don't think, yeah, not me, I'm a fucking genius, I'm at Stanford.

  • You're probably the most likely to fucking fall for it.

  • >> [LAUGH]

  • >> because you are fucking check

  • boxing your whole God damn life.

  • No offense guys. >> [LAUGH]

  • >> None taken.

  • >> [LAUGH]

  • >> So, you've been outspoken about

  • the Trump's Administration's position on immigration,

  • these things are going to collide in government and business, right?

  • That's happening now, so what do you want these future business leaders to

  • do about it once they get into that spot? >> Get the money, get the money,

  • and then let's get around a table and let's create new rules.

  • Literally that simple, get the fucking money.

  • I'm serious, do not get it, it is going to be made, it is going to be allocated,

  • and you have a moral imperative to make sure that if you have a point of view

  • that matters and you want to reflect it, you get it.

  • I'm going to go get it, other people are going to go get it, and

  • then it will be about a competition of views.

  • And don't wrap yourself in all this

  • liberal kind of bullshit about my God, money, blah, no, stop.

  • Here's how the fucking world works, okay?

  • It drives the world for better or for worse.

  • Economic incentives drive entire swaths of populations to behave in very,

  • very predictable, and then when you take it away, unpredictable ways.

  • Ask anybody in your class that's from a developing nation,

  • ask anybody in your class who has seen that play out from where they're from.

  • So, that's what you have to do, you gotta go and get it.

  • If you control the capital and you have a point of view, you can now,

  • then the question is, don't be a sell out.

  • Whatever your world view is, you should be spending time to think about what that is.

  • So that when you control some of these purse strings,

  • you push that view into the world.

  • I will never judge you, and you should not judge me for what that worldview is.

  • But the point is the more diversity of those views,

  • the more rational actors we have and the more of a balanced,

  • fair system, that is what diversity really means to me.

  • It doesn't mean let's manage back to a quota, it doesn't mean,

  • okay, we need a black guy, a brown guy, we need a few, that's not what it means.

  • This is what it means, right?

  • There are people in this audience that have probably dealt with

  • the same kind of like life that I've dealt with.

  • You have a very unique worldview that matters.

  • In the absence of capital, you're irrelevant, with capital,

  • you're powerful.

  • And then you decide in small ways, in medium size ways,

  • in large ways, right, and it just depends on the scale of capital that you have.

  • And so that's what's necessary now in capitalism,

  • which is that we have to come back to what is it really?

  • Is it an economic system, yes.

  • But it is a philosophy as well, right?

  • And it's a philosophy that says we will vote for

  • the change we intend based on the views that we have.

  • And when you look at the most successful people that operate in these tentacles,

  • that's what they do.

  • Look at the Koch brothers, that's what they do.

  • They have built a network of influence based on capital.

  • Their world view is propagated into the world at an unbelievably aggressive rate

  • that has been compounding for decades, that is genius.

  • It is genius, it doesn't matter whether you agree with their world view.

  • The question is, what's the counterweight to their world view?

  • Can you name one?

  • Can you name a group of people that operate in the exact same way,

  • methodically, meticulously assembling capital, influence,

  • assets who believe the opposite?

  • Irrespective of what you think of the Kochs.

  • You want both views out in the world at scale.

  • Well right now, you have this and you don't have this.

  • And there are many examples of that.

  • And so get the money and

  • don't lose your moral compass when you do. >> You've

  • said that you think VC is a horrendous allocator of capital.

  • So if we need to go get the capital, how do we do it better?

  • Well, we are chipping away, I think other people will copy us.

  • Venture is basically just a bunch of

  • soulless cowards. >> [LAUGH]

  • >> They're well intentioned, but

  • they're well intentioned soulless cowards. >> [LAUGH]

  • >> They have fallen for what everybody

  • else falls for, which you can't blame them for.

  • Which is here is this gold star and they're like, wow,

  • I've gotten a gold star.

  • And then the minute you do that what you do is you start to just choke it really

  • tight and you're like I don't want to lose this gold star.

  • And then what happens?

  • You go risk off.

  • And then what happens?

  • Your behaviors are about protecting the seat of power that you have,

  • the social definition that that seat affords you.

  • And so now instead of being an accelerant of a progressive worldview,

  • you become a retardant to a progressive worldview, right?

  • Your risk appetite shrinks,

  • the surface area in which you're willing to make decisions shrink.

  • And when you are a critical part of the future, again,

  • going back to how I started, the most important part of capitalism is going to

  • be the folks that are driving the technological change.

  • Well, as a class, that's what VCs are supposed to do.

  • But they're by and large, in my opinion, the wrong people.

  • So how do we do it?

  • You have to make it more systematic, you have to make it more data driven,

  • you have to strip out the bias, you have to be open 24/7.

  • You can't have these dumb rules of like,

  • I only do deals if they're within 15 miles driving distance.

  • How can the most important part of, >> [LAUGH]

  • >> I mean, can you imagine if I walked

  • into Zuck's office, Facebook, where I'm like, I have a great fucking idea.

  • Facebook is only going to be open for business Monday through Friday.

  • >> [LAUGH]

  • >> 10 to 5, because we want to get home.

  • Summers we're going to take off, and so but just going to show a 404 page.

  • >> [LAUGH]

  • >> Does it make sense?

  • >> [LAUGH]

  • >> Or Google,

  • we only want you to search during business hours.

  • >> [LAUGH]

  • >> And so you have to be open for scale,

  • you have to be global, you have to do all of these things so that you can get

  • the money into the hands of the people that deserve it and then help them.

  • And by helping them, what you have to do is actually address the core structural

  • parts of business-building that are not done well today.

  • And the best analog is AWS.

  • If you were starting a business 15 years ago, I can even tell you a decade ago,

  • we were racking servers at our data center, because the growth was great.

  • And somewhere along the way, Amazon said, you know what?

  • All of that complexity is necessary, but

  • it's not sufficient to building Facebook or any other great company.

  • So let me abstract that for you.

  • Let me go and replace all of those good people with an API, and

  • I'll take those good people and they'll be celebrated at Amazon.

  • And initially a few people said yes, and people thought in 2007 AWS was a joke.

  • And we used to laugh at it.

  • We were like, why would anybody do this stuff?

  • And now see how fast a decade later you're on the other side of the fence.

  • If any of you guys start a business and you're not on AWS,

  • you would be the joke, right?

  • So what did they do?

  • They basically said, here's all this stuff that's necessary to building a business.

  • You need to do it.

  • You probably don't want to do it.

  • You're probably not going to do it well.

  • And so let me just replace it all with an abstraction.

  • Your company can be smaller, leaner, more efficient, and now the money you raise

  • can be used for things that approximate core product value better.

  • Okay, now in 2017, ask the same question.

  • What's the next set of things that make sense?

  • And in my opinion, what we uncovered at Facebook is what every company needs,

  • which is how do you shift from an anecdotal, political capital,

  • social capital-oriented way of making decisions inside a company

  • to a very precise, unemotional, data driven process?

  • And the way you do it is by building a bunch of data infrastructure,

  • by collecting a bunch of data itself,

  • by helping you optimize your business in a bunch of obvious and non-obvious ways.

  • And so what we believe is that we should take that capability that my team

  • built at Facebook and abstract it for all of you who intend to start a company.

  • So now in the future, what should happen is, you'll go to AWS,

  • you'll get some infrastructure, you'll go to socialcapital.com, and

  • you'll get some insights and knowledge.

  • And it's all interacting via APIs.

  • It's all interaction via endpoints and primitives.

  • And what happens is we can now learn from the feedback,

  • from your data, how you're doing.

  • We can merge those learnings across many, many other businesses.

  • We can find things in some remote part of some company over here and

  • translate that as value for you over here.

  • Wouldn't you want that?

  • Of course you'd want that.

  • What if we could do more efficient customer acquisition?

  • What if we could figure out churn better?

  • So all of these things now are what we are going to bring to the market,

  • systematic capabilities.

  • And I think over time what that does is,

  • again, it moves to a much more progressive view of what capitalism should be.

  • It's not the few that matched a human driven pattern, but

  • it's more about taking big shots, scaling up the money, being able to support people

  • in structurally predictable ways, and allowing them to build better companies.

  • Those companies, I suspect, will be as profitable.

  • But they'll be smaller.

  • They'll be more efficient.

  • They'll have more revenue per head.

  • All the things that you would want over time so that instead of having four or

  • five mega companies, you could have millions and

  • millions and millions of smaller, better run companies.

  • And that's my world view.

  • And I think if we do that,

  • we achieve our goals, all of that stuff comes together if we enable that.

  • So what you're seeing from us is that.

  • And it's really upsetting and disconcerting to the established

  • sort of venture classes, because it up-ends how they've defined their value.

  • It's a very classic inventor's dilemma.

  • They are like, in my brain is pattern-recognition.

  • But we know that that's not true, and the data shows you that that's not true.

  • Simple question for all of you guys that love the allure of Silicon Valley.

  • From the 70s when Microsoft was founded to now, if you look at all the major

  • companies that have been created, major, say over 50 billion,

  • over 60 billion, what percentage of the Series A investors overlapped?

  • You did the A of Microsoft, and you did the A of Google or you did the A of Uber,

  • right?

  • Like for pattern recognition, again, it's non-numerical, right, it's about wow,

  • I like the cut of this guy's jib. >> [LAUGH]

  • >> Well, the answer is it's less than 2%.

  • So what does that mean?

  • Everybody's bullshitting, that's what it really means, right?

  • If you're in a seat, and you have good deal flow, and you have precious capital,

  • and there's a massive tailwind of technological change,

  • over time you get one of the 20, and you look like a genius.

  • That's basically what's happened, and

  • nobody wants to admit that, but that's the fucking truth.

  • It's the truth.

  • So if anybody looks at you and

  • tells you they know what the fuck they're doing, they're lying.

  • They're lying, they are lying to themselves at a minimum, and

  • at a maximum they're lying to you.

  • Because the data does not support that claim, and that's irrefutable.

  • So I don't want to be one of those people that stumble into a company and

  • look back and like, yeah, we were geniuses.

  • I want us to be systematic.

  • And I want us to be able to deploy tools and capabilities that get us closer and

  • closer to that.

  • And that is what if you're again,

  • a traditionalist, freaks you out. >> And that's what allows you to make

  • these much longer term commitments to businesses that are going to

  • address healthcare, education. >> Well, no, that's just because I'm rich.

  • >> [LAUGH]

  • >> But just to be honest.

  • I don't need anybody else's money.

  • Look, this is not a popular view.

  • So the first fucking billion dollars is mine, and

  • then I have to prove it and then other people glom on.

  • But, I mean Many of them started by caring, but

  • I suspect over time, if we end up with a hundred, two hundred or

  • five hundred billion dollars, how much of that last 50 to 60% really care?

  • That's okay, I want the fucking money.

  • I will play the goddamned game and I'll win, because I want the money.

  • because I want to extend my influence,

  • do you know what I'm saying? >> Yeah.

  • >> They want to return, it's fine.

  • >> [LAUGH]

  • >> Yeah, he wants the money.

  • >> [LAUGH]

  • >> because I want to win, I so

  • deeply want to win. >> How,

  • I'm just going to say this exactly as it's coming, how do

  • you keep that power from corrupting you? >> I have no idea,

  • that's the honest answer, I have no idea.

  • I've become increasingly isolated, it's harder and harder for

  • me to connect because I'm so in my own mind.

  • Like, how does this all play out?

  • How do I fundraise?

  • How do I help facilitate good investing decisions which really means,

  • how do I help this really great think about a more platformized approach.

  • And in that, I just get really Isolated and so I don't have a good answer.

  • I like things like this and I like to say the things that I do and maybe it helps

  • you in your own lives, but to be honest, it's very selfish, it helps me because,

  • like it reminds me, when I'm in a place like, it reminds me of these stories.

  • Just reminding myself like I made $4.55 an hour at Burger King,

  • I would get a $50 check and I'd buy bus passes.

  • That's awesome, I just, I don't ever want to forget that and

  • I'll go months and not remember that, but

  • now as I say it, I'm like okay, I started as a good earnest person.

  • And I need to stay a good earnest person, so I don't have a good answer.

  • And I'll tell you of those 150 people, maybe it's a little bit more,

  • but I've met a lot of them, it's really hard.

  • It's very easy to end up really drunk with power,

  • it's really hard. >> I really

  • appreciate that candor because I don't think that we get it very often.

  • And you've laid out an incredible vision for

  • money as an instrument of change, so I'm really grateful that you are here to share

  • it with us today. >> Thank you.

  • >> We're going to open it up now to

  • questions, I'm sure that there are many followups on what you've explored,

  • but really-. >> Any feedback?

  • >> [LAUGH]

  • >> [APPLAUSE]

  • >> Hi, I'm Hi,

  • I'm Dana, I'm second year MBA at the GSB.

  • Thank you for being with us today.

  • But I'm not here to give feedback, but I have a question for you.

  • You just took Social Capital of the public.

  • I wonder what's your plan to run this public fund?

  • How would that be different from running a private fund?

  • >> Or it's just another

  • way to get money >> [LAUGH].

  • >> [APPLAUSE]

  • >> So awesome, yes.

  • >> [LAUGH]

  • >> But, no.

  • So one of the things that I think about a lot is, if I'm in a position to reshape.

  • I've been in a position where I was a part of a group

  • that helped shape psychology of society.

  • That's been a great experience and I learned a lot.

  • And so now in this position what I say to myself is,

  • what are the psychological things I'd love to change now?

  • And one of them is around this idea of patience.

  • And what's counterintuitive and I said this earlier when we were just talking,

  • is that, I think bringing liquidity into companies sooner

  • will actually allow companies to bake longer and more patiently.

  • And so part of what this vehicle is is about bringing liquidity

  • sooner in a company's lifecycle.

  • because if we can take this company, use it to acquire something else and

  • that CEO is now able to compensate their employees.

  • As counterintuitive as it sounds,

  • I suspect that they are less likely to leave.

  • And so now you could have employees stay at a business for seven, eight, nine,

  • ten years, which used to be the historical norm and now it's not.

  • Most of you, probably are thinking to yourselves,

  • well I'm going to get a great job after the GSB.

  • But I should probably portfolio manage my career for the next six or seven years.

  • 18 months here, 18 months there, 18 months there, and

  • then I'll decide what I really want to do.

  • And part of it is because there's an incentive to sort of

  • build this kind of portfolio approach.

  • But I suspect if you knew that liquidity was a more traditional,

  • predictable thing, many people would actually say, you know what?

  • I like these people here, I like the mission of the company,

  • I want to continue to help advance their goals.

  • And now that you've actually solved my compensation problem,

  • I'm willing to commit.

  • So part of this vehicle is trying to turn back

  • the incentives towards people staying at companies longer which I think is going to

  • be required if you're going to try to solve hard problems.

  • because right now, the Silicon Valley attrition rate in most companies is 20%.

  • That means every five years, your entire employee base is turned over.

  • Think about that, how do you do anything valuable,

  • if everybody is new every five years?

  • How is that possible?

  • It's probably not possible.

  • So that's what I would try to change and

  • get the money. >> [LAUGH]

  • >> Hi, I'm Carolyn, I'm also an MBA too.

  • Your sports analogy of kind of buckling down and going into hyperdrive really

  • resonated with me, I also realize that that can go too far.

  • So I'm curious to hear how you make some of the tough calls on whether it's not to

  • participate in the next round of fundraising or

  • whatever that looks like to you.

  • How do you make those decisions?

  • This is, honestly, this is, so yesterday,

  • we spent an inordinate amount of time talking about this.

  • We've made a bunch of decisions that I deeply regret,

  • because they were entirely monetary in nature.

  • And what I said to the team was, I'm fine with us making purely monetary decisions,

  • but we didn't even do those well.

  • It's not as if we had a predictable rate of return on that that said,

  • yeah you now what?

  • We're just going to close our eyes here, double our money, and walk away.

  • And so, the reason I brought that up to them,

  • was I was like our decision-making can't bleed over time.

  • And right now, it's very hard for us as an organization to know

  • how much should be mission driven, how much should not.

  • When should we really double down on things that are not working,

  • when should we not.

  • When should we just give up, because its just either the timing is

  • not the right time and quite honestly I don’t have a very good answer.

  • But if it is the thing that we are now the most

  • emotionally sensitive to, because for example the opposite may be true.

  • So if the diabetes business turns out to work, does the hundred and first person

  • that works at Social Capital say fuck it, we're just going to buckle down and when

  • they're writing checks all of a sudden we're 50 million deep into something that

  • is clearly not going to work was that a? >> So,

  • I don't have a really good answer but it is the thing that I think about the most

  • when do you know how do you know to keep going for?

  • When do you know that it's just too much?

  • When do you know that your decision making is bleeding into a vein that

  • is not constructive?

  • I have no idea.

  • So it's a great question, I think about that a lot.

  • By the way, a lot of things, it's really powerful to be able to say I don't know.

  • I mean, I would just encourage you guys all to just be like, I don't know.

  • This culture, American culture is this weird thing of know-it-alls.

  • Everybody doesn't know everything.

  • How he fuck can you ever learn?

  • When is that going to be valuable?

  • Don't be the, just own that one line, I don't know.

  • It's so powerful.

  • And as I kind of get more abstracted, when I meet people, and

  • I ask them things, it is is so endearing to hear, I don't know.

  • Because behind that is just the self-awareness and

  • confidence that I think is increasingly rare.

  • Now you guys are like, I'm going to fucking grin fuck this guy and

  • just keep telling everybody, I don't know.

  • Don't do that.

  • >> [LAUGH] >> I mean really own it.

  • If you're going to say it, really own it, but

  • I really think it's a very powerful thing to be able to say, I don't know.

  • Hi, my name is and I'm a first year MBA student.

  • I'm also a Canadian who went to Waterloo and my first job was at Burger King, so

  • I really see you as a role model. >> You're like my fucking

  • brother. >> [LAUGH]

  • >> I mean no literally,

  • you look like me too, it's crazy.

  • It's the weirdest thing. >> [LAUGH]

  • >> [APPLAUSE]

  • >> Are you planted, are you an actor?

  • >> I swear,

  • I swear to God. >> Well,

  • you're really freaking me out right now. >> [LAUGH]

  • >> What do you want?

  • >> [LAUGH]

  • >> So my question for you is,

  • a of couple years ago at an event at HBS,

  • you mentioned that MBA students are typically at a disadvantage.

  • With respect to getting capital if they pursue entrepreneurship Do you think that

  • still holds true today?

  • And if so [CROSSTALK]. >> So, that's a perfect example of me,

  • before Cas, which Dean Leven talked about, expressing my bias.

  • And I think part of my bias came from my insecurity about not having a grad degree.

  • Part of my bias was looking at people like you and saying, wow,

  • I just feel inferior to folks like you, I have felt for huge amounts of time.

  • And so it's a perfect example, where even though I can say it, what I said at

  • that HBS thing was me just spouting off, making myself feel better about my biases.

  • And what I would tell you today is, it can matter, it doesn't matter.

  • I would rather say that there are ways of figuring out how valuable you are,

  • that are independent of those traditional signals.

  • Whether you have them or not.

  • So I would say today I've changed my mind.

  • But by the way, that's another thing. >> [LAUGH]

  • >> Changing your mind.

  • >> Is so powerful.

  • >> [LAUGH]

  • >> I mean, fuck, change your mind.

  • It makes for really, really, really, bursty,

  • difficult marriages at times. >> [LAUGH]

  • >> My wife will tell you.

  • But man, is it powerful in business.

  • Change your mind all the time.

  • And it's amazing,

  • again, where you'll find really good scaled leaders want the right answer.

  • And they're fine with capitulation, they're fine with change.

  • They really are, because they just want the right answer.

  • And then you just get so invested in an answer.

  • And then you build up all this superficial logic to reinforce it,

  • versus saying I don't know, you know what, I changed my mind.

  • Wow, another powerful thing I think.

  • I change my mind all the time. >> I think this is going to be our last

  • question. >> My name is.

  • I saw some of the venture work at banks, some of the tech world and

  • you said something about amassing capital.

  • Today, what do you think is one of the best ways for us to amass capital on

  • a risk adjusted basis? >> I mean, the last part is

  • just such as sellout part. >> [LAUGH]

  • >> A risk adjusted base,

  • I don't know, fucking buy some bonds?

  • I mean, I don't know. >> [LAUGH]

  • >> [LAUGH]

  • >> Here's what I would tell

  • you, man. >> [LAUGH]

  • >> I think,

  • if you ask me, who's building the most important,

  • indelible company in the world, I've been very public about this.

  • I think it's Jeff Bezos.

  • Part of what he realized was the value of slow-compounding.

  • So here's my little theory about company value creation.

  • The faster you build it, that is the half-life,

  • it will get destroyed in the same amount of time.

  • And so when you think about a lot of social businesses, that's played out.

  • And when you see what sort of the tops are like,

  • does it take, eight, nine, ten years to build a really great consumer business?

  • It'll take 8, 9, 10, 12 years to destroy it.

  • And we may see the tipping point now in a couple of these businesses.

  • Right now we may be seeing it in front of our eyes, regulatory or otherwise.

  • So why is that an important statement?

  • Amassing capital to me, is about finding a smart,

  • useful solution to a very hard, practical problem.

  • And being slow and methodical.

  • And again, that's what I'm saying, you have to rewire your brain for

  • that to be okay.

  • How do you, in year two or year five, [COUGH] come back to this room for

  • your, what is it called when you get- >> Reunion.

  • >> [LAUGH]

  • >> [COUGH] And say I'm still

  • working on the same thing, and when somebody says, and how is it going?

  • You have the courage to say, it's hard, I haven't figured it out yet, I don't know.

  • But if you figure it out and you have this moderate growth, moderate compounding,

  • that is the key, that's cool.

  • I look at our returns and it's so funny, because you can get so

  • enthralled by IRRs in our business.

  • And I have friends who run other organizations, and

  • they're like, we posted 92% IRR, and I'm like,

  • well you can't eat IRR. >> [LAUGH]

  • >> What does it really mean?

  • And when you unpack it, what you realize is, fast money returns can completely,

  • really decay long-term thinking and sound judgment.

  • And so I'm like wow, I would really love to just compound at 15% a year.

  • And the reason is,

  • because if I can do that for 50 years, that's 250 fucking billion dollars.

  • It's some crazy number, it's just enormous, so it's slow and

  • steady against heart problems.

  • Start by turning off your social apps and giving your brain a break.

  • because then you will at least be a little bit more motivated,

  • to not be motivated by everybody else fucking thinks about you.

  • Do you know what I'm saying?

  • It's hard, think about how all this stuff plays together.

  • How does trying to get, posting your fucking waffles online,

  • relate to me starting a business and

  • accumulating capital. >> [LAUGH]

  • >> This is wiring your brain for

  • super fast feedback.

  • It's the same brain you're using to build a company.

  • Don't think they're not the same. >> [LAUGH]

  • >> Do you know what I'm saying?

  • No, yes?

  • No? >> [LAUGH]

  • >> Yes, yes, right?

  • You have one brain!

  • So you're training your brain here, whether you think it or not,

  • whether you know it or not, whether you acknowledge it or not.

  • Acknowledge that these things, where you're spending hours a day,

  • are rewiring your psychology and physiology.

  • In a way, that now you have to use to go and

  • figure out how to be productive in the commercial world.

  • So if you don't change this,

  • you are going to get the same behavior as over here.

  • Change this, there's a reason why Steve Jobs was anti social media.

  • I am telling you,

  • I'm not on these fucking apps, I'm not him by any stretch of the imagination.

  • But I am proactively trying to rewire my brain chemistry to not be short

  • term focused.

  • I'm telling you they're linked. >> Kumar,

  • thank you so much for being here and enlightening all of us.

  • >> [APPLAUSE]

[MUSIC]

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