The future of what we’re trying to build is something that says, “Wherever technology will either create positive disruption, or create some kind of negative implication, we want to understand.”
The minute that you say that, two things happen. First, your team construction is totally different.
There are no financial people at Social Capital. There are product managers and engineers that allocate capital as a byproduct of really good decision making. Those people needed to have done something really important. At Facebook, at Google, at Apple. You name it, we cherry-picked great fantastic people that understand the technology landscape.
The second: we are functionally agnostic about where we allocate the capital. We do seed investing, we incubate businesses, we’ll invest in traditional Series A, we do growth, we have a huge hedge fund. All of that is because that is a tactic of a strategy, and what we try to do is to become really good strategists.
The question is, how do you [become really good strategists?]
The way that we do that is not dissimilar from the team I was a part of at Facebook, which was very data-oriented.
Public institutions have a way of normalizing their measurements. Stock prices are a way, but mostly, gap financials are a way. There’s a very simple way to take an auto industry company, an insurance company, and a healthcare company and say, “Which one is better?” You can make those tradeoffs. But how do you trade off Airbnb, with Pinterest, with a Series A startup that I just invested that’s building a machine learning ASIC?
The thing you have to do is look past cash flows because oftentimes they don’t exist, and look underneath the hood at how these companies really operate. What that requires is a deep technical understanding of how products get built, what is a leading indicator of success, what is a lagging indicator, and putting those together in a complete picture of company formation.
So we’ve taken an agnostic view of capital allocation, we’ve pulled together 35 incredible product managers, engineers, people who know how to think about building really disruptive things. We’ve collected enormous amounts of data. From third party sources, as well as all of our portfolio companies, as well as all these companies that want to work with us.
We use that to create a mosaic that allows us to make, reasonably intelligent thus far, and highly productive capital-allocating decisions.