Being First

By editor on January 28, 2018 — 2 mins read

We’re just very sensitive to not investing in the tail; we want to be first. The sign that you’re first is when you’re doing deals and you’re making investments in companies where there is virtually nobody else.

My bellwether is I have a few mentors that I really look up to. If you spend any time with Peter Thiel, this guy is in an intellectual league of his own. Vinod Khosla, intellectual league of his own. John Doerr, same thing. These guys are thinking about things in a way that other people just don’t, because they can’t.

Talking to them about investments, and you’ll see a sparkle in their eye and they get engaged, and it makes us realize: this is where we should be.

For example, in education: We have a whole thesis around education. You want to deconstruct education. How do you basically manage the cycle of human capital?

Right now, the biggest problem in education is that there’s all these jobs, and all these unemployed people, and there’s a massive skill gap. It’s not a recession with companies that aren’t willing to hire, it’s that last year we graduated 89,000 visual artists, and 29,000 computer scientists. Nothing against visual artistry, but we need these precious skills that are, in many ways — the blue collar work of the 21st century is to be a coder.

We built a product that goes to attack that. We found this incredible entrepreneur, Ryan Carson, who built this company called Treehouse. Who do we run into? Reid Hoffman. You see a quality guy like that, who’s thoughtful and generally been progressive and a few steps ahead of the curve.

I run into Reid, and we go back and say, “Wow, we’re clearly in the right area.” Reid and I led that deal together. And Ryan is crushing it! By the end of this year, he’ll have the largest computer science faculty in the world, paying him to learn. In turn, we turn around and we can give these kids the ability to get jobs at all the great technology companies. You’re matching the job requirements, you’re generating downstream GDP, and eventually you’ll allow these people to capture more of the value which will change the social incentives.

Education is a path to control GDP creation. Engineers create immense GDP for the world. Right now they don’t capture the percentage that they actually generate. But when you have more democratic systems and you create more of these precious resources, and then you’re the marketplace or the system that allows them to be in a position to be economically productive for companies, you can start to transfer a lot of that value back to the individual.

That’s a multi-hundred billion dollar company. It reshapes capitalism. (48:00)

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Editor's Note

These are Chamath Palihapitiya's words. They are probably some of the best thoughts on VC, business, and life, but were scattered around the Internet. They live now in this archive.