https://www.recode.net/2016/3/21/11587128/silicon-valleys-homogeneous-rich-douchebags-wont-win-forever-says (42:00)

Some VC firms will create the bravado of consistently winning. Let’s look at the last 15 years. We’ve had Google, Facebook, and Uber. What’s interesting about that is that there has been no consistency of winning. Sequoia and Kleiner were in Google. Accel and Greylock were in Facebook. Benchmark is in Uber.

To me what it says, is that the reason there’s such a divergence, and no consistency and repeatability, is that the investor class and entrepreneurial class continually gets out of whack. The more and more it gets out of whack, the more and more these outcomes become more randomly distributed.

As a smart business person, I think the challenge is to close the gap.

I think it’s ridiculous to want the entrepreneurial class to look more like the investor class. It should be the exact opposite. We just set about understanding that quantitatively, and then you can solve it.

Most people in the investor class don’t want to solve it. They look like a very old, dated representation of what success looked like.

It’s a lot of ego-driven bravado.

https://www.recode.net/2016/3/21/11587128/silicon-valleys-homogeneous-rich-douchebags-wont-win-forever-says (43:20)

Over here you have Benchmark: five, six guys who are unbelievable practitioners of their craft, building a hugely successful, impactful business, but $200–$500 million dollars at a time.

Then there’s what we’re doing: multi-asset class, everything from seed to eventually private equity, credit, public hedge fund — but the overlay is tech. You can take down tens of billions of dollars of capital. Then you have market pricing power and the ability to help really shape outcomes. That’s going to be necessary in some of these really hard markets where you can’t just write $5 million cheques and help these companies.

You have to go and sit down with Ford and say, “Let’s create a program together to solve autonomy.” You have to sit down with the big HMO’s and say, “You want to do something in precision medicine? Let’s reinvent the entire stack together.”

https://www.youtube.com/watch?v=Nqy6CcU84Xs (16:00)

They want the return. It’s fine. I so deeply want to win.

https://www.youtube.com/watch?v=PMotykw0SIk (40:15)

At the same time, what happens is the public markets provides the investor, in this case the LP, a very reasonable way of actually getting almost the same return, if not in many cases an equivalent and better return. And so now, the LP in these funds have to ask the following question: Well, I can lock up my money for what is effectively 10, 12, years now because these companies take longer to gestate, and get basically the same return I can for being in a highly liquid public market security. So from any sort of logical risk-based assessment for a limited partner, I think what happens is there will be a culling. And any of these folks that can’t have differentiated returns, you are not going to take on the risk of being illiquid, especially if you think about in a world that is probably going to become more complex, more dynamic, less stable, you want to have massive amounts of liquidity because you don’t know when the dislocation is going to happen. In a world like that, I think all of these middling, also-ran, firms go away.

No, I think it’s irrespective of AUM, it’s just folks whose approach is just sort of dated and not current.

You know, we’re nine people, we’re gonna try to raise the next fund, we’re gonna chop it up amongst ourselves, it’s about us and we make the best decisions we can. Which again is okay, but again I think LPs really start to push back. Separately what happens is you’re going to have different folks who have different approaches.

I suspect the most disruptive entrant into the venture landscape could probably be Google, Microsoft, and Amazon. Why? Because most of the businesses are built on top of them. It doesn’t take much logic to view a world where Amazon says, “Well, I’m renting you the computer, I’m renting you the storage, I’m renting you the algorithms, I’m renting you all of this stuff — I might as well give you some money along the way as well.” They do that with credits, but they don’t take it to the next level. This would be a function of AWS, it should be a thing in a marketplace.”

https://www.recode.net/2017/8/28/16212318/venture-capital-chamath-palihapitiya-social-capital-investing-vc-kara-swisher-recode-decode-podcast (29:00)

Everyone said no. Meaning, they didn’t even respond to my mail, except two people. They probably don’t even know this to this day.

I got a really nice, thoughtful, letter from Vinod Khosla, and a really nice, thoughtful, letter from John Doerr. The only thing I regret is not having kept those letters.

https://www.youtube.com/watch?v=VHslS0QPMSc 12:40

Taking lots of risk.

https://www.youtube.com/watch?v=VHslS0QPMSc

https://www.recode.net/2017/8/28/16212318/venture-capital-chamath-palihapitiya-social-capital-investing-vc-kara-swisher-recode-decode-podcast (12:35)

And then what happens is, all these investors who otherwise, they were not sure I was a cultural fit for, I wasn’t sure they were a cultural fit for, they all capitulate.

What’s the quote? It’s like, it was a Billy Beane quote, like, “We’re not hiring these guys for how they fill out their jeans, we’re hiring them for a bunch of statistical things.” I think now [the gut instinct] is more of a physiological bias of men.

There is just a need to act with bravado, especially when you have power. I think men treat power very differently, frankly, than women do. I think men have a very hierarchical way in which they impose power, so it’s hard power. I think they love the bravado of that idea of, “Oh, my gut told me.”

I do believe that your limbic system is very powerful. But the idea that they just knew it at the time — come on, it sounds cute. Nobody knew.

https://www.recode.net/2017/8/28/16212318/venture-capital-chamath-palihapitiya-social-capital-investing-vc-kara-swisher-recode-decode-podcast (32:52)

That’s where you see the true best of the best. The Warren Buffetts of the world. The Seth Klarmans of the world. They show you that even as you amplify capital, you have to have the precise mental framework to continue to be concentrated. That is where to emotional and psychological mettle of an investor is tested, and most people fail.

https://www.youtube.com/watch?v=Nqy6CcU84Xs (17:45)