High and Low Touch

By editor on February 19, 2018 — 4 mins read

The heartbeat of our business is our traditional venture investing. We have done a really good job of partnering with entrepreneurs at the earliest stages to build vibrant companies, in some really interesting areas. Companies that you guys know where we led the formal Series A’s like Slack, and companies that are getting baked like Groq, companies like Glooko, Syapse, etc.

Our “high touch” venture business is amazing. But I kept again, asking the question, guys, the rules of the game are changing. More and more entrepreneurs, whether it’s because of choice or whether because of non-optionality, are not going to be in the United States. There also increasingly not necessarily going to be in Silicon Valley and New York City because it just costs too much to be here. So how do you find these people? How do you go to where they are?

The analogy is the following: About a year ago, I was in a situation where I thought about getting a massive line of credit from a massive bank.

I am risk on all the time. I’m not afraid.

It was a $1 billion credit line, and I’m sitting with the CEO of the bank. I’m like, I want $1-2 billion of credit, I might do whatever I want with it, I’ll secure it against my [personal assets]. Let’s go.

Now, when somebody asks for that amount of money, you get a meeting. As you can imagine. But I’m the same person that, two weeks earlier, applied on that same bank’s website, for a credit card, because I needed to give it to our au pair. And so, that was a $500 credit decision.

It’s the same institution, one is high touch, one is automated decision making. And my takeaway from that process was, well isn’t that how venture should also work?

When you want to raise a $10-15 million Series A, of course we want to spend an enormous amount of time with you, get to know you intimately well, forge a relationship, and work together.

But if you’re odd around the world or you can’t necessarily get into the United States, but you’re starting something that’s vibrant and it’s working, why shouldn’t you be able to describe your business in a really logical, honest way? Numerically, and have people be able to back you and support you?

The way that we think about this service, which we call “Capital-as-a-Service,” is an automated compliment to everything that we do that is our high touch business. And our high touch business will always be the center, it’ll always be the heartbeat. We have a group of eight people, by the way, half men half women, I mean kick-ass team; they fucking rock.

And then we have this other business now, which is, “Hey, if you’re anywhere in the world, 24/7/365, and you want money to move your business forward, just fill out the form, and we promise to get back to you right away.” In a lot of the cases, we’re able to say yes.

And that’s just a transformational thing. We’ve seen 5,000 companies in 7 months. Less than 100 [checks]. Our goal this year is to write 100. Our goal next year is to write 1,000. And then our goal every year thereafter is to write 10,000 checks a year. Time will tell whether we can pull that off. We don’t know whether that’s gonna take an extra four years. We don’t know how we’re going to fund it.

Think of all the companies that may want to support us in this process. Think of all the governments that may want to support us in this process. Think of all the philanthropies, all the foundations. Think of all the sources of capital. The World Bank, the IMF, all these people who want what we can enable in some small way, which is people who can take control of their own futures. To self-actualize, to be economically self-sufficient, everywhere in the world.

We know for a fact, when you do that, on a need-blind basis, more women, more minorities in the game, that never would be in the game, that’s the path to economic stability, and that’s the path to prosperity. That’s the path to peace. That takes 25 years to build, but you gotta get these people in the game. They’re at the starting line, screaming out that they want your help. And so we’re like, “Yeah, let’s go do it.”

Those are high-class problems. If we’re in the situation where I have to beg, borrow, and steal to find people who want to support entrepreneurship all over the world, so be it. I will be on a plane the rest of my fucking life.

https://www.youtube.com/watch?v=7TOnKXBabpM (17:00)

Posted in: v2

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.