Inefficient System

By editor on February 20, 2018 — 4 mins read

Democracy is under attack. And the reason is because, democracy creates a framework of personal freedom. You and I can basically do whatever we want. And the net result of that is both of us decide to allocate our resources, however which way we choose. Your time, my money, people’s abilities. Some people become foremen, some people become nurses, some start companies, some become artists. Right?

And in that process, society becomes more mature, self-actualized, there’s more peace, there’s prosperity. So it all works. So it sits on top of lubricant called capitalism. And the problem today is capitalism is just fundamentally broken, because of two reasons:

One is the law, so in countries like the United States we’ve bastardized and perverted the ability for a few of us with capital to completely change the system to the way that we want it to work. And so we can walk around in our own little utopic world and say, “This is how I want this system to work, that system to work, and I can make it so.” And there’s a couple thousand of us that can do that.

And the second part about it, which I think is fundamentally broken is this idea that in that world where the law is perverted, you have technology which then accelerates that even faster than you could have ever imagined. We have these articles today, if you’ve been reading the paper: autonomous vehicles. On the one hand it’s like wow, autonomous vehicles are good and there’s two or three companies that can invest and make it so, and on the other hand there are four million people with jobs related to driving just in the United States. Well if those four million people went out of work, you know, the unemployment rate is 11%, oh, by the way, most of those people are men between the ages of 22 and 34. Well, if, you know, four million people between the ages of 22 and 34 were hanging around with nothing to do and we were in Syria, that would be called ISIS.

And so you have to really internalize, there are structural things that are happening here, that to me says, we’re in an inefficient system.

So I believe part of our responsibility is to reallocate capital more equitably. And so I try to find systems that I think represent inequity that are broken where I can, with a reasonable allocation of capital, fix them to be more equitable for as many people.

So, in that: health care, so the binary act of living and dying.

Education: how can you acquire skills so that you are that much closer to being self-actualized and the ability to pursue your own passion?

Financial services: so how do you get access to the functional lubricant that allows you to do it, which is money, for better or for worse?

And then we have a couple of other areas. We have this area that we call Frontier which is a catchall for everything absolutely crazy that we can’t bucket eloquently.

We do a lot of stuff in enterprise software. Why? And people say, “In that grandiosity where does enterprise fit in?” Because all of us spend 10 hours in a company and most of us interact with horrible shitty software, it’s the equivalent of being stuck in traffic except for 10 hours.

And so you get home and you’re just angry. You’re angry at your kids, you’re angry at your wife, you’re just angry at everything!

If you’re gonna fix the system you have to fix it at a moral and ethical level, but also at a very practical level. So those are like four or five areas that we spend inordinate amounts of time.

So, healthcare. We love chronic disease. Why? Because that is a very tractable set of conditions that we can solve in our lifetime. Diabetes, asthma, obesity, heart disease.

In education, we love this idea of breaking this notion that the only way to get a good job is through very roped, linear models of pedagogy and education. And for many, many people, we should be able to find a way to celebrate the vocational worker as much as we celebrate the graduate from Harvard. Because there are eight billion people in the world and there’s only ever going to be 1500 graduates from Harvard a year. It cannot be that everybody else has no value.

So, there are all these systems now we need to rework, but it’s done in this lens of we’re gonna use our ability and our place in the capitalism food chain, because we’re, for better or for worse, closer to the top of that totem pole, to try to help democracy get a little bit going; it’s a little sluggish right now. It’s not doing what it was supposed to be doing. And it’s playing out, by the way, in real time in the United States right now.

We’re eight weeks from what could be a cataclysmic, train wreck of an outcome, but when you understand why that’s happening, those are real people, that are functionally frustrated because they believe a system they’ve invested their whole lives, that their kids go and fight for, that they die for, isn’t working. And so those are the kinds of things that [we’re interested in], and how we frame, how we allocate our time, and our money. (9:35)

Posted in: Capitalism

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.