Social Capital Vision v1

Systemic Inequity

When you see things like Arab Spring, the riots in Paris and London, you see hundreds of thousands of people in the streets in Moscow, you see people standing up against the FARC, you see people in Occupy Wall Street. You think to yourself: Well, these are just spots of dissent. It’s not. They’re all correlated. And they’re correlated, in my opinion, from a sense of massive inequity that the majority of the world feels, versus the very few people who seem to have an enormous amount of equity. And then a deep-seated incentive to make sure that they translate that to their siblings, and their loved ones, and their kids.

That inequity now becomes systemic.

The way things get inverted, and reverted back to the mean, is through systems like this. [Systems] that create transparency, that create democratization. It is a trend much bigger than any one product.

For society to stay in a balanced mode, where we don’t devolve into anarchy, where Occupy Wall Street doesn’t devolve into violent protests every day in every city.

How do you make sure the violent problems are contained? You need to address the root cause. Part of the root cause are the systems that create the inequity in the first place. So I think things like Wikileaks, Twitter, Facebook to some degree, can help shine a light on it.

When you look at the trajectory of the world, what’s interesting is that it has this amazing regenerative power where it always used to go in cycles. Certain people would be in charge, they would generate a massive amount of wealth. But then, they did something that then became not as important and someone else came about. They pass along power, they pass along wealth creation. The robber barons passed their wealth on to their kids. Then the industrialists were in power. And now I think we’re starting a generation of technologists being able to really drive systemic change.

In all of these things, the problem is that those cycles are taking longer and longer, because there’s so much plaque that’s built up in the system from every generation that’s come before. That’s why it’s even more important that this disruption happens. (27:50)

The Trillion Dollar Problems

Bill Gates has saved 7.5 million people’s lives. That’s incredible. I haven’t saved one life. Practically saying, “I gave someone a polio vaccine that allowed them to live.” I can’t say that, so I have no idea what that feels like. Even one life is amazing.

Another person, Bill Clinton. One of my heroes. That guy’s unbelievable. The amount of money that he’s generated and then given away, to these problems that, frankly, had no solution until he got there. Practical programs to distribute retroviral drugs in sub-Saharan Africa. Figuring out how to increase yield for farmers in Africa. These are very practical real world problems.

You can say very cynically, “You’re saving these people’s lives, but now what life can they live? Can they have a job? Can they be educated? Can they actually achieve wealth?”

Clinton’s now solving this next phase: let’s give them a path to productivity. These sorts of things were part of what precipitated me leaving and starting the fund is that I think these are the broad problems that need to get solved. They’re the problems that, when they are solved, two things happen:

One is, you can actually make immense amounts of money, because these are the trillion dollar categories of the world. But it’s also the areas where you have massive societal change and impact. There are very few things that combine the two.

These problems get solved via technology. In order to attract the best technologists, we fundamentally are for-profit animals. This is what the beautiful thing is about the generation below us. They really innately feel this coupling of value creation and impact, moreso than any generation I’ve ever seen…

That’s a practical reality, which wasn’t a reality before. The way that you could do good before was purely through non-profit. Now, there is a really meaningful way to drive systemic change in a for-profit manner. (30:30)

Unchanged Industries

When I honed in on this thesis, what I said was, one level beneath it: If we want to disrupt the systems of society that are the most broken, and we want to empower the [highest] number of people, we want to build the next trillion dollar industries, where do those exist?

You have to now finally attack those pillars of society that haven’t changed for decades. Those are the usual suspects: healthcare, education, financial services. These are all multi-trillion dollar areas.

These areas are interesting because they’ve been the least affected by technology. I think the definition of the solution is different. In many of these, particularly healthcare and financial services, the belief is monolithic, bulletproof, software is the only solution. We’re saving people’s lives. We’re pricing derivatives. Where’s the mainframe? Where’s the 1,000 QA people who have been validating this thing for a year and a half?

In some respects, it’s a fair criticism. But there are these rapid models of iterating and developing products now, combined with the fact that there’s ways of starting companies that obviously dramatically lower capital needs in the first place, that allow us to take very different approaches and try some disruptive stuff. We’re at a point where those areas are going to change pretty profoundly.

I took a very different approach: most venture funds are raised from pretty established and very typical sources of capital. University endowments, pension funds, funds of funds. The problem with them is that they don’t necessarily universally either a) believe in this change, b) want to see the change, or c) want to try to take the risks that are necessary to drive the change.

It may actually have a huge impact. When you’re sitting at a school that’s matriculating half of the Wall Street managing directors, who are then giving back billions of dollars to your endowment, how badly do you really want to see Wall Street change? It’s a difficult cognitive dissonance, in some ways.

I went to people that believed in this thesis and people who represented the types of change that we wanted to see. There are four constituents in the fund. The first are what I would call the philanthropists. People who, over the course of their lives, have, as a byproduct of working on really interesting problems, have generated a lot of wealth and are now focused on finding ways to, frankly, create a really constructive legacy as they pay it forward.

The second group are people who have an immense ability to basically put capital to work in really successful ideas. The best private equity person in the world, the best hedge fund person in the world, the best angel investor in the world, the best VC in the world: all of these individuals are partners in my fund.

The third group are technologists. People with a track record of building fantastic products.

The last are corporate partners. People who are on the right side of history, and are trying to propel this change forward.

It’s a very exclusive group of people who I immensely respect, and who I look up to, who have given me great feedback. It’s a group of people who will do really powerful, disruptive things in the world for positive change. The fact we can coalesce together in one vehicle is really important. (34:05)

Being First

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)


The firm is basically with this premise: it’s about deconstructing these extremely calcified senses of power. Society as we define it right now is breaking at the seams. All of us live a life of just total frustration, and it’s because none of us trust the things that we were supposed to trust to help make the world a better, more useful, interesting place. And so, the best thing that we should be doing is spending our money and our time to basically destroy that, and to rebuild things in a much more equitably interesting way. (3:28)

Power to the Edges

We took a step back and we said, “Where does the world need to be improved the most?”

And we defined “improved” in the following way:

How do you rip out power and give it to the people at the edges, and then how do you allow them to do whatever they want to do?

That could be some really bad stuff. As an example, I spend a lot of time right now in Bitcoin. And every time anybody knocks me about Bitcoin, they’re like, “Oh Chamath, what about if like, Al Qaeda funds a terrorist plot using Bitcoin…”

I don’t know. Well, guess what? They fund that shit with fucking US dollars today. So, will bad stuff happen? Probably. But that’s the cost of progress, unfortunately. You never get a perfect thing. You’ve always gotta deal with the half a percent of crappy use cases. Great, local and mobile and all this stuff is a wonderful thing. Yeah.

Unfortunately, for example, with that scout application, like, did some bad stuff happen to young kids? Yeah. That’s really bad. Does that mean nobody should be building anything local, or mobile, or social? Probably not.

And so this is the double-edged sword.

This goes back to building good products, and like, what are you really trying to do? I’m not trying to exploit a window in building an app in local mobile social. I couldn’t give a crap about that stuff.

I would really like to go out and build stuff that, again, if you allow more and more people to live, if you allow them to also have confidence in themselves around the skills that they have, versus the degree, so that you deconstruct the hierarchy in the world, and then you give them access to a lot of money.

In an unbiased way, you unlock potential in people, you’ll find entrepreneurs where you never expected them to be, you’ll find solutions to problems that you never thought were possible, and the world moves forward.

And forward will include some gnarly stuff that people can’t really grok or support. Tough shit. That’s the cost of progress. (52:07)