Unchanged Industries

By editor on January 28, 2018 — 2 mins read

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.

https://www.youtube.com/watch?v=VHslS0QPMSc (34:05)

Posted in: v1

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.