Chamath Palihapitiya – CEO of Social Capital, Chairman of Virgin Galactic, and part-owner of the Golden State Warriors is an amazing man, and this excerpt from his recent interview with Yahoo! Finance describes a lot of his business acumen. I have long admired his approach to investing, and met him at Jason Calicanis Launch Summit in 2016. Chamath takes a great approach to Venture Capital, and now his company has morphed into a Holding Company with some of the largest names in Tech included in his investment portfolio. Palihapitiya also has been a huge advocate for Bitcoin, and has been compared to Warren Buffet, although Buffet has derided Bitcoin since it's inception.
Below is the opening to his 2019 Letter to Shareholders of Social Capital:
Eight and a half years ago, we started Social Capital to tackle hard problems like cancer, space exploration and climate change at a time when few investors were doing so. While many investors fawned over social networks, photo-sharing apps, and other consumer-oriented investments, we invested in healthcare, education, and frontier technology businesses like space exploration and artificial intelligence. Many of the companies we backed were initially unable to raise money from other institutional investors until we stepped in to give them the long-term, patient capital they needed. We hoped that we would be rewarded for these bets in good time. In 2018, this hope started to become a reality and we concluded that the traditional approach of fund management and asset gathering wasn’t going to be enough. It would definitely generate huge fees to put in our pockets but, ultimately, not make a meaningful impact in achieving our mission. This is a difference that makes a difference in today’s increasingly complicated world and so we iterated. We closed ourselves to outside capital and became a technology holding company in mid 2018.
As we write to you today, we look forward, optimistically, to the future despite its intermittent calamities. As the world changes, our tactics will evolve but our goals will remain the same: we want to empower entrepreneurs to solve the world’s hardest problems while generating compounding returns, both economically and socially, for the long term.
What the hell is going on -
Imagine a time of incredible economic expansion and wealth creation punctuated by periods of class warfare, strife and political upheaval. During the Gilded Age of the 1870s-1900 we saw all of these: rapid economic growth, wage growth, immigration and expansion of social programs like education with the standardization of primary schools and the emergence of high schools. At the time, the major industry of growth was the railroads which in turn led to technological expansions in factories, mining and farming. As is the case today, Wall Street played an important role during the Gilded Age as a financial intermediary and financed everything including a bubble in railroads which eventually burst. While this economic expansion was happening, immigrants fled to America in droves and a class division started to emerge with the 1% owning more than 25% of all property and the bottom 50% owning less than 4%.
If you replace ‘railroads’ with ‘technology’ and re-read these last few sentences, does any of this sound familiar?