Appetite for Change

Since our founding, we’ve never stopped searching for better and better ways to help entrepreneurs win. To do this, we’ve consistently challenged ourselves to explore what the future might look like. By definition, the future may be radically different from the present way of doing things in Silicon Valley. In my post from a week ago, I talked about the product bets we’ve placed that have started to deliver powerful results that we’re now doubling down on — including tools like CaaS to help us find great companies as well as software and services like 8-ball to make them even better.

In parallel to investing in product and engineering talent to build out the Social Capital Platform, I also kicked off a process to test if a traditional approach to scaling our asset base should be part of this solution. It seemed like a reasonable path in the era of Softbank’s Vision Fund and Sequoia’s rumored mega-fund. To execute this, I brought on two leaders: Marc Mezvinsky as Vice Chairman to lead our capital formation efforts, and Tony Bates as CEO of Social Capital Growth. We also explored what a Credit fund that could provide an entrepreneur with less dilutive forms of capital would look like.

We felt emboldened to try all of this because of our track record in venture capital. Our venture capital funds are at the top of their class and there is little doubt that some of the startups we have backed will redefine this current generation of tech companies. If there was any time to pursue these new strategies, it was, in my opinion, now.

Friends and mentors told me blindly scaling our asset base would distract me. Focus on technology, they said, and stick to what makes you unique vs what makes you the same.

I initially thought they were wrong. And so we embarked on trying to do both: build great products and scale assets across multiple new funds, all at the same time. It’s this last factor that is hard. Ironically, we tell our entrepreneurs all the time to do one thing really well, but found ourselves not following our own advice.

As I internalized this and we got closer to closing some of these new strategies, my gut was telling me to go back to our core. It took some time, but we decided not to pursue the Credit effort, and also to refine our Growth strategy to largely focus on later stage investments in some of our best portfolio companies rather than generically compete in increasingly excessive growth-stage auctions.

Refining our Growth strategy to what will be our second Opportunities fund means there is little point in having a separate Growth leadership team, because doubling down on proven winners from our venture funds is best carried out by our venture partners, since they know these remarkable companies and their founders better than anyone. As such, with this shift, the scope and roles for Marc and Tony became very limited compared to what they and I had originally thought, and we collectively came to the conclusion that it makes sense for them to transition to new challenges and opportunities outside of Social Capital, although we’re exploring ways they can still be involved in our future success as Board Partners or advisers. (Update: I want to clarify that Marc and Tony were my partners in refining and focusing our strategy and, given that direction, independently made the decision to transition into Board Partner roles. Tony will also remain Vice Chairman of Social Capital Hedosophia Holdings. I am grateful to them both for their continued leadership and am excited to have their ongoing help and insights within our portfolio companies going forward.)

It is tough to part ways with great colleagues like Marc and Tony. I am grateful to have had the opportunity to work with them, and know they’ll go on to do great things — they are A+ and I’m sure we will work together again in the future.

For the foreseeable future, we will stick to what we are truly passionate about: high-touch venture investments and building out our Platform that provides these entrepreneurs with tools and software to build better companies.

The good news is that what we are passionate about is also what we are best at. Our data-driven tools and platform technologies are gaining increasing traction, with CaaS especially promising. Our way of looking at businesses is quickly become industry standard. It’s time to double down on all of these things. Said differently, I have realized that excellence doesn’t necessarily come from the novelty of a constant stream of new things, but rather focus and refined repetition of the things that are at the very core of our organization.

One of our core values at Social Capital is having an “appetite for change”. We are continually challenging ourselves to make difficult decisions in ambiguity, and to have the courage to change our minds and course correct, with the knowledge that the path to achieving our mission is non-linear. Oftentimes we get these decisions right. But sometimes we get them wrong. And in these moments, it is really important to shine a light on them so we can learn for the future. I am grateful to the Social Capital team and our LPs for navigating this shift with their customary support, focus and determination.

I also want to personally thank Marc and Tony for their contributions. And I hope you continue to follow our journey in complementing the traditional high touch venture investing model (which we remain committed to and passionate about) with increasing levels of automated tools and software to empower entrepreneurs to achieve their goals.

Onwards.