10 Lessons from the VC Other VCs Love to Hate
Chamath Palihapitiya on Entrepreneurship, Leadership, and Life
I first heard about Chamath Palihapitiya when I started my first job in November 2012, as a plebian comms muckety-muck at one of his portfolio companies, Xtreme Labs.
We’ve never met before, but in the years that passed, I’ve learned a lot from his video and podcast appearances. In addition to the insight, it’s his spirit that really stands out. He says:
What I realized along the way was that I didn’t want to be some sort of bitter minority guy who’s like, “I’m getting fucked.” I didn’t get fucked. I got really lucky. But I empathize with that struggle. I empathize with the struggle of women, of other minorities, of LGBT.
But, people can’t eat empathy. So, armed with the swath of resources and skills he’d gained from his times at Facebook, AOL, and Winamp, he built Social Capital to do something about it.
In 2015, my friends and I put together a book of Kanye West quotes. Around then, I also came across the resurrected Marc Andreessen blog posts put together by Cameron Koczon from Fictive Kin. What a great format! I decided to combine those two ideas…
Chamath’s speeches always resonated with me and brought out the best YouTube comments I’ve ever seen, but many of them were scattered into long videos or podcasts. I wanted a single place to read the best snippets. So in the past few months, my team and I made the Chamath Archive.
Here are just a few of the most important lessons that I learned from Chamath over the past few years. I hope they inspire and inform you as they did me:
1. Often Wrong, Never in Doubt
Whenever I show friends this archive, this is the quote I almost invariably bring them to:
I make a lot of mistakes, but to be honest with you, this may sound so sick, I don’t really think about them that much. I don’t have that great big thing that I regret. Shit happens. I get a lot of stuff wrong. Most of the time I’m wrong.
“Often wrong, never in doubt.” That’s what I say. And I say it to remind myself because it’s okay. And I don’t get caught up, you don’t need to be right.
I’m not ashamed of being wrong. I don’t know what my biggest mistake was. I know that I’ve made a lot of them. I should be making more in the future, if I don’t, that’s death.
He’s also tweeted this a bunch of times:
At first glance, it sounds ridiculous — an elegant excuse for someone who hasn’t done the work to have an opinion to speak. (“He’s someone who never lets complete ignorance of a subject get in the way of having strong opinions about it.”)
But, if the person says this about themselves, this mantra becomes refreshing and dead useful for a few reasons:
- Being wrong fast and course-correcting to be right is often more efficient than being right. (“Any decision is better than no decision.”)
- Confidence, certainty, and energy are really difficult ingredients to cultivate. They’re the glue that holds great relationships, people, and teams together.
- If the person says it about themselves, that means they’re aware they’re often wrong — which hopefully means they’re willing to admit it and change.
Fortune favors the bold. This mantra gives the sayer the energy they need to move forward, and the understanding that they could very well be wrong. It’s reminiscent of, “Strong opinions, weakly held.” There’s no shame in it. It detaches the ego from the need to be right.
(Side note: I haven’t checked out this book yet, but it sounds interesting!)
2. Life is Impermanent
When I wrote for Lifehacker, I wanted to talk about death. Nobody likes reading that stuff, my editors said. And that was that. (In hindsight, I’d reframe it as mortality.)
But life is really short. This year has just started, and I lost three loved ones — my good friend from school, my dog, and my grandmother.
In this process over the last 10 months, the biggest thing that I probably realized is just how impermanent all of this is. My dad was 72, he was sick, he was diabetic… We were expecting it. My friend Dave, we were not expecting. In both of those things, what I realized is, if I were to die today, I’d feel pretty good about my life.
I’ve tried to do everything that I wanted to do. I want to do a lot more, but I’d see what’s on the other side of all of this.
We’re a speck of dust in time.
We’re 80 years over 80 years times 9 billion on this earth, times a billion years of the earth.
It approaches zero.
I feel comfortable that there’s an impermanence to things, we’re here for a little while. You’ve got to keep pushing. What’s the point in stopping?
He’s written about this more in detail here. We really are a speck of dust in time. Life is really, really, short. And unpredictably so — we’re allocated maybe 24 hours of it at a time. This is a timeless idea. Roman emperor Marcus Aurelius writes:
“Mark how fleeting and paltry is the estate of man — yesterday in embryo, tomorrow a mummy or ashes. So for the hairsbreadth of time assigned to thee, live rationally, and part with life cheerfully, as drops the ripe olive, extolling the season that bore it and the tree that matured it.”
Seneca wrote a whole book on it, entitled, “On the Shortness of Life.”
The takeaway is not to wallow in existential dread, but to make something of the short time we have. The decision is ours — we can resign, or we can strive.
3. Know the Difference Between Luck and Skill
When you’re working at a company where everything is going right — there’s momentum, morale is high, and growth exceeds expectations — there’s a tendency to attribute that to your own skill and contribution. Unfortunately, you will not know if that’s true. The reality could be that you were at the right place, at the right time, a very fortunate accidental tourist.
One of my general life principles is, people conflate luck and skill all the time. The things that work are actually not that meaningful, because you don’t really know, in the moment, why something is working. Oftentimes when things don’t work, you have a very good sort of trail of breadcrumbs, that that thing is not the right thing in that moment, for a bunch of important reasons.
And so I have to tell people a lot, I’ve learned more when I worked at AOL — which was highly dysfunctional, extremely political, archaic, decaying organization at that time — than I’ve learned in many other situations. You’re in a situation where you have to unpack why all of these things aren’t working, and then tell yourself, if I’m ever in this position again, these are all the things that I’m never gonna do.
That was probably the most instructive team situation that I was in. And then when things really work, like at Facebook, you’re kind of just like, “Is it working because I showed up today? What if I didn’t show up today, would it still be working?” Probably most of it’s working because Mark showed up in 2004. You have to approach it with just a tremendous amount of humility.
When things work, longevity comes because you don’t take yourself too seriously. When things don’t work, it’s a perfect opportunity to do what most people don’t spend enough time doing, which is actually trying to gain true knowledge because society’s incentives just aren’t built that way.
Society’s incentives are built to wrap a bunch of nonsensical BS and terminology and verbiage on top of things that are working, so you can basically pretend that you know what you are doing. And society undervalues things that don’t work because we want to lionize winners and we basically throw away people that don’t win.
That’s why Silicon Valley, by the way, is so special. The value system is actually inverted. The people that have started things that were spectacular flame-outs actually get more respect than the people that have actually built something that worked. And the reason is that we appreciate that ambition. And we’re like well, if but for the grace of God, we as well.
The line between that failure and success is so minute that you see a lot of these folks that get on the right side of that, and all of a sudden it’s like you know, their… I was gonna say their shit doesn’t smell but I know we’re on TV. So, their poop doesn’t smell. And you just laugh at them because they’re just complete clowns in real life.
Chamath has often pointed to his difficult years at AOL as vital to his subsequent success at Facebook. It was there — where nothing was working — where he realized his skills and ability to make some things work. Whereas, at Facebook, he occasionally wondered how different it would be if he didn’t show up.
It’s about accurately understanding what you can do consistently, removing the ketchup of luck to truly taste what’s under it. Or, as Warren Buffett has written, “After all, you only find out who is swimming naked when the tide goes out.”
4. Don’t Complain About the Future, Build It
This was his response to Trump taking office and the James Damore memo circulating at Google:
We can be tweeting and we can be writing, or we can be building. We are builders, and when we build things that need to get built, we tend to do the right things and there’s so much more progress. And so I just think that, what you believe about him, it’s fine to do it in your spare time. I get a lot of popcorn material reading Twitter. I think it’s great. But at the end of the day, Monday morning I’m there to grind and to build and to help others grind and build.
(1:12:03)
Nothing much more to say here — stop complaining, and keep working.
5. Be Long-Term Greedy
This is the first time I’d ever heard of this concept, but I love the pairing of “long-term” and “greedy.” It paints an accurate picture.
It’s way better to be long-term greedy than short-term greedy. When you’re sitting on top of a venture firm and you can take the bulk of the economics, the ability to not do so, and rather instead invest your capital, is being long-term greedy. It’s about rewarding and honoring the platform that allowed you to make the money in the first place.
These are simple signals that tell a person the character of that individual. It’s very clear to see who really cares about their platform and who doesn’t.
That’s why at our firm, we are the largest LPs. We always have been. We are the biggest at risk, and we’re not a multi-billion dollar foundation. We worked hard for our money but we put it all back in. The reason we do that is we think we make better decisions, but also the reason we do that is it aligns the incentives.
When making decisions, this comes in handy — and I try to remember his points on slow-compounding as well. Let the others play in their short-term tactical hell, keep your eyes on the long-term vision. Make sure everyone has skin in the game and shares a long-term vision.
6. Be Confident, but Do Not Let Your Ego Affect Your Decisions
One of my favorite authors wrote a whole book about ego. Chamath has said:
Ego’s a very powerful thing. It can empower you to do things. But ego’s a very corrosive thing, which is that it can entrench you in a set of decisions that fundamentally are about outsider’s perceptions of you versus your true-north internalization.
(46:35)
We should all have ego, but we should not be ego-driven in critical decision-making. We should be unpacking our behavioral biases constantly, and finding ways of mitigating them. I think those are examples where that screaming red flag of things that are structural that just provide a very poor future forecast for that company’s ability. Even if you were to fix it, if you don’t fix that psychological tendency, that framework for decision-making, it’s going to fail.
And here it is in action — when Chamath shares his thoughts on MBAs:
That was a perfect example of me expressing my bias. Part of my bias came from my insecurity about not having a grad degree. Part of my bias was just feeling inferior [to people with MBAs], that I’ve felt for huge amounts of time.
What I said at the HBS thing was me spouting off, making myself feel better about my biases. It can matter, it doesn’t matter. I would rather say that there are ways of figuring out how valuable you are that are independent of those traditional signals, whether you have them or not.
Changing your mind is so powerful.
It makes for really bursty, difficult, marriages at times. My wife will tell you. But man, is it powerful in business: Change your mind all the time.
Really good, scaled, leaders want the right answer and they’re fine with capitulation, they’re fine with change. They really are, because they just want the right answer.
You can get so invested in an answer, and you build up all this superficial logic to reinforce it, versus saying, “I don’t know, let me — you know what? I changed my mind.”
This point on bias, and changing your mind, is the embodiment of “Often wrong,” in point #1. And it’s a demonstration of what you should after: Do whatever intellectual work you can to be right at first, convey your opinion clearly and confidently, and consider criticism.
And when you’re inevitably wrong at some point, realize you’re wrong, change your mind, and be right.
Chamath’s thoughts on ego remind me of what Bill Walsh wrote in his book, The Score Takes Care of Itself:
Here’s what a big ego is: pride, self-confidence, self-esteem, self-assurance. Ego is a powerful and productive engine. In fact, without a healthy ego you’ve got a big problem.
Egotism is something else entirely. It’s an ego that’s been inflated like a hot-air balloon — arrogance that results from your own perceived skill, power, or position. You become increasingly self-important, self-centered, and selfish, just as a hot-air balloon gets pumped with lots of hot air until it turns into some big, ponderous entity that’s slow, vulnerable, and easily destroyed.
Ego is important. It is the fuel for you to make things happen and to get what you think you deserve. But do not let it seep into your decisions.
7. Trust Your Self-Worth, Make Decisions Only You can Make
Growing up, most of us are trained to check boxes. Elementary, high school, good college, prestigious job, family, promotion, kids, promotion, grandkids, retirement, death.
Other people’s opinions invariably influence our decisions. But, seeking validation does not generally lead to good decisions:
It’s funny, and this is going to sound flippant, but I don’t particularly care. Now, that’s taken me a long journey to get to a place where I can comfortably tell you that answer. But I don’t care. I don’t care what they think.
I’m on a path. I have to do what I have to do. I’m at a point in my life, now, where I have to be very inside-out motivated, and so it would be disingenuous for me to give some glib answer about what I want them to think of me because honestly, at some very, very, basic level I just don’t care.
Everybody grows up in these social hierarchies that pound into you certain ways of behaving and certain value systems. That happens if you’re born a woman instead of a man, that happens if you’re born black vs. white, or if you’re born Muslim vs. Catholic… All of these things basically have, in unfortunate ways, these predefined expectations of you as an individual. And so in many ways a lot of people, despite their best intentions to break away from that, get beaten down into a system where that’s what they end up living out.
And so, you know, in my example, my parents emigrated to Canada. We grew up on welfare, I’m kind of like, very honest with it now, because I’ve accepted it and lived it. I was deeply ashamed of it when I grew up. I was a pathological liar about it when I grew up, and all my friends knew that I was lying. I’d have them drop me off like 18 blocks away from where I actually lived and I would walk home. And I pretended I lived in a house that I didn’t live in, I mean, it was crazy.
I was deeply trying to live out… because I went to this rich high school, and I was like the only not-rich kid, and so it just created all these things that it’s taken me a long time to unpack.
And when I went to school my parents were like, “Oh you have to be a doctor or an engineer or a lawyer, because that’s the only way we’ll feel socially validated for all the sacrifices we made to be here.” And I did it. I checked the box. And then when I graduated they were like, “Oh you need to do the thing that’s most respected; I went to work at an investment bank for a year.”
So for many years, I was living my parents’ life, and I was basically getting outside-in validation. And then at some point, it just started to chip away where there was this little circuitry break, and I just kept saying, “I just don’t feel right about the decisions that I’m making.” And that culminated, ultimately, after I went to a place like Facebook that gave me tremendous confidence in my own abilities.
I was just always telling myself, “I just don’t feel like I’m living my life.” And look. I have it much easier than other people, because I think that the struggles that they go through are much deeper and much more psychological. I mean, I didn’t deal with like tremendous abuse in that way. It was just more of a constant Chinese water-drip torture of like this is what you should do, this is what you should do. It’s just very hard to push back and say no, because there’s no counterfactual to measure it against.
It’s taken me a long time to unpack all of this, and to be truly comfortable with who I am as a person, to not care as much… It’s helped that I’ve been successful because it validates my own internal sense of self-worth. All these things are precursors. I’m not saying there’s some magic formula, and you read a book, and all of a sudden you have this great self-confidence. I’m just saying that, I think that a lot of people want to live their own life, inside-out, and I think that they’re all looking for ways in which they can get, an amount of success that validates the choices that they really do want to make in their life.
I go back to, well what if there were systems that actually created a more democratic way for a different class, and a broader class of people to run the race and be successful? You’d probably have, in broadly-speaking terms, a more self-actualized, confident society. There’d be less bravado. As a result, I think at a very macro scale, there’d just be a lot less bad things. And I think that’s probably, generally good for all of us.
Of all the lessons, this is probably the most abstract and self help-y. It also doesn’t seem like one that a person whose “colleagues and friends say [is] one of the most aggressively quantitative thinkers they have ever met,” would suggest.
But for folks who grew up feeling that “constant Chinese water-drip torture of like this is what you should do, this is what you should do,” it will resonate deeply. Stop living someone else’s life.
It’s never that easy, but it is that simple…
8. Money as an Instrument for Change
While many of us equate our self-worth with our net worth, Chamath sees money differently:
Money is an instrument of change, and you should view it more as a custodian than as a system that defines who you are as a person.
(8:20)
He learned this firsthand early on his career at Newbridge Networks, but he also uses this to guard against conflating his self-worth with money and capital. It reminds me of what Phil Knight writes about money in Shoe Dog:
For some, I realize, business is the all-out pursuit of profits, period, full stop, but for us business was no more about making money than being human is about making blood. Yes, the human body needs blood. It needs to manufacture red and white cells and platelets and redistribute them evenly, smoothly, to all the right places, on time, or else. But that day-to-day business of the human body isn’t our mission as human beings.
Or, as my parents told me growing up, we are simply stewards of money.
9. The Crucial Ingredient to Diversity: Eclecticism
The word “Diversity” has been business-fied throughout the years. It’s now difficult to remember the original sentiment and spirit driving the change:
Who cares about diversity? I think it’s kind of stupid, the whole term is stupid. I think what’s not stupid is this idea that you very inherently believe that all people are roughly equal and that you inherently believe that, independent of your economic situation, you may have actually a really good idea so it can’t just be rich people deciding for everybody else. And that you believe that there are things that are worth working on that span, not just the most obvious money making things, but things that are nascent today that could become really important in the future. That’s what I mean: there’s a diverse way of thinking, it’s an eclecticism in how you surround yourself, it’s an open-mindedness to different experiences.
So, it’s not a checkbox, you can’t have a person with the rule, it’s just how you have to live. You know, in Waterloo the biggest thing that I lacked the most was any of that. I had maybe two or three electives. My entire time here. It’s limiting, because there’s just so much of the world that I just didn’t understand. I would not have said that I was an open-minded as I am today. And by having gone to San Francisco, which probably is the most extreme form of open-mindedness possible, I was forced to confront a lot of the biases that I’ve had. And what I realize is now, the people that I surround myself with today are so different than the people that I surrounded myself with earlier on and I’m so much better for it.
So there has to be mechanisms where, at a very young age, you push yourself out of your comfort zone. I remember in Waterloo, there were all these Indian people and all they would do is hang out with each other.
I just found it so stupid. If I wanted that, my parents should never have left Sri Lanka. I could have been as happy as — what was the point? I remember when Brigette and I first started dating it was just so uncommon because you have this Asian, and a South Asian. And now it’s much more common. You just have to force yourself into states of discomfort so you can expose these boundary conditions. Otherwise you are just emotionally and intellectually stunted. And I think you’re never going to achieve your potential that way.
I fear that as time passes, it’s easier and easier to congregate to “like-minded people.” This is not good for eclecticism and perspective.
There’s two important truths to balance:
I don’t get to make new old friends. But even though I get energy from like-minded people, I get perspective from people with different values. It’s a reminder to get to know more different types of people, ask a lot of questions, not hold back my own story and perspective, and for us to try to understand each other.
10. Storytelling
Great stories don’t spring out of thin air. They are carefully cultivated and crafted, adapted upon and iterated, before they are presented to the world.
It’s a real litmus test of a CEOs ability to tell a narrative that creates an envelope of trust. It’s not dissimilar to how a CEO has to manage his or her employees at a company if you’re going to build a very successful company. You have to tell a story that is both inspirational but practical, and believable. When you can do that to your employees, what happens is you have high levels of retention, high levels of employee satisfaction, morale, and people execute.
That’s not dissimilar to working with Wall Street and telling a narrative that is relatively believable and backing it up with enough data points along the way.
When we talk about what’s happening right now, there’s too many of these private companies or public companies, or small tech companies, that are frankly not very durable. I think we’re just not willing to have the hard conversation about that. There are some good businesses. Are they great businesses? No. Will they ever be great businesses? No. We just need to admit that.
But Google, Tesla, Workday, Amazon, are amazing. Tesla got battered in the press because Elon didn’t hit his 2016 ship goals. Except, he committed to shipping 80,000, and he shipped 72,000 or 73,000 cars. That’s just incredible. In the grand scheme of things, will those 6,000 or 7,000 units really matter? No!
By 2021, the guy’s basically going to drive the energy independence of the United States. He deserves some whitespace to operate. The quarterly perturbations don’t truly matter.
He’s done this himself multiple times — his vision for Social Capital changes notably (see v1 and v2). He also revises how he presents his rather ambitious goals based on other people’s feedback and acceptance.
And equally important, our life’s narratives and pillars are built on the stories we tell ourselves and the stories we consume. It’s important to regularly go back and revise stories that hold us back.
I could go on for much longer, but then it’d get weirder than it already is. This is just a fraction of the stuff I’d learned from Chamath from afar. If you want to learn more from Chamath, you should check out his Medium page, or the Chamath Archive.
And if you get a chance, listen to him speak on YouTube or in his Recode podcasts. Text might spread quickly, but it does not always do his tone justice.
Now, go make it rain!
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