In VCs We Trust?
Is Ultra-Capitalism the New Socialism?
Is Chamath Palihapitiya the Zack de la Rocha of this generation?
For starters, Chamath is definitely a rock star. He also loves to talk about social issues like wealth inequality and how the system is rigged against the little people. Plus, he is a brown-skinned man from humble origins (to put it mildly) who plenty of white people think is bad-ass - even though they don’t totally understand what he’s talking about.
Let’s start with a little background on Mr. Palihapitiya.
Chamath Palihapitiya is a “VC”, a venture capitalist. No, this isn’t someone with a lot of money who likes to go on adventures (though, I am sure most venture capitalists have their fair share of adventures). It is someone who invests their money in start-ups, or companies in their early stages of development that show great potential. Chamath is perhaps most well known for his founding Social Capital, whose mission statement reads: “Our mission is to advance humanity by solving the world’s hardest problems”. Social Capital invests in sectors often ignored by most VCs, sectors like healthcare and education.
Chamath has also been a part of launching 14 SPACs (more on what these are here).
Through SPACs, one of the hottest Wall Street trends of 2020, Chamath has figured out a way to make people money while investing in progressive social and environmental endeavors.
Responses to Tweet above:
Before becoming a super billionaire investor, Chamath served on Facebook’s senior management team, and, before that, he was the general manager of AIM. In between the two positions, he was also a principal at the venture capital firm Mayfield Fund. Chamath has been around the block in the worlds of tech and finance.
But Chamath wasn’t born into the world of superstar investing. In fact, he immigrated from Sri Lanka to Canada at the age of six, after his family received refugee status in Canada. In a recent episode of the Invest Like the Best podcast, Chamath recounts how his family barely had enough money to scrape by most weeks and how, even when he started to earn some good money, he still had to help to support his family financially.
On that same podcast episode mentioned above, from 8:11-11:49, Chamath segues from his story to his take on the causes of inequality in Western society. Below are excerpts of what Chamath had to say during this segment:
“…personal finance is not taught. Nobody knows how to get ahead… Being poor is a systemic condition in North America; it is a disease that is equivalent to diabetes and heart disease or depression or any other kind of mental illness except that it is structural and institutionalized. It’s not something that is wrong with your physiology; poverty is just something that is conditioned into people in the way that society works in (a) Western (society)…
Dude sounds like he’s about to front a DIY hardcore band. However, his solution is different than the burn-it-all-down activist types:
I think the biggest risk to our democracy is inequality. I think the best solution is to empower people from the bottoms up to be able to save and to invest… The biggest transition is one of philosophy, which is for us to understand that that dichotomy exists [between labor and capital] and then to ask the question “How does a person who makes their money as labor also start to make money in the form of capital, as an owner, and that’s a mental shift. It’s this idea of understanding that you can own a piece of a great business; even if you own one share, to not look down disparagingly at yourself because of that. It’s to understand that if you’re an owner - it’s that Buffet quote, it’s not timing the market, it’s time in market. That’s what owners do; they own pieces of things forever. And I think that it’s an enormous misunderstanding of the poor. It’s an enormous misunderstanding amongst minorities, and I think that the moneyed class - the biggest edge that they have - is that very, very simple understanding about the difference between labor and capital.
And if you want to make a big difference, you have to - as Chamath so eloquently puts it - “Get the fucking money.” If you want your (progressive) world view to compete with other world views on a larger scale, money is piece of that equation. This video resonated particularly deeply with me, someone with a half-completed MSW (masters in social work) degree who has sat through countless hours of professors and students alike talking about how things “should” be, while having very little idea of how money works or the role that it plays in shaping the world as it “should” be, in their opinion.
Also, regarding how things should be, here’s Chamath sandwiched between two mainstream media talking heads speaking the truth about how we should have invested in people during the pandemic and not zombie companies.
Even AOC, the Queen of Democratic Socialists, is down with Chamath’s take on the government bailing out bloated companies and not people.
The love is mutual.
And on the topic of summering in the Hamptons (see video in @AOC Tweet)…
But are all VCs like Chamath? On the surface, many don’t seem as politically progressive as Chamath, but this isn’t to say that they still don’t have great ideas that can benefit the average person. Take, for example, Naval Ravikant, an Indian-American immigrant who invested in companies like Uber and Twitter in their early stages. He is a seemingly staunch libertarian whose political views don’t entirely align with my own, yet I was able to mine more than a few nuggets of profound insight from his recently published “Almanac”, which you can download for free here. The same is true for someone like Peter Thiel, an early-stage investor in PayPal and Facebook. Our political views may not completely align, but I took a lot from his book Zero to One. There’s also David Sacks, also an early-stage investor in PayPal and Facebook, who happens to be a card-carrying Republican. If more Republicans were as thoughtful and articulate as he is, the party might begin to win over more of the left-leaning intelligentsia types.
What I love about VCs is that they invest in the “tinkerers”, the people who keep iterating until they optimize something, as Nassim Taleb puts it in his book Antifragile. VCs invest in the people who aren’t afraid to get things wrong. They are the opposite of Wall Street folk. VCs have critical thinking skills, and they understand that making money and solving problems can work hand-in-hand. I don’t believe that VCs they can solve all of the problems on God’s green Earth, nor can they cure all of our social ills. But I also think that most liberals overestimate what government can achieve in regard to reducing inequality. Plus, liberals often vote for people who inflate bureaucracy without affecting much change. There’s obviously a balance to be struck between the free market and the role that government should play, but I admire the role of VCs in the free market side of the equation. I’ll take people who put their money where their mouth is over those who engage in SJW wordplay as a means to grab/maintain power.
On the topic of SJW wordplay and power, during episode 25 of the All-In podcast, a podcast hosted by Chamath and his three VC “besties” (one of which is David Sachs, mentioned above), Chamath discusses this phenomenon of rich white liberals playing with words as opposed to getting shit done, as he discusses the botched vaccine rollout in California:
“The problem is that we throw around this word “equity” and that we need to do something with equity, and, in fact, I think that people who use that word are stupid. I think what they are trying to say actually is “We don’t want inequity,” and the most inequitable thing is to actually take the most impoverished and fragile of the population and prevent them from actually getting the vaccine because they are the ones that actually need to be working and can’t afford to actually not work or can’t afford to be sick or can’t afford to find solutions to child care… It’s this weird word that the extreme left uses now to describe policies that are just frankly poorly thought out and even more poorly executed… All of this stuff is just a bunch of - I’ll be blunt - rich white people sitting in a room with their head up their ass, and they come up with these stupid fucking rules and they try to implement them with words like “equity” and all that happens is that you compound inequality.
I recommend listening to the whole segment of the podcast (E25, 3:17-7:52).
And something tells me it’s likely those same rich white people with their heads up their asses - in one of America’s whitest and most liberal cities - that are behind the headline below. (For more on (rich) white liberals, see Malcolm X: “The white liberal is the worst enemy to America, and the worst enemy to the Black man… They are just a faction of white people that are jockeying for power.”)
Hence…
So, bringing things back to the question I posed at the top of the piece, I’ll admit the comparison between Zack de la Rocha and Chamath Palihapitiya was not an apt one; I used it as a fun hook to sucker you into reading this (and it worked! You’re still reading. Plus, I really loved the line about white people thinking both de la Rocha and Chamath are bad-ass despite not really understanding what either one is talking about. Go ahead, ask the average white Rage Against The Machine fan or Chamath-supporting finance bro to really break down de la Rocha’s lyrics or to explain exactly what a SPAC is.) I love de la Rocha’s words and Chamath’s mission statement for different reasons. However, when I see Chamath post messages like the one below, the
first thing that comes to mind is, “I’ll take that over ‘Fuck you, I won’t do what you tell me.’” But I’m also a white dude approaching middle age and not an angst-ridden teenager, so take my two cents for what it’s worth. If we’ve learned anything from Chamath, other VCs, and even from the r/WallStreetBets community, it is that maybe the best form of rebellion is learning how to play the game instead of opting out and being a slave to it.
Best,
Frank
Twitter: @frankcorva
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