💬 "Chamath Palihapitiya: Money, Success, Startups, Energy, Poker & Happiness"

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Podcast’s Essential Bites:

On Money & Happiness:

[21.55] CP: "[Money] doesn't buy happiness, but it buys you a level of comfort for you to really amplify what happiness is. [...] I think the challenge for most people is to realize that this escalating arms race of more things will solve your problems is not true. More and better is not the solution. It's this idea that you are on a very precise journey that's unique to yourself, you are playing a game, of which only you are the player. Everybody else is an interloper. And you have a responsibility to design the gameplay."

[25:10] CP: "I think the most negative aspect [around money] is that it amplifies a 360 degree view of your personality. [...] When you're given that kind of attention, it's very easy for you to become a caricature of yourself. [...] I think all I've ever seen in Silicon Valley, as an example, is that when somebody gets a hold of a lot of money, it tends to cause them to become exactly who they were meant to be. They're either a kind person, they're either a curious person, they're either a jerk, they're either cheap. And they can use all kinds of masks, but now that there's no expectations, and society gives you a get out of jail free card, you start to behave the way that's most comfortable to you. So you see somebody's innate personality."

[27:22] CP: "If you think about mimetic theory in a nutshell, we're all competing for these very scarce resources that we are told are worthwhile. And if you view the world through that Girardian lens, what are we really doing? We are all fighting for scarce resources, whether that's Twitter followers, money, [...], notoriety, and we all compete with each other. And in that competition Girard writes, the only way you escape that loop is by scapegoating something or somebody. And I think we are in that loop right now, where just the fact of being successful is the thing that one should scapegoat to end all of this tension that we have in the world. I think that it's a little misguided, because I don't think it solves the fundamental problem."

On Poker, Success, & Mistakes:

[32:10] CP: "Let's just use poker as a microcosm to explain a bunch of other systems or games. [...] What does success look like? Success looks like you have positive expected value. In poker, [...] basically, your mistakes minus my mistakes is the edge. [...] That's how poker works. If I make fewer mistakes than you make, I will make money and I will win. [...] Translate that into business. You're running a company [...] [and] are going to make mistakes. [...] And then there's the competitive set of all the other alternatives that a customer has. Their mistakes minus your mistakes, is the expected value of Google, Facebook, Apple, etc."

[33:46] CP: "Now take investing. Every time you buy something, somebody else on the other side is selling it to you. Is that their mistake? We don't know yet. But their mistakes minus your mistakes, is how you make a lot of money over long periods of time as an investor. Somebody sold you Google at $40 a share, you bought it and you kept it. Huge mistake on their part, minimum mistakes on your part. The difference of that is the money that you made. So life can be summarized in many ways in that way."

[34:20] CP: "The question is, what can you do about other people's mistakes? And the answer is nothing. That is somebody else's game. You can try to influence them, you could try to subvert them. Maybe you plant a spy inside of that other person's company to sabotage them. I guess there are things at the edges that you can do. But my firm belief is that life success really boils down to how do you control your mistakes. Now, this is a bit counterintuitive. The way you control your mistakes is by making a lot of mistakes."

[35:51] CP: "In terms of your mistakes, society tells you don't make them, because we will judge you and we will look down on you. And I think the really successful people realize that actually, no, it's the cycle time of mistakes that gets you to success. Because your error rate will diminish the more mistakes that you make. You observe them, you figure out where it's coming from [...] and then you fix it. [...] The word [mistake] resonates most with most people, but the real thing that it is, is learning."

On Facebook:

[45:40] CP: "I invented this thing called data scientist, because we had a PhD from Google that refused to join [Facebook], because he got a job offer that said data analyst. And so we said, call him a scientist, because he was a PhD in particle physics. [...] That launched a discipline."

[50:59] CP: "I think the pro of move fast and break things is saying the following. There's a space of things we know and a massive space of things we don't know. And there's a rate of growth of the things we know. But the rate of growth of the things we don't know is actually, we have to assume, growing faster. So the most important thing is to move into the space of the things we don't know, as quickly as possible. And so in order to acquire knowledge, we're going to assume that the failure mode is the nominal state. And so we just need to move as quickly as we can, break as many things as possible, which means things are breaking in code, do the root cause analysis, figure out how to make things better, and then rapidly move into this space. And he or she who moves fastest into that space will win."

[54:37] CP: "If I was running Facebook for a day, the big opportunity, in my opinion, was really not the metaverse. But it was actually getting the closest that anybody could get to AGI (Artificial general intelligence) [...]. Here's how I would have pitched it to the board and to Zuck: [...] There are 3.5 billion people monthly using this thing. If we think about human intelligence very productively, we would say that there's a large portion of it, which is cognitive. And then there's a large portion of it, which is emotional. Ae have the best ability to build a multimodal model that basically takes all of these massive inputs together to try to intuit how a system would react to all kinds of stimuli. That to me, would have been a profound leap forward for humanity."

On Social Media:

[1:18:25] CP: "You first have to solve what is broken inside of the social networks. And I don't think it's a technical problem. [...] The real problem is a psychological one that we're dealing with, which is people through a whole set of situations have lost belief in themselves. And I think that that comes up as this very virulent form of rejection that they tried to put into the social networks. [...] So a social network has to be designed, in my opinion, to solve that psychological corner case, because it is what makes a network unusable. To get real density, you have to find a way of moving away from that toxicity, because it ruins a product experience."

[1:20:36] CP: "The social network has to have a social cost. You can do it in a couple of ways. One is where you have real world identity. So then there's a cost to being virulent, and there's a cost to being caustic. A second way is to actually just overlay an economic framework, so that there's a more pertinent economic value that you assign to basically spouting off. And the more you want to spend, the more you can say. And I think both have a lot of value. I don't know what the right answer is. I tend to like the latter."

[1:23:01] CP: "I think you could reductively boil down the human intellect into cognition and emotion. And depending on who you are, depending on the moment, they're weighted very differently, obviously. Cognition is so easily done by computers that we should assume that that's a solved problem. So our differentiation is the reasoning part. It's the emotional overlay. It's the empathy, it's the ability to steelman the opposite person's case. [...] That is a very difficult thing, I think, to capture in software, but I think it's a matter of when not if."

On Success & Happiness:

[2:01:33] CP: "If your precondition is to start something successful, you've already failed. Because now you're playing somebody else's game. What success means is not clear. You're walking into the woods. It's murky, it's dark, it's wet, it's raining, there's all these animals about it, there's no comfort there. So you better really like hiking. And there's no short way to shortcut that."

[2:02:07] CP: "I think that there's a very brutal, basic definition of success that's outside in. But that's not what it is. [...] The only difference between you and me, is an outsider's perception of your wealth versus mine. But the happiness and the joy that I have in the simple basic routines of my life, give me enormous joy. And so I feel successful, no matter what anybody says about my success or lack of success."

[2:03:55] CP: "I think if you focus on trying to have an impact on the world, [...] you're gonna end up deeply unhappy. [...] It may happen as a byproduct. But I think that you should strive to find your own personal happiness and then measure how that manifests as it relates to society and to other people. But if the answer to those questions is zero, that doesn't make you less of a person."

On Investing & Silicon Valley:

[2:28:44] CP: "This pugilism that I inflict on myself [in investing], [shows in] these two things. [...] Thing number one is I have a table that says: how much should we make from all of our best investments? How much should we lose from all of our worst investments? What is the ratio of winners to losers over 11 years? And in our case, it's 23:1. [...] What that allows me to do is really say, [...] we cannot violate these rules around how much money we're willing to commit in an errant personality."

[2:29:32] CP: "The second is I asked myself, of all the other top VCs in Silicon Valley [...], what's our correlation? Meaning when I do a deal, how often does anybody from Sequoia, Excel, Benchmark, Kleiner, who you name it, do it at the same time or after and vice versa? And then I look at the data to see how much they do it amongst themselves. [...] I'm [...] as virtually close to zero as possible. [...] It's not a good thing when the markets are way, way up, because it creates an enormous amount of momentum. So I have to make money the hard way, [...] because I'm trafficking and things that are highly uncorrelated to the gestalt of Silicon Valley, which can be a lonely business. But it's really valuable in moments when markets get crushed. Because correlation is the first thing that causes massive destruction of capital."

On Advice for Young People:

[2:51:13] CP: "I wish somebody had told this to me: We are all equal. And you will fight this demon inside you that says you are less than a lot of other people for reasons that will be hard to see until you're much much older. And so you have to find either a set of people far far away, like what I did, or one or two people really, really close to you, or maybe it's both, that will remind you in key moments of your life, that that is true. Otherwise, you will give in to that beast. And it's not the end of the world, and you will recover from it. I've made a lot of mistakes. But it requires a lot of energy. And sometimes it's just easier to just stop and give up."

Rating: ⭐⭐⭐⭐⭐

Additional Links:
Chamath’s Substack