The former Facebooker takes
on social media, Silicon Valley.
BY BILL SNYDER
Chamath Palihapitiya says he never
logs into Facebook, and he calls venture
capitalists “soulless cowards.” Yet he’s
held high-level positions at the social
network and is the founder of Social Capital,
a venture capital firm focused on social-
impact startups. A man of outspoken,
sometimes profane, opinions, he rejects
Silicon Valley’s conventional wisdom about
“failing fast” and inveighs against short-
term profit seeking. Money may be an evil,
he said during a recent View from the Top
appearance at Stanford GSB, but he urged
students to “get the money, and don’t lose
your moral compass when you do.”
This past fall, he pioneered the IPO-by-
acquisition model, raising $600 million to
acquire a still unselected company and then
take it public. He also unveiled the Capital as
a Service platform, which allows startups to
submit an online application and receive up
to $250,000 without a face-to-face meeting.
Despite his innovations, Palihapitiya
downplayed his creativity during a View
from the Top appearance in early November.
Urging his audience to “be good copiers,” he
said, “A lot of my life, quite honestly, is just
copying things that I see. There’s not a lot of
original thought here.” Here are some of his
insights on socially conscious investing and
where Silicon Valley gets it wrong.
YOU CAN’T EAT IRR
IRR, or internal rate of return, is a standard
metric used to determine the profitability
of an investment. But IRR tends to focus
attention on short-term gains, not long-term
success, says Palihapitiya. “When you
unpack it, what you realize is that fast-money returns can completely decay
long-term thinking and sound judgment.
Moderate growth, moderate compounding,
that is the key. That is gold.”
“FAIL FAST” FAILS SERIOUS
“Fail fast” has become the conventional
wisdom of Silicon Valley. And when it comes
to consumer businesses and apps, that makes
sense, says Palihapitiya. Consumer internet
businesses like Facebook are about exploiting
psychology, and businesses need to fail fast to
keep pace with the shifting tastes and desires
of consumers. But that formula doesn’t work
for “anything that really matters,” he says.
“It is not how you solve diabetes. It is not how
you use precision medicine to cure cancer.
It is not how you educate broad swaths of the