Chamath Palihapitiya - The Major Problems Facing The World 🏛️
Hey guys, Kareem here! I’ll be joining Ismael to try to deliver this email to your inbox 3 times a week. I’m sure we’ll introduce ourselves more in-depth for you all one day but for now, we want to hear from you! How do you like being a subscriber? What do you wish we could do more of? Reply to this, pinky promise we respond
Chamath Palihapitiya
“I cleaned the toilets and mopped the floors and the greatest part about that, I remember how much I made. $4.55 an hour. “
Chamath Palihapitiya, an early Facebook employee now founder and CEO of Social Capital where he’s burst on the scene as one of the world’s most prominent investors. His mission is to advance humanity by solving the world's hardest problems. We cover potential paths to closing the income inequality gap, how to manage one's personal psychology, and tackling climate change. His interview with Patrick O'Shaughnessy is a must-listen.
INVEST LIKE THE BEST- CHAMATH PALIHAPITIYA
Summary and highlights 💡
Chamath’s experience with debt when he was younger and how he thinks about personal finance 💳
Ran a casino in Highschool, 25 cents to a dollar, where he was the house. Made $50-100 a week
Graduated with $30k in student debt. His first boss when he got into derivatives trading, Mike Fisher, offered to pay it off for him after a great year. It changed his life. “All of a sudden I had capital because, at the end of the month, I was not necessarily breaking even.”
“Being poor is a systemic condition in North America. It is a disease that's equivalent to diabetes and heart disease or depression or any other kind of mental illness, except that it's structural and institutionalized”
Income inequality and how to tackle the problem 🎌
The biggest risk to democracy is inequality
Took a while to understand the difference between labor and capital
The key to prosperity today is to close the inequality gap by teaching how they “can be a part of the capital, not just labor
Reaching the right people to fix the problem 💰
Structural top-down ideas are important but transparency is key
“You want to open the largest top of the funnel so that people see a fundamentally flawed human being. I.e. me capable of doing it and think why not me as well.”
A for-profit business to solve the problem of income inequality 🔮
“Our generation needs a version of Berkshire”
“The rules are set up against you. In both Democratic and Republican administrations, they compound inequity.”
Bosses he has beaten and hasn’t beaten in his finances 💢
Big trap of using complexified measurement vs simplified measurement
Insecurity as motivation
Chamath’s focus on family, friends, memories, and legacy 📯
Had to find a “little lighthouse” after major personal changes
Found a partner, who is now his sounding board for everything
Reset friendships
Lessons learned from Social Capital 1.0
“You just learn after infinite reps, how to hit the shot or how to see the specific pitch come out of the pitcher's hand”
“Some people are scumbags” - too funny not to include
Insights into investments and strategic framing 📈
“What I didn't realize before is that companies don't exist in a vacuum. I would meet a company, private or public, and I would look at the product and I would meet the CEO, then meet the team, then talk to the customers, and my biggest mistake was thinking about it in a vacuum.”
“How do you underwrite a sector”
Absurdities in the value investing style 🏛️
I consider myself a value investor. I know that sounds crazy to you, but I really do. I think I'm like, "Okay, what will be worth a great deal of money in the future? What is valuable? What is something of great worth?"
Quantifying value isn’t easy -- “Are your kids valuable?”
Benefits of SPAC investing and opportunities for late-stage entrepreneurs ♨️
“It is the single most powerful way to allow normal, ordinary folks to cross the chasm between labor and capital.”
Traits in managers that he invests in👔
“Their moral and ethical starting point”
“I love that David versus Goliath thing. I mean, oh, how intoxicating? That's glorious.”
What he’s learned about combatting climate change 🔋
Critical areas: Minerals and manufacturing are critical areas
“If you went and saw how a mine works, you'd be like, "Holy shit. This looks like the 1800s."
Thoughts on the supply chain, specifically as Americans
“I think what the government could do is create credits and tax offsets that make locally produced goods, dollar cost equivalent to Chinese produced alternatives.”
“I do think that it has to be a little bit "non-profit", but again, the profit lever comes with the government giving us the right tax credits to make it all balance out.”
Company life cycles and innovation 🎁
“I think the big companies will not be able to do it as well as they have been.”
Hard for new bright grads to not take the great offer from a big company
What is most broken in the capital markets system?
“Liquidity. It's still very hard for companies to get funded. “
Fixing healthcare 🏥
“There needs to be a state-sponsored alternative to healthcare. I think it's ludicrous that the richest country in the world doesn't guarantee every single citizen and permanent residents of its country guaranteed healthcare.”
“The most predictable thing in the world has been healthcare inflation over the last 20 years… And I think it's the same in education.
Fixing climate change as President for a day 📗
“I would introduce a carbon tax. I would cut personal taxes massively. I would raise the corporate tax rate and I would create massive incentives to basically onshore and rebuild an entire economy that's focused on climate change, technology, and biotechnology.”
Is he a “main character” in the investing world?
“Investing, not yet. I think I still have an enormous amount to prove”
The kindest thing anyone has done for him 🎁
Brian Mark, the guy in his sister’s class. His family gave him some clothes and a mattress when they first moved to Ottawa
Great stuff!