All-In PodcastE26: State of Venture Capital, plus fan questions on longevity, decentralization & quantum computing
EVERY SPOKEN WORD
150 min read · 30,007 words- 0:00 – 5:49
Bestie intro & poker talk
- JCJason Calacanis
... Sax, is there something you object to here? The poker one and net worth?
- DSDavid Sacks
No. I mean, it's fine. I don't give a shit about longevity or quantum computing, but-
- JCJason Calacanis
Here's the good news, David. I- it's not all about you. There's four people on the show.
- CPChamath Palihapitiya
(laughs)
- DSDavid Sacks
(laughs)
- JCJason Calacanis
So, so you could have two people who like the topic, and then you could just ask them a probing question.
- DSDavid Sacks
That's fine. That's fine. Just, just tell me when it's over. I'll do you, you know.
- JCJason Calacanis
This fucking guy, you know he's ready for off-
- DSDavid Sacks
I'll do you, you know.
- NANarrator
I'm going all in.
- CPChamath Palihapitiya
Let your winners ride.
- JCJason Calacanis
Rain Man, David Sax.
- NANarrator
I'm going all in.
- DSDavid Sacks
And I said- We opened and sourced it to the fans, and they've just gone crazy with it.
- JCJason Calacanis
Love you, Wes.
- CPChamath Palihapitiya
Queen of Quinoa.
- NANarrator
I'm going all in.
- JCJason Calacanis
Hey, everybody. Hey, everybody. Welcome to the All In podcast. I'm Jason Calacanis. And with us today, again, the Queen of Quinoa, David Friedberg. Sans his dog in the background. Sorry for those of you who love his dog. And-
- CPChamath Palihapitiya
He's on a walk. He'll be back in, like, 10 minutes.
- JCJason Calacanis
He'll be back and he'll be in the seat. Uh, and the Rain Man himself, David Sax.
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
Ultra-focused on SaaS and marketplace startups.
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
And involved in some illegal trafficking of red pills, straight up, from Honduras to Cuba, and then through Miami, making... The red pills making their way to California. And finally, daddy's back, the SPAC master himself, Bestie C, the dictator is back.
- CPChamath Palihapitiya
Replenished. Bank account replenished. (laughs)
- JCJason Calacanis
(laughs) You've been re-billionized.
- CPChamath Palihapitiya
Fir- firing on all cylinders.
- JCJason Calacanis
Ugh. It's so, so... You know, live by the SPAC, die by the SPAC. That's what they always say in this business. But you know what? We have been absolutely inundated with, I kid you not, hundreds of questions from you, our loyal audience. And when this thing is over, we are going on world tour. We'll see you in Vegas. We'll see you, uh, in, uh, at the Royal Albert Hall in, uh, London and Miami. All cities are on the agenda. Let's take our first question from you, the audience. To what extent are you guys interested in-
- CPChamath Palihapitiya
Wait, wait. How's, how's everyone doing?
- DSDavid Sacks
Great.
- 5:49 – 12:54
Fan question: Longevity & Biohacking, Chamath's health regimen
- JCJason Calacanis
Here's a question from Leonard Omazics, "To what extent are you guys-"
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
... "interested in longevity? In your opinion, what technologies could help us live longer and healthier lives?" Friedberg, that's got your name on it. Why don't we start with you?
- DFDavid Friedberg
Um, on this one, I would, uh, point folks to read the book-
- JCJason Calacanis
(smacks lips)
- DFDavid Friedberg
... Lifespan by David Sinclair, who's a researcher at Harvard. And he's done a lot of kind of leading work on, um, on, uh, uh, basically calling aging a disease and, and life extension. So the book Lifespan highlights, I think, a lot of his research and findings and paths forward, uh, for, um, uh, for improving, uh, uh, longevity. And basically, you know, it comes down to what he defines as kind of an early switch that evolved in evolutionary biology in every cell, on every li- living organism, where the cell is either in growth mode or repair mode. And the trick is can you get the gene to switch on that puts the cell into repair mode? And if you do that, the cell fixes itself and you l- and the cell lasts longer and the organism lives longer. And so they've identified a number of genes, um, that trigger this and a number of compounds that trigger expression of those genes. Um, and there's a number of things you can do lifestyle-wise, uh, to trigger these genes, basically to get yourself to live longer. So fasting is a good one, and then there's a bunch of compounds that you can take that mimic fasting on a cellular level, like, uh, metformin and rapamycin.
- JCJason Calacanis
I'm on metformin.
- DFDavid Friedberg
I think a couple of you guys are on metformin, right?
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
Um, and then, and then the NAD+ supplements, um, which you can buy-
- JCJason Calacanis
What are those? Are you saying M- NMN supplements? Or-
- DFDavid Friedberg
Yeah, NMN. NMN and NAD+. Um, so, uh, there's two, there's two compounds, NMN, uh, like Nancy, Mike, Nancy. Um, and then NR, um, and those, uh, you can buy a product called Tru Niagen on Amazon, which, which has those compounds, and you take about 1,000 milligrams a day. And, um, anyway, all of this stuff's, uh, laid out in his books and it, it supports a lot of the research that's being done. Obviously, fasting and exercise also trigger this gene expression and, and enable kind of, um, mea- measures of longevity, uh, to kind of be showing up biologically. But, um, I think, I think it's a, it's an emerging field and there's, uh, a lot of deep work going on. And as people have highlighted, the, the process of aging is a biological process that theoretically we can stop and potentially reverse, and there's a lot of new work that's being done in stem cell therapy that may kind of, uh, elicit some new paths forward here. So arguably, someone is alive on planet Earth today that could live past the age of 200. Um, so it's an exciting field and, and lots of kind of paths forward.
- CPChamath Palihapitiya
I'll, uh, I'll tell you for what it's worth, my regimen, um, and, uh-
- JCJason Calacanis
Oh, God. Here we go. Thirst trap photo coming in three, two, one. (laughs)
- CPChamath Palihapitiya
No, uh, so, so I do, I do, uh, the c- the following. So, um, I take, uh, a statin now. It was 10 milligrams, now I'm at 20 milligrams. Um, I take metformin, and all of this I take sort of in a preventative posture, um, because my cholesterol wasn't super high but it wasn't super low as like-
- JCJason Calacanis
Mm-hmm.
- CPChamath Palihapitiya
... sort of like in the 160, 170, 180, but now it's sort of like 120. Um, and then metformin I take preventatively as well. I'm not pre-diabetic. Um, and then a couple of vitamin D and some other stuff. But then here are these things that I do that I think could be valuable for some folks listening. Uh, there are these places now that exist. They're popping up. One company that you can check out is called Prenuvo, P-R-E-N-U-V-O. Um, they are in Vancouver, they're in LA, they're in, uh, Redwood City, so mid- mid-peninsula for those in Silicon Valley. And what you can do is you can get a head-to-toe, uh, MRI. So, you know, there's no radiation. You know, you could do these things, you know, every other week if you wanted to. It takes about an hour, and what happens is they can basically, uh, look through your entire body, um, your musculature, your organs, um, from the- literally from the tip of your head all the way down to your ankles, and they can spot a lot of stuff that may not otherwise, uh, be seen. And so, you know, every three or four years, to get one of these scans, you could see a lesion, um, you could see the beginnings of a tumor. Um, you know, I did one a few weeks ago, touch wood. It was great. Nothing, nothing sort of significant happened.
- JCJason Calacanis
How much does it cost?
- CPChamath Palihapitiya
Um, there's a range of prices, um, and I think those prices will come down. The range of prices are from like $1,500 to $2,500, so it's not expense- it's not cheap, sorry. Um, but here's what they're able to do. They're building a corpus of all these images where they're running, uh, machine learning on it, and they're getting better and better at identifying anomalies. And so as a result of that, they're able to actually take the MRI images and they can do fewer and fewer scans to get the equivalent resolution. So two things will happen. One is the scan time will come down, right? So it was an hour and a half. Now it's sort of right under an hour. It can probably be as low as 40 minutes, which is relatively tolerable for most people, and then the cost will come down into the hundreds of dollars because you'll be able to very rapidly assess. Um, so I do that, and then the second thing is for anybody with heart disease in their family, I really implore you. One of my friends actually is flying down from Toronto. I'm taking him to my cardiologist in LA, and there's a thing called heart flow. And what heart flow is, is a contrast CT, which basically means they inject a dye and then they put you under a CT and they, they map out your heart. And you can literally see the calcium build up. You can see the state of your arteries. Um, and, you know, what probably people don't know is when you have a calcium score, you know, most of us it's zero, but when it starts to be non-zero, it doubles every year, and by the time it gets into the thousands, you're basically guaranteed to get some form of cardiac issue. Um, and so it doesn't seem like anything if your cardiac score is 20, except it goes to 40, 80, 160, and all of a sudden within five, six years, you're really in the red zone for a heart attack or something. Um, I've done it twice now. Um, every five years I do it, um, and touch wood, you know, my c- my calcium score is still zero. Um, but in any event, uh, that's what I do for longevity. I kind of preventatively at the cellular level with some drugs, and then just trying to catch cancer and heart disease on the front end. Uh, otherwise, t-... eat three balanced meals and exercise and sleep a lot.
- JCJason Calacanis
Sacks, uh, you obviously don't care about longevity. (laughs)
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
Uh, any thoughts here? I mean-
- CPChamath Palihapitiya
Sacks has looked like he's a thousand years old since he was seven.
- JCJason Calacanis
No, he was... When he was in 12th grade he looked like he was the Vice President of the United States. Yeah.
- CPChamath Palihapitiya
Guys, just-
- JCJason Calacanis
(laughs)
- CPChamath Palihapitiya
Ju- just let, just let me know when this conversation is over. I've been doing my email.
- JCJason Calacanis
(laughs)
- CPChamath Palihapitiya
(laughs)
- 12:54 – 22:48
Fan question: Decentralization, separation of currency & state, will governments fight back against crypto?
- CPChamath Palihapitiya
good. All right, Action Bias asks, "Please debate decentralization of monetary value, ultimate threat for insiders power erosion."
I interpret this as a, as a Bitcoin question. So-
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... I think one of the most interesting things happening in the world today is this... i- is what's happening with Bitcoin, right? It's... And, and you're seeing the price go up because a bunch of institutional investors on Wall Street are all getting into it now. It's gone from retail to institutional. And the narrative basically, it's a really profound narrative, which is, i- i- it's the separation of money and state. So if you think about, like, one of the most important events in human history was the separation of church and state, where we no longer look to the state to determine, you know, what religion everyone was gonna be, well, what crypto is introducing is this idea that the government cannot control the money supply. I think that's what he's talking about with the decentralization, is that you could have a currency that everybody in the world believes in, that no government can control. That's the separation of money and state. Now, this is just really a narrative right now. Um, I mean, and who knows if it will actually come true. But the interesting thing is that if everybody does believe in it, it will come true. And so Bitcoin's been sort of described as the bubble that never ends, because if everyone kinda buys into this bubble, it actually comes true. So I think it's very interesting and you're seeing... Um, because Bitcoin is kind of perceived as the antidote to inflation and money printing by the government, uh, I think you're seeing it take on new urgency now, because the government just keeps printing trillions and trillions of dollars of, of new money.
- DFDavid Friedberg
Doesn't this threaten government? So if government, um, doesn't have control over monitoring financial transactions and have control over the accounts in which the financial assets sit, which is effectively the, the notion of decentralized anonymized wallets, then, um, how does the government secure taxation which is requisite for their ability to fund, uh-
- JCJason Calacanis
Well, the good-
- DFDavid Friedberg
... to fund the state, right? And so what happens to the state?
- CPChamath Palihapitiya
Well, so there, there's an enormous amount of leakage that happens today in assets that actually get financialized but in the gray market. And I think the, the beautiful thing is on the one hand, you know, we become less focused on, like, the M1 and the M2 money supply, like the physical printable distributable money that we can see and touch, and it gets replaced with virtual currencies that are tied to other things. I think what the, the, the, the, the person who wrote the question is asking really is more about DeFi and what's happening sort of, like, on the Ethereum, you know, 2.0 ERC-20 contracts, all that stuff, which is sort of much more next gen, I think, than Bitcoin. And I think at some point we should deep dive into it. But what I would say, Friedberg, is all the leakage you have today goes away in a world of DeFi because you will financialize every single asset possible. You know, you'll financialize your homes, you'll financialize your cars, your watches, your jewelry, your art, you'll financialize every random thing and how-
- JCJason Calacanis
Maybe even your career.
- CPChamath Palihapitiya
... and how people will trade it. Absolutely your career. And, and the thing is by, by monetizing it and financializing it, you can borrow against it, you can trade it, you can pull forward value into the future against it, but it'll all be tracked. And so as long as the government then says, "Listen, we're gonna enable it all, but there needs to be an off-ramp to taxation." And that's pretty simple, because a physical house exists in the world. You can't hide the existence of a physical house.
- DFDavid Friedberg
But it's not anonymized, right, Chamath? And so, you know, if, if you wanna track it-
- JCJason Calacanis
Semi-anonymized.
- DFDavid Friedberg
... I mean, that's the challenge, is if... No, I'm saying if it is anonymized then the government, uh, can't track it and the government can't actually-
- CPChamath Palihapitiya
But I think these are, these are two separate things. Some assets will live anonymously, and those are the assets that don't need to exist in the real world. But I think what this will create is a world where all of these assets that actually truly exist in the real world, it'll be fine that it exists and that people get taxed on it, but it'll be much more legitimate, and I think it'll be simpler. And so I think people will trade off incremental taxation for incremental monetizability. I'll give you an example. Um, let's use real estate. There is no reason why every single piece of land everywhere around the world isn't written into a ledger with knowledge of who owns it, such that the person that owns it could trade it, could borrow against it, um, could sell it, um, could buy more-
- JCJason Calacanis
Yeah, fractionalize it.
- CPChamath Palihapitiya
Fractionalize it.
- JCJason Calacanis
Even if you can't fractionalize in the real world 'cause your neighbors won't let you set it up into four lots, you could do that online.
- CPChamath Palihapitiya
Online. And so today w- what'll happen is that, you know, that person has a level of wealth and what they do instead, take the United States, is they lobby, lobby, lobby to create all this convoluted real estate tax law to make their life simpler. But if you actually unlocked the ability to focus on revenue versus expenses, you just wouldn't focus as much on the taxation 'cause you'd say-
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... "Well, I can make so much more money."
- JCJason Calacanis
If you judge, just to, you know, sort of answer the question here from the, from the reader, from the listener, I think that you can really judge this based upon how much it's being pumped by the people who own it, and they are absolutely dogged, religious about this. It's like talking to an, you know, person who's, you know, met Jesus and now everybody has to be a Christian. Um, and you can also look at...... uh, the people who are opposing it, I don't know if you saw Yellen, um, and then, um, Christine Lagarde. She came out against it. Yellen's come out against it. India might ban it. And then you have, obviously China's coming out with their digital yuan. So I think it's gonna be... There's going to be a dog fight here, where governments are not going to easily give up their control of this, and there's many ways they can make a bunch of red tape to slow this down. And in countries that are authoritarian, they can outright ban it. Let's take another question here.
- DFDavid Friedberg
Uh, by the way, there's like three outcomes here, right? I mean, you, you could either see Bitcoin, for example, you know, being banned, and, and that's gonna be ugly. Um, and, and obviously there would be significant financial loss at this point. I mean, to Sacks' point, at some point, there's, there's so much asset value tied up in Bitcoin, it, it, it's too big to fail.
- JCJason Calacanis
Sorry, David, banned by who?
- DFDavid Friedberg
Oh, that, that's-
- JCJason Calacanis
Chinese government?
- DFDavid Friedberg
This, this is what they're trying to do on some of the states, right?
- JCJason Calacanis
India? India is talking about it, yeah.
- DFDavid Friedberg
And they're s- they're trying to make it illegal for citizens to transfer money in and out o- of the asset class.
- CPChamath Palihapitiya
I thi- I think it's, I think it's a bigger threat to countries that wanna impose export or currency controls-
- JCJason Calacanis
Currency curves.
- 22:48 – 33:33
Fan question: Quantum computing's potential impact, why heavy R&D technologies should are better suited for government funding rather than the private sector
- JCJason Calacanis
and, uh, next up, Adil says, "Can one of the besties explain the power of quantum computing and how it can change industries like medical, pharmaceuticals? Any good companies that are leaders in quantum computing?"
- DFDavid Friedberg
Uh, I- I'll, I'll take a cut at this one. So, um, a- and, and the reason, um, I pointed it out is because a lot of people do talk about quantum computing, uh, potentially being a path to cracking the hashing functions in Bitcoin mining and potentially overwhelming the network and effectively counterfeiting the, uh, the Bitcoin, uh, ledger. Um, and so, uh, technically, a, a quantum computer is a computer that uses qubits, uh, which is a, a, a storage of a quantum state versus a storage of a binary state, which is, uh, uh, a bin- uh, a binary digit, which is called a bit in traditional computing, classical computing.
- JCJason Calacanis
A one and a zero.
- DFDavid Friedberg
A one and a zero. And a quantum, a qubit, a quantum state can, uh, be a, a much more dynamic function. And so it's a, it's a state that is, uh, it's, uh, very analog and very representative of kind of a, a much more kind of broader condition than just a one or a zero.
- JCJason Calacanis
It could be a one, a zero, or neither, right? It can have neither state as well.
- DFDavid Friedberg
Think about it as a wave function. And, um... And so a qubit can only exist in a, in a piece of matter, uh, where you can hold the fidelity of a quantum state, meaning it can't be disturbed.So right now all quantum computing gets disturbed. It all has some error-prone, uh, context to it. And so in order to use qubits to do calculations, we use what's called quantum error correction on those qubits, and so we adjust the- the qubits and the output to try and resolve it. Um, a qubit with no errors is called a logical qubit, and a logical qubit has not been built. It would require very, very, very low error rates. Um, and there's a bunch of, uh... an- and- and there's a bunch of theories around when this is gonna happen. When are we gonna have truly logical qubits? Um, when does the error rate get low enough that these qubits are- are- are truly kind of useful? Now, there is an estimate that the number of logical qubits needed to crack RSA 2048, which is the- the big kind of encryption standard, um, which could kind of break the whole cryptocurrency model, um, it would require about 4,011 logical qubits. Um, today the largest, um, sup- uh, the largest quantum computer has about 100 qubits that are very noisy, and so it's less than one logical qubit. And so we would need somewhere between 100,000 and a million-qubit computer to be able to have enough quantum, um, uh, supremacy to be able to tackle a project like cracking RSA 2048.
- JCJason Calacanis
And to-
- DFDavid Friedberg
And by some estimates-
- JCJason Calacanis
... and to-
- DFDavid Friedberg
... and some people have tried to estimate when this would happen, and the estimate currently by some researchers is that this- there's a less than 5% chance this happens before the year 2040. So we're talking somewhere between the year 2040 and the 2060 when we get a- a quantum computer that has enough logical qubits to be able to crack a problem like, um, you know, RSA 2048 and basically make all crypto fail. And between now and then, a lot of people are working on quantum cryptography, which is new methods of encryption that are kind of built for the quantum era and the quantum frontier. Now, what's more interesting is that over the next 100... next 10 years or so, the current super noisy, super low fidelity quantum computers can be used to simulate quantum states, which is the condition of atoms and molecules, and use that to do better modeling of physiochemical properties of material. That's where the breakthroughs will happen in the next decade. So all the hard discrete problems that we kind of theorize about cryptography and other stuff, that's decades away. I- this decade we are already gonna start to see quantum computers have breakthroughs in how material, how atoms and molecules interact with each other. For example, finding proteins that can do a better job of having an enzymatic reaction in the physical world where we can now potentially pull nitrogen out of the atmosphere to make fertilizer or- or drugs or, um, or specific protein targets that can go in the human body and have specific functions by modeling what we can't do with traditional computers today, modeling the quantum properties of those molecules and how they interact with other molecules and then building really cool predictive models that we can then turn into products. And that's gonna be chased really hard this decade. Everyone's gonna be going after it. Um, and we already have enough compute power. I don't think that there's any leader in quantum computing today. These are all still science experiments, they're all breadboards. IBM, Google, Microsoft, a bunch of research labs, a bunch of startups are all kind of basically doing the same thing with different types of qubit technology, but they all have very high errors, they all have very low qubit computers, and so it's still unresolved who's gonna come out with something useful.
- JCJason Calacanis
Two company- two companies to follow are D-Wave, which was started in '99, so just to give you an idea of how long people have been working on this. It's a 22-year-old company. I know, uh, Steve Jurvetson has been backing it for now in its third decade. And then Ionic, is that the other one? I-O-N-Q?
- CPChamath Palihapitiya
I- I think like quantum-
- JCJason Calacanis
And they stacked, right? So-
- CPChamath Palihapitiya
Quantum computing is like fusion.
- JCJason Calacanis
Yes. (laughs)
- CPChamath Palihapitiya
It's like a- it's like a technical problem that has attracted people who've had more money than common sense.
- JCJason Calacanis
(laughs)
- CPChamath Palihapitiya
Um, and-
- DFDavid Friedberg
Hm.
- CPChamath Palihapitiya
... it's just basically a way to burn an enormous amount of money over 20 or 30 years. And the problem with that is that you start to build in technical cruft. Anything that is still in R&D phase 20 years in needs to get scrapped and rebuilt from scratch, because everything has changed, including the people. Even the 20-year-olds that started are now in their 40s and have kids and just have a completely different risk management.
- JCJason Calacanis
Yeah, paradigm might have shifted. Yeah.
- DFDavid Friedberg
That's a great point to remark. Really true.
- CPChamath Palihapitiya
And so- and so, like, you gotta just scrap these projects and start all over again, because the- the- the problem is you need somebody completely naive to look at this problem in 2021 and say, "Well, okay, how are we actually going to really solve, like, the coherence problem? I don't know. How are we gonna build a gate array? Uh, I don't know." Uh, and you have these very, um, formulaic ways that we knew based on what technologies were available in '99 or 2000 to start with. And I think that's probably part of why we framed the problem as largely sort of this thing of like, okay, maybe there's like a integer factorization thing you can do, and it's like, I don't know, I'm, uh, I'm deeply skeptical.
Yeah. Well, the- the- m- I- I agree, and the main thing-
By the way, this is why... Sorry.
Yeah.
Can I just say one last thing? This is why AlphaFold beat quantum computers to the solution of protein folding. Uh, and- and the reason was they were just like, "Ah, we'll just take a different run at it." Completely different people, a completely different technical framework and modality, and a completely different risk profile and age as well.
- JCJason Calacanis
A company to keep an eye on in the, uh, fusion space, Commonwealth Fusion Systems. Um, I just saw Bob-
- CPChamath Palihapitiya
Oh, God.
- JCJason Calacanis
... Lumgard on that fund.
- 33:33 – 37:25
Chamath's thesis behind deep tech investing
- CPChamath Palihapitiya
really ready for commercialization?"
What's Chamath's response to that? 'Cause Chamath, you, you've done deep tech investing and you've done c-
- JCJason Calacanis
I mean, Virgin Galactic would fall into that or no? Yeah.
- CPChamath Palihapitiya
So like, how do you think about deep tech investing, Chamath, and like where, where, like, there's a role for venture capital, private market, you know, dollars? Yeah. I've done a... I've done a lot of deep tech investing. And my whole thing was I've always looked at, at the point where something is completely de-risked, technically, and it's about then the exploitation of a market. Otherwise, it's exactly what David said. So I'll give you an example. Um, a company called Relativity Space is now the second most valuable private space flight company after SpaceX. Okay? YC company, either of the series A. Um, what were they trying to do? Their, they, their, their stated goal at the time was, "We wanna 3D print the entire rocket and the entire engine." And I said, "Wow, okay." Well, when we did the math and we tried to figure this out and have the same launch capability as SpaceX, all of it comes down to, okay, well, how do you wanna de-risk this? And what Tim and Jordan's first idea was, "Well, first we wanna basically prove that we can actually get a certain printing capability done," because you're talking about these extremely, you know, energy-intensive, uh, extremely technical printers, and effectively writing printer drivers, right? And to be doing it at a scale where you can hand that off to NASA, and they can take that engine, literally strap it down with chains, called the hold-down test, fire the engine and say, "It works."
- JCJason Calacanis
Doesn't blow up.
- CPChamath Palihapitiya
Doesn't blow up. And I said to Tim, "How much does that take?" And Tim was like, "I can probably do that on 10 million bucks." I said, "You're done on $10 million."
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
And so-
- JCJason Calacanis
But if it was a hundred million-
- CPChamath Palihapitiya
Hundred... Uh, the only person that would've written a hundred-million-dollar check to de-risk that doesn't understand what they're trying to prove at that point in time. Because what he was trying to prove was the, the ability to use the printer. He wasn't saying, "I'm trying to build a next-generation rocket motor." Right? So similarly with Virgin, you know, Virgin got to a point where it's like, it had flown demonstrably in the air. So what did it prove? It proved the flight profile worked. It proved the engine worked. It proved all the navigational componentry worked, and it proved the safety envelope work, which means that it could basically act as a glider under all kinds of boundary conditions.... that's an enormous amount of technical progress. And then, at that point, there I'm willing to invest billions of dollars. And so to David's-
- JCJason Calacanis
And, and they have a-
- CPChamath Palihapitiya
... point, you have to have an in-
- JCJason Calacanis
... revenue model early too.
- CPChamath Palihapitiya
Y-
- JCJason Calacanis
Like, that's one of the things about being an entrepreneur, is figuring out how you stay alive while you s- answer these questions. And you came up with a brilliant one, or whoever was doing Virgin Galactic, which is, n- people will overpay for a tourist-
- CPChamath Palihapitiya
No, but Virgin was a 15-year process-
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... where Richard Branson, to his credit, did exactly what David said. "Here's $10 million, get to milestone one. Here's $25 million, get to milestone two." He did the exact venture capital model. It's just that he did it by himself. I think what David is saying, which I agree with, is you should never short-circuit that and say, "Here's $500 million pre-Series A, just go off with it."
- JCJason Calacanis
Yeah, I'm, I'm agreeing with that, sure.
- CPChamath Palihapitiya
Otherwise-
- JCJason Calacanis
I mean, Magic Leap.
- CPChamath Palihapitiya
... you'll be working at something for 20 years with nothing to fucking show for it, as in fusion, as in quantum computing.
- JCJason Calacanis
All right. There you have it, folks.
- DSDavid Sacks
You'll end up with, like, you'll end up with a, a Magic Leap or, um-
- CPChamath Palihapitiya
Theranos.
- DSDavid Sacks
... Theranos or even Quibi.
- CPChamath Palihapitiya
Well, Theranos was a fra- I mean, it, it looks like it's a fraud, but Magic Leap just looks like it's technically incompetent. (laughs)
- JCJason Calacanis
Or it's too hard of a technical problem to solve in the amount of time and the amount-
- CPChamath Palihapitiya
Technical, right.
- DSDavid Sacks
Right.
- 37:25 – 48:49
State of VC & how it's changing in terms of demographics, new access to capital, deal size & more
- JCJason Calacanis
think you're describing the person, not the problem.
- DSDavid Sacks
It could've been too hard-
- CPChamath Palihapitiya
That's all.
- DSDavid Sacks
... lift for them, so, you know.
- JCJason Calacanis
Yeah. Okay. Well, the last question is about access to private equity, but let's just go into this deck here. Now, one of the things we wanted to talk to today, Chamath had a good idea. Venture capital is changing rapidly. Um, the last decade has seen more change in venture capital than, I would argue, the four decades or five decades that venture capital has existed. In other words, more change, um, and we're gonna go through some of those changes, how it affects the entrepreneur, how it affects the investor. Chamath was nice enough to put a deck together.
- CPChamath Palihapitiya
And then, I guess Jason will figure out a way to post this into the YouTube or something like that and-
- JCJason Calacanis
Yeah, you know what? We'll put in the show notes a link to this Google presentation, and Nick can pull up the slides when we're talking about them.
- CPChamath Palihapitiya
And also, I think, I think if folks can give us feedback, this is kind of a new thing for us. We're trying to experiment, which is sort of, this is like a half teach-in, half discussion on something we all wanted to talk about. And hopefully you guys get some value from it, but, uh, tell us if it's not. So, uh, I, I want to thank, uh, Carmen Collins on my team who helped put this together, but let me just, uh, go through this state of venture capital. Um, so a, a couple of high-level points. There's, like, some really important trends at play. The first is that there really is now, underneath, a massive change in the players in this game. Um, founder demographics are changing slowly but surely. We're gonna go into that in a second. Traditional, uh, VC investors are getting disrupted. We're gonna go that, we're gonna go into that. Um, and then this model, which I love, of, "Let me know how I can be helpful," quote unquote, um, basically eroding, um, and seeding ground to what we call solo capitalists. And we'll talk about that, which is probably the most disruptive trend in venture. Second, we'll talk about the inflation in the amount of money that's going into these companies, which really means more money at higher prices, and why that's good f- in some ways and actually bad in some other ways. This goes back to David's point of, you know, not being forced to, to generate milestones sooner. Uh, and then the third is that it's really now a founders' market. And I think this is really important because, you know, you've seen an enormous amount of dilution and lack of control for, uh, founders and employee teams in companies. And I think that there are some really disruptive new ways that completely usurp traditional venture, non-dilutive forms of financing. We'll talk about that. So let me just level set for you guys. I asked the following question, "What are the demographics of the United States?" And here's what they are. In the United States today, 59.7% of people are white non-Hispanic. 12.5% are Black, 5.8 are Asian, 18.7% are Hispanic, and 2.3 are multi-race. If you map that to VC founders, 77% of VC founders are white, 1% are Black, 17.7% are Asian, 1.8% are Hispanic, and 2.5 are multi-race. So amongst multi-race, Asian and white, you either are at or overindexing your representative population in Blacks and Hispanics. This is not anything new, but massively underrepresented. If you take it from a gender, females have lower representation among founders, but it's growing. So the US is basically 50/50 male/female. Female-founded companies were 23% of all deal activity in 2019. That's, that's pretty good, um, up from 12% in 2010, although racial diversity is still pretty lacking, which we know. And then the young tech bro stereotype is cracking, uh, which is, this is incredible, a 2019 study in The Times showed that the average age of a tech founder is... David Sacks, what do you think it is, the average age of a tech founder in 2019?
- JCJason Calacanis
Median or average?
- CPChamath Palihapitiya
Average.
- JCJason Calacanis
Mean or median?
- CPChamath Palihapitiya
Average, average.
- DSDavid Sacks
Well, I saw, I saw your deck, so isn't it something like y- uh, it was surprisingly-
- JCJason Calacanis
I would say 35, 40?
- CPChamath Palihapitiya
42.
- DSDavid Sacks
42.
- JCJason Calacanis
Yeah. No, I'm seeing a lot... I think the... I don't know, uh, just to pause here for a moment, what are we thinking-
We can still found a company.
You can.
- DSDavid Sacks
(laughs) Yeah.
- JCJason Calacanis
What do we think is... given we, you know, we had the longevity question earlier, and then you have people, you know, generating wealth and starting companies in their 40s, 50s and 60s who then underwrite it themselves, right? Uh, until they get to product market fit and then raise money. What do we think is the best zone for an entrepreneur in terms of having a great outcome?
- CPChamath Palihapitiya
I've always thought that the... Look, I, when I, well, how old was I? I was 30 i-... one, 32 when I started Social Capital. Um, I mean, this is a multi-billion dollar enterprise. I feel like I'm reasonably successful at it. Um, but I was preparing for the first 13 or 14 years of my professional career. I learned some good things, I learned some bad things. I learned tactics that worked, I learned strategies that didn't work.
- JCJason Calacanis
So, 30s or 40s? Or 30s-
- CPChamath Palihapitiya
Well, no, no in my-
- JCJason Calacanis
... to 50s? Yeah.
- CPChamath Palihapitiya
In my experience, for me, and I think it's for personal for everybody, I was best positioned to know what to do and at least iterate in my 30s. Um, and I think in the absence of an idea that has some network effect or something that's sort of like supernatural, outside of your own control, I think the older you are, generally, probably the better prepared you'll be.
Yeah. I agree. I mean, I did PayPal when I was still in my 20s, but I wasn't the founder of the company. I was recruited to it at a very early stage. I didn't really start Yammer until... Well, I guess I started the predecessor company, Genie, when I was 34, and then Yammer, pivoted into Yammer when I was 35. I mean-
- JCJason Calacanis
Absolutely. Yeah, I, I-
- CPChamath Palihapitiya
... that's, that's like a, that's like a good level of preparation, you know? Unless you have a spectacular idea for a startup, you should probably get some experience first.
- JCJason Calacanis
100%. Freeberg, any thoughts there? On what's the kill zone, best time to launch companies, in your mind? Or invest in companies, or where founders are beginning-
- 48:49 – 55:00
Trend of founders caring more about individual investors rather than firms, who is well-positioned & who is left out?
- JCJason Calacanis
uh, in terms of getting this product out to the world.
- CPChamath Palihapitiya
What, uh, what do you guys think about this other trend, which I think is really important, which is the atomization of these firms. So, you know, we're moving from a world where people used to care about, name the brand, Sequoia-
- JCJason Calacanis
YC.
- CPChamath Palihapitiya
... Accel, uh, and then now they, they name the person, right? And they'll probably follow that person wherever they are. So what do we think about that? There's a really interesting tweet from Eric Torenberg. He said, "Founders don't want to raise money from institutions as much anymore. They want to raise money from individuals." And then if you marry that with what's happening with AngelList and all this other stuff, isn't that the trail of breadcrumbs for how, like, VC just kind of, in some ways, just kind of gets blown up the way that it's normally been done?
- DFDavid Friedberg
I r- I remember as a founder, um, wh- when I started my company in 2006, there was a lot of this conversation in, as, as, uh, Sacks pointed out, in the blogger communi- blogging community and, and with, like, various websites that rated VCs. And there was generally a trend in the support network among CEOs at venture firms, um, of talking a lot about make sure you pick your partner, don't pick the firm. Um, and so this, I don't know if this is necessarily a new trend, Chamath. It's certainly something that I remember being top of mind 15 years ago when I started my first company. And so much of it was about make sure you have the right partner, because that's who's going to be on your board, that's who you're going to spend time with, that's who's going to recruit executives with you, that's who's going to be helpful in finding your next round of funding for you. Um, and I feel like that's al- that's always been the case. But you're right, the brand value of a firm has certainly become less useful, um, and folks have struggled to kind of figure out, I, I think a solution here. I mean, you, you see what Andreessen Horowitz did. They, they launched in 2009 and really focused on trying to be this kind of full service provider to startups. And I, I don't know how much that matters as much anymore, as much as making sure you've got a great partner from the firm that's helping you with your business. I, I don't know.
- JCJason Calacanis
It's, it's actually, you're, you're right, Freidberg, that it's a continuing trend. What I'll say is the top firms are still as attractive or more attractive to founders. The loser in this, I believe, is the mid-tier firm or the lower tier firms that actually none of the partners there are all that great. The performance is not that great. Their value add is not that great. But when you do get a Sequoia or an Andreessen, uh, and I put Craft in this as well, when you get one of those all-star VC firms to join your board specifically, that is the key. When they join the board, they own over 10%, you are anointed in a way that is transcendent. You will get pounded with inbound from the second tier and third tier firms who want to triple your valuation and give you 20 million bucks. It happens like clockwork. In fact, there are a couple of firms, like, was it DAG the one, Sacks, that would always follow on?
- CPChamath Palihapitiya
Sequoia.
- JCJason Calacanis
Sequoia deals. And so there were firms that were built around this concept.
- CPChamath Palihapitiya
That was their, that was their LP pitch, DAG's LP pitch is, "We-"
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... "just, we will mark up every Sequoia deal."
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
Exactly.
- CPChamath Palihapitiya
And so-
- JCJason Calacanis
I mean, and you know what?
- CPChamath Palihapitiya
... it w- I mean, one page, it was one page. So it's like, if you can't get into Sequoia and you're willing to wait an extra round, (laughs) invest in DAG.
- JCJason Calacanis
Well, and then now, the, I think the big trend here is those firms, Andreessen and Sequoia, are now full stage where they have the late stage growth. They have a scout program. They have a seed program. They have a Series A program. So the full life cycle-
- CPChamath Palihapitiya
But Jason, it's not those, it's not those guys also, it's just, it's all these other big crossover guys that have come down, Tiger-
- JCJason Calacanis
Yes.
- CPChamath Palihapitiya
... Coatue, Durabl.
- DFDavid Friedberg
I think that's the biggest trend of the last, uh, 15 years, Chamath. And I think it is what has enabled the proliferation of early stage startups and enabled the valuation increments and the capital that's flowed in the early stage, is the, um, is the scale down from the big guys. I just want to kind of do a quick walk down memory lane, 'cause when you guys said you wanted to talk about this, I kind of remembered, I, I got my Series B term sheet in 2008, I guess it was, and, um, and, uh, or 2009. And I had three venture firms. Uh, Andreessen was one of them that gave me a term sheet. Uh, and the interesting thing about at that time with Andreessen was they gave me a term sheet. I was trying to raise $30 million, and they said, "We want to give you 40 million," and they upped the valuation significantly. And, um, and there was a tr- uh, I ultimately went with Coastal Ventures, but there was this trend, um, that Andreessen was kind of imparting, and, and I heard about it a lot from other, uh, entrepreneurs, was that they were going out and offering more money than the founder was asking for or seeking at higher valuations. And it was this trend towards saying like, "Go grab the market." Because the interesting thing about web scale economics and, um, you know, web scale businesses is you get so much leverage and you can get e- extraordinarily rapid growth. I mean, the, the rate of growth could be infinite, um, and, uh, and the leverage could be infinite. And so-
- CPChamath Palihapitiya
If you do it, if you do it at the right round, I think that's...
- DFDavid Friedberg
But so much of this was... And, and then obviously, so that was a huge step up. And I remember Andreessen Horowitz beginning in 2009 kind of started to build a reputation for doing this, of, of kind of, you know, putting larger checks out and saying, "Go scale." And then the, the big crazy thing was the crossover guys started coming in and, and offering bigger checks in, in kind of this proven stage, growth stage kind of funding.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
And then obviously the big step up was SoftBank and SoftBank with the $100 billion vision fund. And, and ultimately what-
- JCJason Calacanis
But what exactly did that disrupt, Freidberg?
- DFDavid Friedberg
Just hang on. So when all of these things happened, those large chunks of capital became available, and the valuation step ups were so significant for these later stage startups that the money flowed down and more money was raised in earlier stage venture that enabled this proliferation of capital and this proliferation of new startups and enablement of startups at the earlier stage because of all the crossover money that started to come in and the blitz scaling of proposals and lots of money that was being thrown in at the later stage. That, to me, felt like the reason all of the earlier stage stuff proliferated was because of the, the amount of capital coming in at a later state.
- CPChamath Palihapitiya
You're, you're absolutely right. And now, 10 years later, here's where we are. In early s-
- DFDavid Friedberg
SPACS are the next step, Chamath, because like-
- CPChamath Palihapitiya
Totally.
- 55:00 – 1:04:00
Why growth stage firms could become less relevant: undifferentiated capital, routing around dilution, brand matters more in the early-stage; how Pipe & Clearbanc are revolutionizing non-dilutive funding
- DFDavid Friedberg
and, and I think, you know, I think it's the next step up, and we just keep seeing these step-ups.
- CPChamath Palihapitiya
Yeah, I tend to think that the growth stage is the most troubled and challenge. Because at the early stage, you can get a guy like Sacks or J.CAL on your board, and you can grind. And I think that that's really important to get to product market fit. And at the public stage, you can get somebody like me, and, you know, we can help transact and actually help optimize and run the business for scale and value. But in the middle, you have all these weird dynamics that no longer, maybe no- don't make as much sense. So just to give you a sense of it, the average deal size, okay, so the typical round, is up 3X over the (laughs) last 10 years.
- JCJason Calacanis
(laughs)
- DFDavid Friedberg
3X.
- JCJason Calacanis
Uh, that, that is absolutely anecdotally my experience.
- CPChamath Palihapitiya
Uh, in late stage, investors are doubling and tripling down on these mega-deals, so that that average round size is up 5X in the last decade. Um, the, the typical pre-money on a growth-stage deal in 2010 was 100 pre. This is for the top quartile. Uh, and it's now... Or sorry, this is for the average. It's now f-
- DFDavid Friedberg
This is for a growth stage?
- CPChamath Palihapitiya
Yeah, a growth stage. 100 pre, it's now 573.
- JCJason Calacanis
Wow.
- CPChamath Palihapitiya
(whistles)
- JCJason Calacanis
Yeah, it's getting crazy.
- CPChamath Palihapitiya
It's really, it's really, really getting crazy. Tiger, it says here in the notes, Tiger Global has announced a deal, according to PitchBook, every 48 hours in 2021.
- JCJason Calacanis
Well, here's something interesting (people laughing)
- CPChamath Palihapitiya
That's fabulous. That's fucking fantastic.
What Tiger, I think, has figured out is, they're, they started as public market investors and worked their way down the stack, right? So they're very familiar with the public market valuations. They're seeing that these SaaS companies are, you know... Th- we, I remember 10 years ago, when I was doing Yammer, we thought that the best outcome that you could have as a SaaS company was, like, a $1 to $2 billion exit. That's why when Microsoft offered us 1.2 billion in 2012, we took it, right? We're like, "We could work five more years, maybe get to a $2 billion outcome." Well, now you're seeing what, Slack just got acquired by Salesforce for close to 30 billion. It's pretty routine f- to see SaaS companies IPO-ing at now 10, 20, 30 billion and up. And so the exits are just so much bigger than anybody thought 10 years ago. And we were the optimists, by the way. There's a good tweet on this by, um, it was Jay Malik. Basically, he gave some stats. He said that, uh, "If you're wondering why everyone wants to invest or be a VC today, the stats from PitchBook provide an answer." We had 43 billion in exits in 2010. We had 290 billion in exits in 2020. So we had about 7X, roughly, greater exits over the course of a decade. Now, the average deal size has grown 3X, and there's a lot more money going into venture capital. But the reason why you're having all this money go in and all these new players is because the outcomes are so much bigger. And then he said, and I agree with this, wouldn't be surprised if VC hits 1 trillion by 2030. So we're seeing just the... I mean, I remember 20 years ago when I first got into the business, you know, like Silicon Valley was this small little, um, concentric circle around Stanford, and now it's spread to San Francisco and the entire Bay Area and to other cities, and it just keeps getting bigger and bigger. I mean, tech-
Continents.
- DFDavid Friedberg
It's the digitization of every market, right?
- CPChamath Palihapitiya
Right.
- DFDavid Friedberg
I mean, every traditional business, every traditional industry is being digitized in some way or another. And so it's no longer a tech enabler of other industries. It is the industry itself.
- JCJason Calacanis
We know that the s- the brand really matters in the early stage, because they anoint you, and they bring so much value in terms of working with you to solve problems. We know with SPACs, whoever, and IPOs, whoever is anointing that really matters, right? The sponsor. But in the middle, is all that cash now moved to a, a game of who will pay the most for the least rights? In other words, series B to, you know, when you get involved, Chamath, is that just, uh-
- CPChamath Palihapitiya
It's such a good point. You're, so what you're now teeing up, Jason, is this next big category, which is, if it's undifferentiated capital, at some point, you're gonna go to the logical conclusion, which is, I don't want any dilution from this. I'm happy to take dilution in the series A when I get, you know, Craft or Sequoia or Benchmark. I'm happy to take dilution in the IPO because that's sort of the necessary process of, you know, diversifying the stock ownership, getting, you know, my users and my customers to be able to own the stock, et cetera, et cetera. But in the middle, now you have these companies like Pipe and Clearbanc, where now, all of a sudden, you can grow, Jason, in your B, C, D rounds, and you have zero dilution. So if you're a founder, you know, the best formula is gonna be take series A and seed capital from an expert single, you know, GP brand person who knows that business category so well, right? If you're starting a SaaS company, you should probably get your seed from Sacks, you know, raise your A from some expert... Or wait, let me say it differently. Seed from J.CAL, A from Sacks, and then go to Pipe and Clearbanc, and fund it all based on your recurring revenue growth-
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... and then go public via a SPAC. So just to give you some p- uh, data that I got from Pipe and Clearbanc-
- JCJason Calacanis
Which means you would, just to give people an idea of what the cap table would look like there, you would dilute 10% in your s- your seed round, 20% in your A. Now you still have 70% of the company, and you just sell your yearly contracts ahead of time-
- CPChamath Palihapitiya
Correct.
- JCJason Calacanis
... to Pipe-
- DFDavid Friedberg
Correct.
- JCJason Calacanis
... and you're done.
- CPChamath Palihapitiya
By the way, can I, can I tell the story about Pipe? So Pipe, um, Pipe, like, Harry-
- JCJason Calacanis
Yeah, it's kind of painful. Thanks for including Friedberg and I.
- 1:04:00 – 1:11:08
Summarizing the changing landscape of venture capital, how startups can best position themselves in a full lifecycle, innovations in equity crowdfunding, opportunity for entrepreneurs
- CPChamath Palihapitiya
thing I'll say is that, uh, the other big thing as- as Friedberg says is like, um... So let me just summarize. So it's kind of like, I think where we're all going to is we see the venture capitalist changing.
- JCJason Calacanis
The financial stack, yeah.
- CPChamath Palihapitiya
Um, it's going from organizations and these amorphous, amorphous financial orgs down to individuals. As that happens, I think what we're all kind of stating is, it's incredibly valuable at the earliest stages to align yourself with a person that knows your business or your market, right? And that's worth some amount of dilution. It's almost like getting a quasi co-founder, right? So in the seed and the series A. But I think, so that's one really important point of what's happening in the market. The second thing that I think we're all saying is, "Why are we diluting ourselves to grow in these middle rounds if you don't have to?"
- JCJason Calacanis
If you don't have to.
- CPChamath Palihapitiya
Well...
It's unnecessary and there should be really clever ways of non-dilutively financing yourself. And as, as the market becomes more and more sophisticated, there will be more companies beyond Pipe and Clearbanc, to be clear. But the point is that every kind of company that has product market fit should be able to finance themselves non-dilutively in the B all the way to the D and the E. And then the third thing, which is sort of what Friedberg says is this last bookend, is then you have sort of the path to going public. And this is where the SPAC makes a ton of sense, because you have a very certain cost of capital. You can now architect a cap table where the founder remains in control, where they and the employees are still more than 50%, and you pull in the time of the IPO. Why is that important? Typically today, these companies were taking 12 plus years to go public. Now with SPACS, they've come back in and they're closer to seven and eight years. The reason is back to that argument of like, if you wanna be a winner, take most outcome, the most important thing you need at scale is money. And the way that you get money is by opening the kimono on your finances and showing people who have lots of money why they should give it to you and not something else.
- JCJason Calacanis
Right.
- CPChamath Palihapitiya
And so by going public in year six, seven, and eight, that's where you pull in the billions of dollars that you can dominate.
- JCJason Calacanis
Uh, the... What we're seeing is massive competition in the financing of massively competitive startup scenes. In other words, the entrepreneurial ecosystem has never been this vibrant. And I wanna point out one thing that the SEC has done that has... is going to change things dramatically, I believe. When syndicates first came out, everybody said they were stupid, nobody would ever do it. First one we ever did famously was com.com. We put in $328,000, became worth over 100 million. We're on track this year...... to do five deals a month, 60 deals, and we'll put 50 million to work this year at thesyndicate.com. Think about that. My fund is 44 million. That's over three years. So now the syndicate's gotten so big, um, that we-
- CPChamath Palihapitiya
You should just run the syndicate.
- JCJason Calacanis
Well, exactly. So I, uh, I'm gonna tell my LPs the next time around, "Let's have a discussion about this." But anyway, I wanna point out what republic.co happened this week. republic.co is equity crowdfunding. This means civilians can invest. There used to be a cap on an equity crowdfunding of $1 million every year, and there's a lot of auditing and financial review you have to do. And you pay 6% to whoever raised the money. But it's n- it's, um... There is no sponsor involved in this. So as an investor, you don't get me as a lead, or Chamath as your sponsor, or Sacks on your cap table. But you can go onto Republic now, which has 100,000 investors on it, and Gumroad, which is doing $10 million a year, just raised $5 million in one day, Sahil, who was also running a rolling fund with AngelList. And he has 8,656 investors, which means people are putting in under $1,000 each.
- CPChamath Palihapitiya
Amazing.
- JCJason Calacanis
And the... It's capped at 5 million now. Then Arlan Hamilton, who runs Backstage Capital, did a very non-traditional, I'll say, raise. She's not raising for her fund. She sold 10% ownership, or is in the process of selling 10% ownership in her venture capital fund, Startup Studio. It had a $50 million valuation, she's selling 10% of it. If you buy shares in that, you don't get carry, but you get 10% of her carry and management fees forever. So it would be like buying 10% of Craft or whatever. The point is, you... the VCs get, uh, boxed out of this. And this, imagine if Airbnb or Uber decided, "Fuck it, we're gonna let our drivers buy shares through this." And they said, "We're starting this crowdfunding for 5 million." And they did it every year, 'cause you can do the 5 million every single year. So every year, you just allow folks who are in your stakeholder pool, you email them, and then they buy in. It's just-
- CPChamath Palihapitiya
Sorry, Jason, Jason-
- JCJason Calacanis
... absolutely extraordinary.
- CPChamath Palihapitiya
Can you explain the Arlan thing? So she... Sorry. She sold 10% of what? Her-
- JCJason Calacanis
It's a little complicated if you page down to the-
- CPChamath Palihapitiya
Her future earnings?
- JCJason Calacanis
Yes. So if you go to the flow of funds in that link I sent, republic.co/backstage, she has took all of her different funds and said, "You can buy 10%. For $5 million, you own 10% of essentially Sequoia Capital, uh, or Y Combinator," whatever you want to refer to her, um, you know, company as, her holding company. Then every time she gets management fees, every time she has distributions from her carry, she's gonna give 10% of that to these folks forever. I don't know if that's a great idea, but it's a- a- a new idea. Um, and I don't know if the investors in that are gonna get a ma- a massive return, or they're doing it 'cause they want to support the cause.
- CPChamath Palihapitiya
That's, that's incredible. My gosh.
- JCJason Calacanis
It's so weird, right?
- CPChamath Palihapitiya
It's so disruptive. It's so disruptive.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
Wow, it's incredible.
- DSDavid Sacks
Well, because it lets anybody really spin up a new venture firm, basically, 'cause there are some startup costs to spinning up a new venture firm, so...
- JCJason Calacanis
Remember she's been in it, she's been doing this for 10 years, and-
- DSDavid Sacks
Yeah.
- JCJason Calacanis
... really has gotten...
- DSDavid Sacks
Good for her.
- JCJason Calacanis
... I will have to say, not a lot of traction-
Episode duration: 1:17:28
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