Tech Brew Ride Home - (Bonus) Chamath Palihapitiya Interview

Episode Date: April 23, 2023

Again, my Internet History Podcast interview with Chamath Palihapitiya of the All In podcast from 2016. Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Internet. history podcast. I'm your host, Brian McCullough. So for the second of my San Francisco trip episodes, the good people at Social Capital were kind enough to host me for a

interview with Chamath Polyhapatia. Most of you know Chimath as one of the more prominent and progressive venture capitalist working today. But before he formed Social Capital, Chimath was an early employee at a startup we've already covered, Winamp, was the head of AOL's instant messenger product when that really meant something. And of course, he was an early employee at Facebook, where eventually he was in charge of user growth. On today's episode, we get into all of this with the fascinating Chimath Palihabitia.

Chimath Pallihabitia, thanks for coming on the Internet History podcast. Thanks for including me. So I think your story is somewhat well known, that you grew up, you were born in Sri Lanka, moved to Canada, age six, I think it was. You were essentially a refugee from Civil War, so you grew up in poverty, generally. But other people that I've spoken to

that are either immigrants themselves or the children of immigrants, there's a common theme, which is that the parents never want the kids to do anything risky. They always want them to be doctors, lawyers, something safe. Were your parents that way? Yeah.

I think it's basically like this psychological, that sets in when you make a lot of sacrifices. So if you're on a path and then for whatever set of circumstances you take yourself off that path, all you can think of is like how does someone or something in my life validate those choices? And for a lot of parents, the, frankly, the most important validation ends up being their children. And so, you know, I would say like my parents had a very traditional worldview, which is where they grew up in Sri Lanka. The smartest kids became doctors or lawyers or accountants. Because in order to do those three things, you had to maybe go and get a degree in the UK. That's a big deal when you're in

Sri Lanka. And so, yeah, their definition of success was myopic. It wasn't incorrect. It was just, I think it was not the fullest of what it probably could have been. Someone else told me, I'm not remembering who at the moment, but it's almost like the parents took this insane risk. And so that... they assume I did this so that you never have to take risks. I think that's also a part of it. It's like, if you think about it, that is the most insane risk of all, which is like, you know, okay, like I say to our entrepreneurs all the time,

like there are so few life-threatening decisions. Like what life-threatening decision are you, do you really, are you faced with? There are just on nine-nine. But then when you think about like, okay, we emigrated, there's a civil war, you can't go back, it's unsafe. That actually is a life-threatening decision. And so in so many ways, yeah, it's like it's they had to take the biggest risk. And then they probably, again, coupled with that psychology,

they just want you to basically live a very different life because then it just allows them. Well, A, I think it allows that, it allowed at least my parents specifically to feel like everything was safe. And then I think the other part of it was they just needed a way to reclaim some sense of stature. Because I think they, at least in my case, they just went through a lot of stuff where they never was able to leave. live up to their own expectations of themselves. What was your parents' professions? Well, my dad worked in the health ministry in Sri Lanka. But when we moved to Canada, he worked at a photocopy.

Most of he was unemployed. Then he worked at a photocopy store. And then he was a clerk in the federal government for a while. And my mom was a housekeeper. Then she was a nurse back to Sri Lanka. So you attend the University of Waterloo, you know, the big, university for sending tech talent down here sometimes. Your degree was in electrical engineering, not computer science.

But then you go into banking. Why banking? Well, I think part of it is just because you, well, I was faced with a very short-term problem, which was just, you know, I had racked up about $27,000 or $28,000 of debt, student debt, debt even though I was part of the co-op program at Waterloo. So you alternate work in school, you get paid a little bit, you use that to pay for school, but there are still gaps. So I had that to deal with, number one.

And then number two, my parents basically wanted me to go to graduate school. And I was like, well, this is crazy, we're really poor. I have all this debt. And there was these really great jobs on base jobs. which is the Canadian equivalent of Wall Street. And I got one. And it seemed like all the money in the world. Like, you know, you get paid $55,000.

I remember in like your first year bonus, people would say guaranteed at least $25K. And you're like 80 grand. I mean, like, I can make $80,000. And so it just seemed like the right thing to do. It was a very prudent decision. Were you good at it? I think you were a driver. I was really good at it.

You know, and what's funny is like I found out something about myself, which is I have both like proclivity for tremendous risk, financial risk, but I think I make reasonably good decisions when I'm faced with little information. And so when you put the two together, you know, while I was trading interest rate derivatives on behalf of Bank of Montreal, I was also basically trading equities, tech stocks. And that's actually how I paid off my student debt. one of my managing directors made so much money off of my stock picking, he said, he's an incredible guy, his name is Mike Fisher. And he literally wrote me a check for $27,000. He goes, this is not for you.

It's for your student loans. Go and pay it off right now. And I remember, because I worked in this big, huge office tower, at the bottom is a branch. And I literally immediately walked downstairs. I cashed in the check for $27,000. I paid off my student loans. And I just remember feeling like, wow, like what a huge. weight and it wasn't but like six months later I ended up quitting and that's all it took so if you

really like if you think about it it's like there was a couple of other things like I didn't get a super bonus and a couple of but it's like you boil it all down it's like that 27,000 drove so much of my decision made it released you to be able to do 27,000 dollars and then and then you think like what about the poor individuals now who have to deal with hundreds of thousands of debt how good must they be, but then they're not going to get lucky enough to pick a couple tech stocks A, but then B, not work for someone generous enough to actually just give you the exact amount of money you owe. Like, so, I don't know, it just, yeah, it's 27,000.

So I read in a couple places that you come to Silicon Valley because you're following your girlfriend. Now my wife. Now your wife. And so just to put this in context, is it 2000? Yeah, you come here. Great. So it's right when the bubble's bursting.

Before. Right before? Yeah, it was before. So it was like, I remember she lived in Burlingame, and she worked in Palo Alto. And I land here to go and visit her. It was like a February. And there's not a drop of snow. I'd never been to California.

And it is beautiful and sunny. And then she says, great, let's go. I show you my office. And it was like a Saturday. And we get on the 280. And I'm driving down the 280, and on the right-hand side, it's like this beautiful, idyllic water and woods and all this stuff. And I'm like, where am I?

Like, what is this place? And then we drive around Palo Alto. She shows me Stanford. And I was like, what am I doing? Because I was like, I just wanted to be around. And another one of our friends had actually also come down to the Bay Area at the time, and he was doing his master's at Stanford. And so the combination of those two, I'm just looking at them,

like she's working at a startup, or she's working at Ernst & Young, but working with many startups, then she went to many startups. And then my other friend who has now started one of Social Capital's Best Portfolio Companies, I'm looking at these guys, and I'm like, man, these guys are like really going for it. Like, they're chasing their dreams. And I was like, I got to get you. And so that's when I went back and I just started applying, like, random. to every job possible.

You interviewed at eBay and did you get an offer from eBay? I interviewed in the CorpDeb group of eBay. I want to get this right. So for sure it was eBay and TIBCO. And one of them was in CorpDev and one of them was more like technical product I think. And I got an offer in the corp dev job. I didn't get the other offer and I got an offer from Winamp as a, at the time, the business development man. business development manager because what I played up this whole oh I know business because I

worked in finance they didn't even I mean this is what they didn't know the difference between a trader a banker they were like oh finance equals business do you mean winempt didn't or anybody okay well we'll get to win em in a second yeah and so like Fred McIntyre who interviewed me I'm sure he didn't know the difference and so but but he saw that I was technical he's like oh technical guy knows finance which means technical guy knows business so we'll just hire and he'll do some biz dev type stuff. And I was just so happy because I was like, it was like young people.

I was like, how are young people in charge of anything? This makes no sense. I go back to Bank of Montreal and it's like, my boss at the time, or in his late 30s, early 40s, his boss is in his mid-40s, his boss is in his mid-50s, and his boss is in his mid-to-late 60s.

And that's all I knew. And here you have 18, 19, 20-year-olds running around like they own the joint. And so, yeah, It was crazy. Well, so I've had Justin Frankl on the show, so I want to go into this a little bit because the other thing about them at the time is they're, what, five, six guys? It was originally five guys backed by Justin's, I don't remember this correctly,

Justin's father and, like, I think a father's friend. And I think between Justin's father and Justin, they own like 97% of the company, like just basically, they own the whole company. And then there was the original five guys, and then there was these four or five of us that were hired. in short order kind of like after that period. It was, there was like two guys from France. And it's really, actually, I kind of feel bad because I actually don't remember most of these people's names now even.

I promise to no remembering names, no remembering dates. And so it was like a couple guys from France, me, a couple guys from, you know, San Francisco. And, yeah, like the whole team was at the time that probably grew at the max maybe to 17, 18 people. So for those listening, reference the Justin Frankl episode for more in-depth about this. But, you know, Winamp is, this is slightly before, but then in the mix with the whole Napster era. This is when music is being revolutionized.

So with no background, no experience, this is your first startup, you're thrown into this. And what are you doing in this? My first deal deal that I did was, unwinding. There was an there was an amazing time where there were I don't even know how to call these types of deals

but it was like essentially like round tripping kind of deals where like you know you would buy services from me I would take that revenue and then buy services from you kind of thing. Tons of people did that in that area. It was and so you're man I mean obviously you say it today

it's like of course that's illegal. Back in the day it didn't it seemed like like wow we were all just doing business with each other in any event it was to unwind a deal with a company called MyPlay which was essentially like Dropbox at the time for storing music and so Winamp was downloadable software and we had an install screen and so you could package and cross-sell different apps because plugins and things like that plugins and things like that and so in our installer if we placed you correctly you would just get

huge uplift because this is a product that had, I think, I want to say, 100 million plus users. And so we negotiated some deal where we got like five bucks per install or something. I mean, something crazy. Fred McIntyre did this deal. And that long story short, like my play owed us like, I don't know, it might have a little bit of billion dollars. Like whatever it was, it was just like untenable for this startup to pay. And so we were in the midst of unwinding it.

That was my first deal. And so it was a little bit of negotiating, a little bit of marketing, a little bit of, um, market. modeling, and it was a lot of interacting with the product team because it was about extricating a bunch of stuff out of the code base. And that's where I started more of a migration back towards more traditional product. I want to hit on that just real quickly because it's more common now, but the fact that seven guys, or however many, less than 10 guys, got to 100 million user base. It's insane.

It's, it's, I mean, it's, it is insane. Like even 100 million users of anything today is probably at least a top 50 app. Excellent. But in an era when there's what 300 million people on? I was like I was going to say, I think the internet was at least one tenth of what it was. So it just meant a lot more. And also, I actually think to give Justin credit, it was also the first real consumer-facing development platform of any importance. You know, the number of skins and plugins.

The one thing we never had was a real economic model. but we had an unbelievable level of developer adoption, and we actually showed that there was a way where once you had scale, you can rewire distribution and give the massive long tail of companies access to a massive user base. Today, that just seems like, oh, duh, that's obvious, Android, and, you know, obviously like iOS and the iPhone, but, yeah, back then it was still a really big deal,

because the only other way that you could do it was, for example, like, you know, AOL would do these things called carriage deals, and they would charge you an arm or a leg. You would go and raise money from a venture capitalist. You know, he or she would give you, you know, 20 million bucks. And then AOL would do a deal and take 17 of that $20 million. Turn it right over to them, yeah. Exactly, and promote, you know, like I remember, for example,

there was this furor at the company because we ran Greyhound Racing Ads one quarter. Because AOL did some crazy deal with some, like, European betting company. And, you know, this was before this kind of stuff was illegal. And they were like, all right, we got to stuff like two fucking billion ads down everybody's throat in the next like three days. And so they took over every property and we had a little interstitial banner at the top of the Winamp product. I just remember people in turn around like, I love dogs. One of our guys, he was the CMO, had a greyhound and they had rescued. And so it was like the most comical thing because it was like it was the two worst things you could have.

done. It was like betting, racing, gambling of a dog, of which one of our executives had that exact same dog. It was hilarious. And on a music application. So we sort of alighted over this. AOL bought Winamp combined it with Spinner. With Spinner, yeah. So basically what happened was like when I came in, there was these two guys. One had split his time on Winamp. One split his time. This guy, Dave Cotton, on Spinner. And Spinner was more internet radio. So it's kind of like Pandora and iTunes basically, but first generation versions. And while Justin remained intact at Winamp, the two founders of Spinner kind of very quickly transitioned away, two great guys, Dave Samuel and Josh Falser, who now run freestyle

in VC. And then it was this cohort of this amalgam of people, and we had to run the two assets together. So we used to call it Spin Amp, you know, Spinner and Winamp. And that was really cool because I got exposure to both the music streaming part of the business and then the more traditional sort of like box software, freeware, shareware kind of side of the business. And both were very different. Culturally could not be more different. Yeah, well, we'll get to that in a second.

I want to just ask one question about what AOL acquires because Rob Lorde told me, you know, like, if managed well, there was no reason why Winamp spinner. What AOL had in like 2000, 2001, couldn't have become iTunes in 2006. So even more specifically, I totally agree with Rob, because I want the record to state, the actual first 99-cent download store was launched by me and a group of guys on AOL servers. And what happened was, because we were in the middle of this merger, we actually went to Warner Music, we were merging with Time Warner. We went to Warner Music and we said, hey, we want to test this concept of 99-cent downloads.

because the only other way to consume music legally were through these horrible products called MusicNet and like it was terrible with DRM and it was just bad. So Warner gives us like, I don't know how many songs, I call it 50 songs. And so we allowed you to one-click buy for 99 cents and charge it to your card on file, which every AOL user had because they were paying for dial-up.

Oh, right, yeah. It had unbelievable conversion rates. And so we put the whole business case together, and we went to AOL management and we said we have to do this this is obvious and our boss great guy his name is Kevin Conroy goes and I with me

and I went with him sorry and we built the case and you had these like dopes that were running this company who were more concerned about politics and preserving their job and they killed it and it was a real shame

and Rob's right and then And like, I remember sitting in the New York offices of AOL Music. This was probably in 2003 or whatever when they, like, launched their own 99-set download store or whatever. And you're just looking at it. You're like, you just felt like such a dope. Because you're like, oh, my God, we did it. It worked. We were showing like, you know, 7, 8, 9% conversion rates to download and buy this music.

No, no, thank you. So, brief word on the dopes a little bit. after the time Warner merger, just either personally your impression of working at a big company like AOL or... So I was very inoculated. So the culture of... First, let me unpack Spinner versus Winamp.

We shared an office on Alabama Street, Porturo Hill. It was a huge converted sweatshop, literally sweatshop. The outer ring was all Spinner employees. The inner ring was Winamp. They tarped off the interior and turned off the lights. that they could live in a darkened work environment.

They then started to only show up at nights and on weekends. So that's how toxic the culture was between. They're literally quarantining themselves. I mean, literally we're like, I want nothing to do with these other people. That navigating, like navigating that was hard enough. But then every now and then, we'd fly to the East Coast. And you were just confronted with these people who at a moment in time were just unbelievably on top of the world.

And they basically wired up. the United States and they did something truly revolutionary but along the way they conflated luck and skill and some of them with all that money became super erratic and then that seeped into the culture and then the culture just became increasingly political and really bad and so you have to interact with these folks and they would just be very vindictive and you know unpredictable So even if you presented all the data in the world, if they didn't like you or they thought that, you know, Kevin was going to accrue too much political capital with this win, nope, no download store for you, let Apple have that whole business. So you, so I saw upfront so many just really bad decisions that were basically made from the point of like personal ego.

And look, we all have ego. I have a huge ego, but not like, like you have to have a huge ego, but not like, like you have to have a ego because it'll help create self-confidence and that then can be channeled to taking risk which is really where I think like at least I feel very comfortable and then and if I lose I don't feel bad about myself because I have self-confidence because I have a reasonable ego so that's how I kind of think about it but where it gets perturbed is where it's like you have an ego you think very highly of yourself you think that you're capable of things that were frankly a lot of situational luck and timing and then you both

prevent others from being in a position to challenge that, and then you yourself basically start to decay and your skills go away. And I saw a lot of that at AOL. So it was like, I would not have changed anything because, and I've said this many times, it's such a great opportunity to learn from things that don't work. That's your moment where you can see. You tried this, it didn't work.

So you know, in my opinion, that that behavior or way of thinking or something, set of decisions was just totally wrong. Well, I also wonder what you learned because you actually, you know, you stay with AOL for a few years and you rise through the ranks, so you're sort of playing this game. And I'm wondering if, like, that's an education

as well, because you're seeing it and you're thinking to yourself, boy, this is a little crazy. But you still play the game. Absolutely. You learn it. I mean, to give you a sense, like, I'm in my early 20s, and then I have a sponsor, Kevin Conroy, and he's promoting me. So I was

inoculated from a lot of the politics, because he made me. He picked me and basically tapped me on the shoulder and said, all right, I'm going to make you. And everybody needs that. Everybody needs that. So I had that. And so I wasn't going to give that up. And with it came a very practical thing for me as well, which was all of a sudden I was making $100,000 a year, $125,000 a year, $175,000.

When I was a VP, I think I was making $250,000 year. That's a lot of money. And so I'm able to pay for everything I need. I'm able to send three or four thousand dollars a month back to my parents, which I did literally from the time I graduated until I was able to get my first slug of liquidity from Facebook. Every month. So even when I made $2.25, I didn't make $225. I was making $100 then because $125 X taxes went back to my family.

So I needed that. So I played the game until I absolutely had to. Again, for the historical context, I want to give a little bit of time to aim and ICQ, which you eventually are the leader of that group, essentially. So in 2003 what happened was, so basically I go through the ranks of AOL music and then my boss goes and takes a bigger job at AOL broadband. So AOL was going through its own transition and it had to disrupt itself and move from dial-up to broadband and it wasn't doing it very well.

So they rejiggered the team in the hopes that they could figure it out. They brought Kevin in. Kevin brought me in. And then as part of that, they reorganized the whole bunch of assets within us. And he got this portfolio of things and he turned to Jeremy Lou, who's a partner at light speed, and said, Jeremy, you run Netscape. And they turned to me and said, you run AIM and ICQ. And I took it really fucking seriously because I'm like, okay, this is my path here because

now it's like I had control of a product plus or minus. I had I was relatively self-contained and I could really start to experiment and what I mean by that is How do you manage? How do you motivate people? There's a whole like we had a matrixed organization at a long So there were some people that reported me there were other people that didn't you and you had to learn how to like Be a real like leader How to recruit well how to fire people how to hire people like how to set a vision how to implement a strategy, how to stick to things when it got. So it was, it was a really, it was really cool for me because it was, and I was 27.

And so I was like, man, like, I'm learning this much faster than I probably thought I would. And I was pretty sure that that would let me go do something else. Just a small segue. Sure. So you asked this question earlier, like, you know, like kind of like playing the game at AOL. There was a point I got frustrated, and I'll never forget this. I got a call from a friend of mine and he said, hey, Skype is looking for a general manager in the United States.

And my eyes lit up on it. Oh, my God, this is it. This is my shot. Because to be quite honest with you, when you're working at AOL, I tried to get a job at Google very early on when I was trying to move down to the United States. I didn't get a job. And I never really evaluated leaving it

because I was also in this precarious immigration situation because I had an H-1B visa, and it couldn't ease. Back then, you couldn't switch. You were beholden to the company you were at until you got your green card. Long story short, they fly me to London. I get on the phone with these guys, and I'm like, here's how I think you should think about Skype,

and here's how I would run the business in the United States, and here's some really interesting partnerships and product things. And they were like, oh, this kid's not an idiot. Why don't you fly to London? And so my wife and I flew to London, were so excited, and were like, oh my god and I went through the interviews and I thought I really had a legitimate chance to get this job and I come back to the United States and like two weeks

later I see this thing hit the wire eBay acquires Skype me and dude I'm telling you like I literally like it's like it's like if there was a single tear that could have been captured like trickling down my cheek so that was the only other time by the way that I that I ever thought about like just quitting otherwise I was like, I'm going to learn as many things that I can, and I'm going to put points on the board, and I'm going to at least give myself some bona fides. I didn't know at the time that Winamp would matter. I didn't know at the time that AOL music would matter.

And you could claim today that they don't matter that much, but I was pretty sure that the AIM and ICQ thing would have mattered. Well, just real quick, to give credit to that, I think people generally know that things like, you know, status updates, the concept comes from aim and things like that. But also, before the current modern social era, that was the platform that at least young North Americans were on. Like, that was how you did your social networking, although it didn't have exactly the social functions, but that was the height of aims.

So you had status messages and away messages, which are now being co-opted in different forms of status updates, I think. You also had a couple of other really interesting, things like you could share some forms of multimedia although it was sort of like you know one-to-one I think the other interesting thing that we did and this was it'll segue to Facebook yeah we were mucking around with a whole bunch of different ideas and we decided to build an email service and so we built this thing called AIM mail and we launched it and we got a pretty decent attach rate of AIM users

who then also picked up an AIME email address and And why that was important was we got all this feedback that said, people hated their AOL email address. And so they were like, give me anything else. Yahoo, Gmail didn't exist at the time. Yahoo was a big one, hop mail was somewhat important. So we said, okay, let's launch AIM mail. But along the way, we were, we experimented

and started to basically measure edges between different nodes of people in the network. And so the manifestation of that, and you can Google this is this thing called Aim Fight. Oh, I remember that. And Aim Fight was just like a little splash page, but you could put in your screen name and somebody else's screen name. And what we did was we actually did a very, you know,

I would say like not complex, but like a really interesting edge ranking of you and who you know, them and who they know, and we kind of gave you a score and who won. And that's when I was like, like, what is this? And that's like you didn't use the terms that you used so easily today. Like you didn't say like network effects and you didn't say virality. And we didn't talk about it in those words. And so, like, you're exploring these concepts of, like,

why is this person interesting and connected to so many people? And then you can see, like, how this information flows. And, again, it manifested itself in kind of a crappy, cute little tool. But underneath, that, to me, was a really important moment of learning. Because I was like, holy shit, like, these kinds of businesses are really powerful. And then that's when, you know, when I met Facebook and it started to really see. it, that's when like the, it's started to click for me at least. Well, because, and I'll help jump us ahead here.

You, from your days at Winamp and other things, you, you, Sean Parker, you get to know Sean Parker, you're still at AIM, Sean Parker says, I want you to meet this kid, and you want to do a deal with Facebook where you put AIM on Facebook pages. So I'm sitting in this meeting with Parker and Zuck and Bankoff and I'm I'm pretty sure John Miller, who was the CEO at the time, there's a bunch of us. And basically, I said to Bankoff, we should buy this company. Banking all was like, there's no effing way we're going to buy anything. Go back to your office and go work.

And I went to Kevin and I said, I really think we should figure out a way to like, at the time it's called Presence. Like how can we integrate Presence into Facebook? I think it would be really cool. And here's what's crazy. I didn't go to an American University. So I could not even use Facebook. So I had to get somebody else to have to have to.

have a .edu email address, you know, and like show me how the bloody thing worked. And we took a bunch of screenshots. And then we came back and we're like, hey, like we'd like to propose this deal where we integrate presence into Facebook. And you can go into the way back machine to see what it looked like in 2005, but the pages were very static. And there was not a lot of functionality on there. And what we would do is we would bind your screen name to your name.

And you could click on it. And from the Chrome of your PC, would pop, boom. I would pop aim. To be clear, there was nothing like Messenger or anything like that. There was nothing. And I thought it was a fantastic deal. And we got a lot of good PR for it. And I mean, the most important thing is I got a chance to meet a lot of the folks at AIM.

I mean, at Facebook. And obviously that helped when I was thinking of joining. Right. So there's an intermediate stage where you're at Mayfield for a few months. But then how is it that you're either asked or do you try to join Facebook? You know, it was kind of like, it was some combination of like Mark was like, hey, why don't you interview with a bunch of the guys and, you know, we can talk about doing something? And I was like, okay, let's have these conversations.

and I, you know, I remember I met with Owen Van Nata, Adam DeAngelo, you know, DeAngelo now runs Kora, Dustin Moskowitz, who now runs Asana, Matt Kohler, who's now a GPA benchmark. What was your impression of them? So I think it was, I think it was good but odd. It was like hard to really, like, did I say I had like an awesome Insta connection with any of them? No. but I

but I like them but it was like it was an interview or like you know getting to know each other and I was like yeah this is cool and honestly like I would say the same thing about Mark as well like it's like when you see him today like

I mean like the growth that he has gone through like this guy is like a top two or three person in the world like period And when you meet him, he is Now, I mean, he's still normal to me But, but when you meet him back then, he was

He was like everybody else who was figuring it out Right, okay. And by the way, he has a real humility about that Which I think is really powerful And, you know, hopefully we all have that If we're in a position to be that Both skillful and lucky But yeah, so he was cool

But it wasn't obvious this then by no means and so it was kind of like yeah we we spent time together and then I had to go back to what I thought was important which is that that whole process of aim was like hey like these kinds of businesses are really interesting businesses a and then B there's all these things that you can do if you can actually create this density and I took a shot and I mean I don't know. I mean, like, I got really lucky. I could have been, I jokingly said it to someone. I could be the Indian guy at MySpace and you wouldn't know who the hell I am. So it's,

instead I'm the Sri Lanka at Facebook. So it's like, it's a flip of a coin. I mean, you know. Well, so when you do join, what are your marching orders? What do you, what do you, what do you do? And actually, what's the year? It's after they've opened up, God Beyond School. Well, it's funny. So like, you know, I started full time, full time. It was so, This was a weird time as well because in my life, my dad went through a really tough health scare and he was like intubated and he had cardiac arrested. And so I missed the launch of Facebook platform. I remember this because I was supposed to be there. And then I got back and I think I was in the seat like maybe in like the middle part of 2007.

Okay. And so your your marching orders are to do? It was a mishmash. It was like I think it was like called like product marketing and operations. So it was like, it was like everything. It was like platform, but it was also like customer operations. I think at some point HR and legal reported to me. Basically, it was like this amalgam of all the things that were not under Owen

and specifically not core product in engineering, which was under the bar. Because that's Marks, right, yeah. And so it was like ancillary product. It was also a deconstruction of Owen's role in a weird way because that was like a really passive aggressive phase in the company. Transitioning out around that time. Yeah. So basically like my first year was really working on the launch of these ad products, Beacon

and the self-surface ad duel. Now the self-surface ad tool is just a huge success. Right, right. And the two, the team that built it so small, it was like a handful of folks. And, you know, like, the guys that, like, literally initially scaled it. One guy, this guy, Tim Kendall, fantastic guy, who's now, I think, the number two guy, Pinterest. And this other guy, Alex Schultz, who's still at AOL. Facebook.

Oh, sorry, Facebook. And then there was a thing called Beacon, which, you know, that was like me, Mark. It was so funny. The thing that we all spent the time on, because we thought it was the coolest, me, Mark, Aditya Agarwal, who's now the CTO at Dropbox, and DeAngelo, was just a huge disaster. obviously right lawsuits so you never know right but when with the smallest group of people is now a multi-billion dollar the you know tens of billion dollar revenue channel for Facebook was was Beacon you guys's attempt not to do AdSense AdWords but to all right we're gonna revolutionize advertising the

same way that they did and it's not that you're you're trying to one-up them but I'm saying was that your shot yeah yeah the red is the game yeah the rhetoric that we had at the time was like social actions will create a lot more engagement and we can do a lot to drive demand fulfillment. So we used to segregate the world and say there's demand generation which is getting people to want things and then there's demand fulfillment which is actually closing the loop and we thought social actions would close the loop and so how do we get social actions? Oh we'll just install a little snippet of JS on this other website we'll figure out you bought some movie tickets, we'll take that action will publish it on your news feed and everybody will love it and it turned

out that that was not but but now you look at it and it's like look you get retargeted there's so much I mean information stealing sharing whatever you want to call it it's gone so past the pale right I mean but then also I mean in terms of lessons learned even the bad lessons are lessons learned even the accidents are lessons learned I mean that obviously had to lead to the better products that then allowed Facebook to Yeah, because I think like, you know, a year later, Facebook comes out with Facebook Connect, and then, you know, they've continued, and then they have the Facebook ad network,

and they do some pretty powerful retargeting, and other people now do all of this form of retargeting. Yeah, so it's just an actual part of the world we live in today. But it started in a very innocuous way. Just real quickly, before we leave the beacon idea, the concept of pissing off your user base. you know, Facebook is famous for this concept of, you know, break things, you know. When you're dealing with a user base so big where if even 5% of the user base is pissed off, that's now, you know, tens, hundreds of millions of people, what do you think you learned about trying to push the envelope forward,

but then being able to listen to when, you know what, either they're not ready yet or this was a bad idea. Yeah, I think this comes to really internalizing this idea that there really are very few life-threatening decisions at a company. Number one. And then number two is you want to be pushing the envelope with a healthy amount of ability to basically, you know, take a step back and reevaluate. So it's kind of like you're very risk-seeking, but in many ways, like you're pretty risk-adjusted. Like you're thinking about expected value, and when you're not seeing what you expect to see, you're willing to kind of dial it back. that's probably the most important lesson.

Now, now what they do, though, is so much more sophisticated than what we were doing in 2007. Back then, it was like, oh, let's just rip it in. And if it doesn't work, we'll deprecate it, we'll pull it back. We'll roll it back. We'll roll it back. Now it's like, oh, we'll test for 1,000 people. Oh, we'll test 2,000.

Oh, in this country, in that country. And so, you know, I don't think they'll ever find themselves in that same situation. But I also think the surface area of innovation is just different now. Like, you know, look, every company goes to an arc of innovation where the surface area overtime shrinks.

And the only way that you basically, you know, can get yourself back on, is to reinvent a new demand curve. And so, you know, I think what Facebook is then brilliantly is buy new demand curves. You know, they buy Instagram, they buy WhatsApp,

Oculus, et cetera. But if you can't reinvent your core demand curve, the surface area, of innovation tricks. And so there's less risk of getting things drastically wrong today than there was in 2007. On that point, so you eventually, your title is you're in charge of growth. Growth and mobile and international. Specifically on growth, I feel like now with the passage of time in retrospect, people could feel,

well, they crack the social, so it was just inevitable once, It's a ball that keeps growing, a snowball going downhill. But from being there, from trying to get the growth to happen, what was the number one lesson in terms of, was it just not screwing it up? Was the product good and we just don't screw it up? Or what were the things that you were trying to do to keep the numbers going up? I mean, I would love to tell you heroically that it would have failed, but not for us.

I don't think that that's true. but I do think that I can tell you confidently that it would be maybe half as big. Yeah. Maybe a little bit more than half as big. Or not as big yet. It would have gotten there eventually but not as quickly. Yeah. I think we positively impacted the rate of compounding.

And that has a huge effect over many numbers of years. And I think the things that we learned, probably to me, the thing that I took away the most, is that we became so thoughtful. at a per country level because we basically respected each country as its own country. Right. Well, actually... Language, nuance, culture.

For example, you know, I remember Cheryl once said to me Chmachap, maybe you should think about going and talking to a bunch of these other American companies just to see what they went through. When they were going overseas. Yeah. And I basically came back and I remember telling the M-T-M-T. our management team. I said, guys, a couple takeaways.

Number one, none of these companies know what the fuck they're doing. And number two, we're not using this as a way for a bunch of overeducated MBAs to get an expat package to travel the world. Those are the only two things I could figure out by talking to all these companies because they were all unsuccessful. And so the best thing that happened was we ended up hiring this guy on my team. His name is Javier Olivand, Spanish kid, now a man. and a big guy at Facebook.

And it was amazing because he just had like a cultural sensitivity to Europeans and then specifically Spaniards and then it's like the light bulb goes off. And so I'm like, great. I want to hire hobby in Japan

and we find this guy who worked at Yahoo Japan and he was incredible. Then we find a person in India. Then we find a person in Russia. Then we find a person in Brazil. And then we start to fill it in. And it just becomes obvious because they're like, here's the playbook.

And we experiment, and each country could be treated differently. And is it tweaking on the margins to be sensitive to the differences in cultures? But does the core product essentially work all over the world? It's all the things around it as well. Like, for example, I remember in Russia, Katarina, who is our countryman or Kacha, she comes to us and she's like, I think we should basically just create. like static Facebook profiles for every single Russian. On the off chance that they're narcissistic enough to click on search for their own name,

they'll end up landing on this profile. And I remember thinking, this is just absolutely insane. And it, frankly, it worked. And it's like, you know, it's like you have all of these people that are claiming their profiles. And I suspect at some point, like, that's when V-Contacta realized, oh, my God, we're going to lose. And I also suspect that's roughly when you're in Milner was like, hey, wait a minute, this thing's going to take over the world. I need a piece of this. I need a piece of this.

Yeah. But the core products still function the same in every country. Yeah, I would say like 98% of it. But look, I would tell you you and I have less than 1% difference in DNA. Right. But there's huge differences. And so it's that last 1% that can make a big deal, but they have to be interpreted culturally. That was probably my biggest takeaway.

Then the other thing was, again, I just think, like when you have a culture of experimentation, a culture of always learning, a culture where you don't celebrate the wins, you celebrate the learning, and you don't hold people accountable for being wrong as long as it's a first-time mistake. Two questions before we leave Facebook about people. What was Sean Parker's contribution to Facebook? It was unbelievably important, and it is the most important thing that ever happened, which is he architected a capital structure that kept Zuck in control. You know, Parker got a lot of the company for working there a year,

and he's worth every penny of it. Because in any other situation, Zuck would not be running that company. There's just no way the way that company evolved. No chance in hell. And so Parker deserves an immense amount of credit for that very specific and important thing. You've spoken on this already slightly, but seeing Mark evolve, as you said,

into now one of the greatest CEOs. No, no, greatest human beings in the world. That's right, you said, greatest human beings of the world. But specifically as this leader of a large organization, do you feel like it was innate in him when you first met him? Or was it literally a skill that he had to acquire? I think that you're born with some innate capability.

And then I think the situation allows you to explore, the depth of that capability. And in Mark's case, it's extremely deep. So could others have gotten two-thirds as far? Yes, many people. Some subset will have gotten 80% as far. Some even smaller subset would have gotten 90% as far. The question is how many people could have taken it this far? A very, very, very rare few. And fortunately, we don't have to answer the question because he's doing it. So when you move into VC, I think I heard you tell Calicke. canis one time that even early on in your career you wanted to to go on to the VC side. When I was in undergrad, I had to do co-op terms and so there was a period where I applied

for an internship at all the top Silicon Valley firms because I was very, I mean I viewed this whole Silicon Valley really romantically and you know I would surf the websites of these VC firms and I knew all the names and I knew all the names of the firms and I was got I rejected. And so it was always in the back of my mind if I had already chance to do this I wanted to do this this idea of like being at the foot of creating things for the future seemed so what an unbelievable pursuit to spend the rest of your life doing you like being in on at the very beginning very beginning I'm actually like as an example like here like at social capital I am worthless

when things start working because my brain turns off I started to become worthless at Facebook internally because I was like I'm bored is it because you feel like there's nothing that you can contribute anymore I've successfully got the engine turned over I've solved them again when the surface area shrinks beyond a certain point. You like the puzzle? I lose interest. Yeah, because I've solved the game.

I feel like, oh, I figured it out. Yeah. I'm not saying it in the sense that I'm taking credit for it, but it's like, once I understand how the whole thing works, it to me it loses its appeal. What's exciting is starting from nothing. There's a jumble of puzzle pieces on the ground and you have to start. That's an, to me, I get huge energy from that. And once the whole picture starts to get filled in, I get less satisfied.

Now, there are other people who are the exact opposite, who, when it's roughly filled in, get immense pleasure from filling in the lines and really bringing out the vibrancy of a picture, that's great. I love sketching and walking away. Two more questions. You know, I feel like you're one of the most public proponents of this concept of investing as sort of like a social act as, you know, almost. The words alluding me now, but as investing to make money, but also to move the culture forward. And do you feel like that that's something that 20 years from now everyone will be doing? Like this is the new model? This is the new model.

Activism, that's the word of it. It's almost like you're investing as activism. Absolutely. I mean, what do we think Thomas Edison was doing? What do we think Henry Ford was doing? What do we think Bill Gates was doing? You know, none of this sort of entrepreneurialism that really moved the world forward came from a place where they were trying to do something incremental

or to celebrate their degree they got at MBA school. And I think, unfortunately, we've kind of, like, moved to an era where that's largely what people think about companies as as a way to sort of reflect some set of societal signals that they've accumulated their entire lives. And I think that just robs us all of like huge potential. The reality is, one, it's cheaper and cheaper to start a business. Two, it's easier and easier to know whether you're tracking. And three, it's more and more possible to get people to give you money to then scale it.

So you're going to see an unbelievable expansion of the entrepreneurial class. But as that happens, unless we help them understand that the risk of failing starting a really ambitious idea is the same as the risk of failure for a marginal idea, once they internalize that, then what their point of view will be is, wow, well, I should really go after the big time idea, because on the small chance that it worked, which is the same small chance that this other crappy idea is going to work, I'm a hero and I'm Zuckerberg. And I think once people understand that, then they immediately go and they think about, well, what are the things that I care about.

Whenever you ask anybody what they care about, they don't care about, like, you know, let me, let me get, you know, my food 15 minutes faster because it really bums me out because, you know, my jeans are tight because, like, I really bought an exercise too short because, you know, said so in, like, this hipster blog that I read. What they say is my dad is suffering from diabetes that really affected me. My sister is in a really tough spot. She really wants to find a job that, like, allows her to maximize her. skill but you can't you know I'm really worried about the climate I get nosebleeds and asthma why does that happen more now like when you really ask people you know you care about your kids you know why aren't we then creating a platform that allows people to reflect that moral and ethical framework in what is the most important thing that they can do which is to start something that then pays that off

And so I think it's in many ways a return to what's made America successful in the first place. That's what's going to make America great again. Final question is, I've always wondered if you own the team, do you feel it, the wins and the losses more than the fans? Because you're literally personally invested? That's a really great question. You know, what's been the most amazing thing about being involved with the Warriors, quite honestly, is I have been exposed to some of the most incredible men that I've ever been around. And these are like young men that have literally like sacrificed their entire lives to perfect something,

which A is just something like you just, I don't think you can really appreciate it until see it up close. Like the sacrifices and the span of the sacrifices that they make. It's not really describable in words. Like this whole, like, oh, it's 10,000 hours. It's just so much more than that. It's the personal relationships. It's their bodies. It's their mind.

It's all of this stuff. That's A. But then B, the complexity of their personalities, like their intellectual curiosity about things. And that's been so underfed because they've had to feed this other part. So I don't feel the wins and losses as much. I get a, I mean, I would. probably pay them for what I get from some of these guys, which is that when they come to my house and we sit down and we just talk,

they're so thirsty to learn what's happening in the world and be a part of it, and they view basketball for what it is, which is a really amazing thing that gives them a platform. And they are a great example of like they have a moral and ethical perspective, to a one, at least for the Warriors players. I can't speak to other players going to know of them as well. And so, yeah, it's a... Almost what you're saying is you're experiencing it more on a personal level because you know the players personally. So your experience it through them. I find it very hard, frankly, A, to meet new people

because it's just harder and harder. And then B, to meet new people where each of our guards can be down, where I'm not trying to impress them or they're not trying to impress me. And that's a hard thing to find, especially as you grow older. So you increasingly spend time more with your family than anybody else as a result, I find at least in my life. And so what I find in them are as like a group of young people that you can just like, it's like you're back to, you know, a group of guys sitting at some startup on, you know, on Alabama Street, Porturo Hill. And you're just, you're both really optimistic about the future and you're learning. And, yeah, it's really cool.

Well, Chimah, thank you for contributing to the project coming on the show and remembering your amazing story for us. Thanks, thank you. If this is the first time you're listening to this podcast, please subscribe to us on your podcast app of choice. There's plenty more great internet history where that came from. And if you're a longtime listener, then you know what to do to help us out. Rate and review us on iTunes. Because iTunes gives credit to reviews and ratings, and the more great reviews we get, the more people will discover us. As always, there's more info on our website, www.com.

The show's Twitter handle is at NetHistoryPod, and my personal Twitter is at Brian MCC. Thanks for listening.