← This Week in Startups
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- [00:00]
Chamath Palihapitiya
I think you have to have a prepared mind. There are many forms of capital. If you're lucky enough, you can be in a position to allocate time, reputation, influence, human capital.
- [00:10]
Jason Calacanis
If you can productize your passion, you're going to have such great joy in your life. And somebody had put into the weighting that the founders were coachable. All of our money is made with the uncoachable ones.
- [00:19]
Chamath Palihapitiya
Exactly.
- [00:20]
Jason Calacanis
They're supposed to be sharp, they're diamonds, folks.
- [00:22]
Chamath Palihapitiya
You can be as successful as you want, but then there's just a lot of people that still stop and then there's a certain core group of maniacs that never stop. You got one trip around the sun, just never stop. Do all the things you want to do, just never stop.
- [00:41]
Jason Calacanis
All right, everybody, welcome back to this week in startups. It's the summer and what do we do in the summer?
- [00:47]
Chamath Palihapitiya
We do the next unicorns.
- [00:48]
Jason Calacanis
We think about who are those next companies and we do the Twist all Stars. Why do we do the Twist all Stars? Because there are some people that share three qualities. One, deep, deep knowledge, experience. They got nuggets of gold. Number two, they're willing to share them. They're iconoclastic, they're outspoken. They will tell you everything. And then number three, they vibe with your boy Jcal. They got a vibe. So you're going to get 10 of those this summer. And the first one is my guy, Chamath Palihapitiya. I don't want to lose a single gem, a diamond. He's going to drop today. So what do I do? I got my plot pin on. Look, it's on my T shirt. No problem. Press the button. I get the haptic. It's recording organized in my plod using AI and I'm just going to give an instruction up top. Hey, make sure I take these into action items and analyze them against my three businesses, the syndicate, my fund and programs like launch festival and the launch accelerator. And against my media business. This week in startups, this week in AI. Take Chamath's knowledge and analyze my businesses with every drop of knowledge he does. Now that's in my pen. I just had this idea. Take Chamath's knowledge and put it against my businesses. Huh? It's like getting Chamath as a consultant. And that's all enabled by Plaud. You have to applaud Plaud for making such a world class device. There's some folks who you just love as the Twist audience. As founders, they typically have three things in common. One, deep expertise. Two, Willingness to share it candidly. And third, they vibe with the host. We got. You know, the vibes are immaculate. Top of that list is my bestie, Chamath Palihapiti, who's making his fourth or fifth appearance here on this Week in Startups. And my lord, we've done 260 episodes of all in as well. It's crazy, huh?
- [02:42]
Chamath Palihapitiya
What's up bestie? This Week in Startups is brought to you by Northwest Registered Agent. Get more when you start your business With Northwest in 10 clicks in 10 minutes, you can form your company and walk away with a real business identity. Learn more@northwestregisteredagent.com Twist LinkedIn thanks to our partners at LinkedIn. Post your job for free@LinkedIn.com Twist Then promote it to get access to LinkedIn jobs. New AI, Assistant AI and Shopify. Turn those what ifs into sales. With the e commerce platform powering millions of businesses, sign up for your $1 per month trial today at shopify.com twist
- [03:21]
Jason Calacanis
so to kick us off one of the great jokes, I would have to tweak Chamath. One of the few things I could tweak him about. No, not his fashion. No, not his shop list.
- [03:33]
Chamath Palihapitiya
Selfish. Not my svelte body and rock hard abs.
- [03:35]
Jason Calacanis
None of that. It was the fact that hey, a decade ago he was one of the few of us who hadn't started a company. Well, now that's changed.
- [03:44]
Chamath Palihapitiya
What do you consider social capital that was a company.
- [03:46]
Jason Calacanis
I mean starting a firm is oh, very close to starting a company, but slightly different. A firm is slightly different than a company because you don't have exactly customers, products in the same way you're managing assets. Right. I consider it adjacent. Right. I don't know how you feel.
- [04:03]
Chamath Palihapitiya
Yeah, yeah. Founder adjacent. I was founder adjacent.
- [04:05]
Jason Calacanis
It's founder adjacent. I mean you could be the founder of a fund, but really making a product or service is hard since that time. I was just thinking about it before I got on air here and I was walking down the road at the ranch. You've been in a flurry. People don't know, but you have two wonderful products that I love the branding on. Drink with me or us? It's drink with me and then learn with me. What I love about those two products is your passion, learning and wine. And number two, the branding. I've never heard anybody do blank with me. Where did that come from?
- [04:37]
Chamath Palihapitiya
They are things that are omnipresent in my life. I just thought that there was a clever way to make a business out of it. And maybe you would say, why? Like, what is learn with me? Learn with me is just a research community. So, you know, part of my job at Social Capital and part of my job in general is to be a very thoughtful allocator of capital. And, you know, we'll talk about this when we get to 80, 90. But there are many forms of capital that if you're lucky enough, you can be in a position to allocate. One is time, another is reputation. Another is social capital. So influence. Another is human capital, you know, influencing what other people work on. And then the last is capital. Capital.
- [05:25]
Jason Calacanis
Just.
- [05:26]
Chamath Palihapitiya
Yeah, money, Right. But in order to do that job, and I think it's an important job to be a capital allocator. I think you have to have a prepared mind. In the late teens and early 2000s, I was introduced by a friend of mine who was a senior partner at McKinsey at the time. Now he works for Google to this service that they had for certain people. And at the time, how he sold it to me was, this is the team that teaches Bill Gates about things when Bill Gates wants to learn about something. And so I hired them and I said, okay, teach me all things energy, because I wanted to understand climate change, but I really just wanted to understand energy production. And that was, you know, year five of Grok. So, you know, I could kind of see the forest from the trees on AI Silicon and what was happening in power. And I just felt I didn't know anything about it. They did an incredible job, but they also charged me $4 million for three months.
- [06:25]
Jason Calacanis
Yes.
- [06:25]
Chamath Palihapitiya
Or 2 million. $3 million. I don't know. Something. It was a lot of money. It was many millions.
- [06:29]
Jason Calacanis
Right.
- [06:30]
Chamath Palihapitiya
And so I just created a team for myself and I said, you know, I want you guys to create a calendar and create first principles, materials that I can use to learn about what I need to know about in the current moment. While they were able to do it, the biggest thing that I struggled with was, what if their content is wrong and. Or not good?
- [06:52]
Jason Calacanis
Right.
- [06:52]
Chamath Palihapitiya
And the solution that we both came up with was, okay, let's make it a subscription service, and let's make the cost meaningful enough that it's a real signal. So, you know, there's a community now of many thousands of people. The cost is about a thousand bucks a year, but it's all the content that my research team produces that I use to frame my point of view. One day it'll be, you know, lab grown meat, the next day it'll be About China. The next day it's about religion. The next day it's about semiconductors. The next day it's about AI models. The next day it's about attention mechanisms. The next day it's about mining. But if you start to consume it on a regular basis, you, you really do start to develop a prepared mind. And because there are so many thousands of people now that consume this service, the single biggest indicator of value is churn.
- [07:37]
Jason Calacanis
Yes.
- [07:38]
Chamath Palihapitiya
When people are churning, it just means the content sucks. And so I know that something's wrong. And when the service is growing, it's the most simple way of me being able to judge whether the content is timely and accurate.
- [07:50]
Jason Calacanis
Right.
- [07:50]
Chamath Palihapitiya
That was, that's learned with me. And that's, you know, available to anybody who wants to sign up.
- [07:54]
Jason Calacanis
I tell you what's so brilliant about it is you learned a really great, what I call, like Tom Sawyer version of entrepreneurship, which is, you know, he had to paint the fence. Or was it Huck Finn? It was one of the two. And he said, hey, painting the fence is a lot of fun. If you guys give me an apple, I'll let you paint the fence. And people would come and paint the fence with him. You took something that was a cost center. Yeah, it was Tom Sawyer. You took something that was a cost sensor. You then brought a community into it. So they act in two ways. They validate it, they make sure the information's correct. But you took something that's a $4 million, you know, money pit, and now you own this, you get to direct it, you get to have those employees, and it makes a couple of million or who knows what the break even point is based on the number of
- [08:37]
Chamath Palihapitiya
people working and the team actually makes profit from it. So. Meaning, you know, it's not where I'm going to sort of define my upside, but it's great that the team has the ability to actually build a business and a community around something that I really value. And it seems like many thousands of other people also value.
- [08:57]
Jason Calacanis
Yeah.
- [08:57]
Chamath Palihapitiya
How big could it be? I don't know. It's probably, you know, in the grand scheme of things, probably a reasonable thing for tens of thousands of people to sign up for maybe 100,000 people.
- [09:08]
Jason Calacanis
I mean, tens of thousands of people signing up for a data product would put you in the most elite circles of data products. Like the information broke 10,000 at some point. Right. And it's a third of the price and it's more journalist than analysis. But, you know, there are corollaries to that. And if you can take something you're doing anyway and Tom Sawyer it. I did that with podcasting. I was going and having lunch with you and having a great conversation for two or three hours and was like, hey, turn the cameras on. Why don't we share this with people? That's what drew me to podcasting. And then all of a sudden, it was profitable. Oh, my God, this opens up so many doors and you get that correcting mechanism. You're bringing a bunch of folks. We'll get to 80, 90 in just a minute. Big announcement coming up.
- [09:47]
Chamath Palihapitiya
Yeah, then. And then drink with me is completely different. So, you know, look, I guess you can read all the health stuff you want. And, you know, I just think at the end of the day, people have to decide what quality of life do they want. And, you know, the years that I have on this earth, I want them to be enjoyable in a way that matters to me. You know, I could sleep separated from my wife in a bed at 68 degrees and maybe live an extra six months, but I'm not sure it's worth it for me. And that's just my own personal trade off. Similarly, you know, I could live calorie restricted and probably be a little bit fitter, but then I would have to say no or disappoint my children when they say, let's go to the ice cream parlor. Let's walk down the street. Hey, dad, try this. I just made this. I don't know. So similarly, wine for me, you know, I drink it once a week, but it's a very special social thing in many people's lives.
- [10:49]
Jason Calacanis
And it's rich culturally.
- [10:51]
Chamath Palihapitiya
You get it culturally, super rich, and also socially.
- [10:54]
Jason Calacanis
Right. Like, I know when I've opened bottles with you, it's like, so much fun to learn about the wine together.
- [10:59]
Chamath Palihapitiya
I've gotten you to drink white Burgundy.
- [11:01]
Jason Calacanis
Yeah. Love it.
- [11:03]
Chamath Palihapitiya
You know where you've never drank alcohol basically in your life?
- [11:05]
Jason Calacanis
Yeah, I was never a big alcohol guy, but I love having a couple of ounces with you. Yeah, it's fun.
- [11:09]
Chamath Palihapitiya
Yeah. So what I. What I noticed about the alcohol business is that wine is incredibly marked up, and the reason is from the winery. So, you know wineries. By the way, there are two properties of wineries that everybody should know. The first is that they are incredible artisans. These are farmers and scientists.
- [11:29]
Jason Calacanis
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- [12:33]
Chamath Palihapitiya
They slave away, quite honestly, to make something by hand. You can't automate it. You can't AI this. And I think that that's beautiful, that that property is beautiful. And the second is you will never find a winery in an ugly part of the world. They are in the most beautiful parts of the world. So you have these people that get the benefit of working in these incredible places, making something with their hands, but the minute that that product is done, it enters this middleman renter economy that marks things up. And so by the time it gets to you, it's typically twice the price. And there's a lot of gatekeeping that happens. And that gatekeeping creates artificial scarcity when it shouldn't. And it allows, you know, certain people with certain kinds of wines to make a killing. And that annoys me because I don't, I don't, I don't. I'm happy to stand in line, but I don't like being part of, like some rigged game.
- [13:32]
Jason Calacanis
I hate it. It's the worst feeling ever. When I tried to buy, when I first saw Weblogs Inc. To aol, when we wrote aol, I wanted to go buy a Ferrari. And the amount of torture they wanted to put me through. You got to buy a used one for 100k off to sticker. You got to buy the one you don't like, and that's a dog. You buy two of those, then you can buy the one you want. It's just annoying. And I just ran into the same thing with the watches. You know, just looking at watches, they're like, oh boy, here you go. You got to find a middleman. And there are these three watches that sell direct, but most don't so you find this annoying, irritating sand in the oyster and then the pearl comes out?
- [14:05]
Chamath Palihapitiya
Yeah, I think so. I just think the people that make the wine get a bit of a raw deal. And at the end of it, there's a lot of generational transition that's happening where most winemakers are hitting the end of the road, where their children do not really want to take over these things. And so what happens is they sell to a corporation and then the product goes to complete and total. So I said I can do one of two things, which is I can go and just get my own liquor license so I can collapse the middleman renter economics of the business and I can create a community so that other people who would like to buy it can also buy using the same discount that I can now get, which is, you know, upwards of 40% sometimes. But the real goal is that to build enough relationships and trust with these winemakers so that when they sell, they don't just sell to some nameless, faceless organization, but they could theoretically go to us and a community of people that love what they do, sell a portion to us, be able to do some estate planning, you know, find great other people who are young and up and coming to help take over their winery and keep these things going and look again, like, learn with me. Neither of these were meant to be billion dollar businesses. They're just meant to be parts of my life that give me tremendous roi. And I think that there's probably many other people for whom that is the same, where, you know, you can kind of create a perpetual kind of flywheel out of it and keep these things going so that again, it's. It's not just all corporations that, that just kind of treat everything like a number and a cell in a spreadsheet.
- [15:49]
Jason Calacanis
Yeah, I mean, this is one of the great lessons if you can productize your passion is what I tell founders. You're going to have such great joy in your life because you're going to look at something that was a cost center and you had to go make money doing something you hated to fund the passion. But if you can align that and you've productized your passion in some way and then you get this roi. Okay, sure, maybe it makes a little money on the side. It's not comparable to what we do in day jobs, but it's nice. And the same thing with the podcast. All in has a nice events business now. We'll talk about that in a minute. Because that's the third business that you famously started to give you a lot of credit for that. You call me after coming out of CNBC one time, you're like, one, I miss you, Covid. Two, I can't do these three minute hits and not get my point across. Why don't the two of us just chew the fat? And I was like, oh, come on this week and start now. I want to do something different. And that was the origin story. And then we, of course, got the two Davids in there, got those two nerds nerding it out to counterbalance our.
- [16:42]
Chamath Palihapitiya
And we made. And we made. I made this key decision. No ads ever.
- [16:46]
Jason Calacanis
No ads ever. Another great one. Yeah.
- [16:48]
Chamath Palihapitiya
Which. Which was very smart because it pulled us into other businesses. But, yeah. So look, there was a period after Covid. If I look back on it, I'm quite proud of the three businesses that I've helped co found. And it was a moment in my life in my late 40s where I was honing in on, you know, what am I? You know, what am I?
- [17:08]
Jason Calacanis
Yeah, who am I? What I am? The big question, when you're successful, Right? Yeah, yeah.
- [17:12]
Chamath Palihapitiya
And it's like, you know, like, I know, like, what drives me. It's like I have relative mistrust of institutions. I have a relative mistrust of experts. I really like to do my own diligence, I think, from first principles. I'm not afraid to be wrong. And that's when I honed in on. I'm this allocator of capital. But the thing that I had never done in all of this journey since Facebook was really allocate my time to one thing. I'd allocated money. I'd allocate reputation. You know, I'd allocate social capital and influence. I'd convince people to go and work at companies on behalf of my friends or on behalf of the things that I was an investor in. But I've never put all of that together into one thing.
- [17:58]
Jason Calacanis
Yes.
- [17:58]
Chamath Palihapitiya
And that's sort of where 80, 90 came from. Because, you know, I would always, like, I kind of felt at the tail end of COVID like, okay, this AI thing, you know, I would tell my friends and my family, it's like I'm out there waiting to ride a wave. And I've been lucky in that I've ridden two huge waves in my career. Wave one was the beginning of the Internet. You know, you wrote it with me. We were. Yeah. I was at Winamp and then I was at aol. And, you know, I had the luck of learning about network effects at aol. And then I accidentally swam into a second huge wave, which was mobile and social.
- [18:40]
Jason Calacanis
And social, yeah.
- [18:41]
Chamath Palihapitiya
And, you know, my real chops were made creating growth as a craft and then, you know, just automating and instrumenting and machine learning the shit out of it. That was a huge success for Facebook. But then I kind of sat out the SaaS wave.
- [18:57]
Jason Calacanis
Extremely tactical, extremely strategic. And this is, I think, what really made you dangerous, is that you added that tactical, strategic and team building philosophy and skill set to your skill stack.
- [19:12]
Chamath Palihapitiya
You know, the thing that I'm the most proud of at Facebook is I recruited a team of seven people. It was called Growth Circle. Three of those people are still there and they're CXOs of the business. They're the COO, the CMO. You know, I did a job of managing people and recruiting them and mentoring them, but I'd never had the itch to do it since then. And part of it was, I think, my intuition that the waves weren't big enough. And then this AI wave started to build and I was like, this is it. I just got to paddle out, get on the board and just rip it.
- [19:47]
Jason Calacanis
Yep, figure it out. And that's 80, 90. What was the origin story there? Because I think most people know what you're doing if they're fans of all in and they've heard us, you know, chit chat about on the side. But let's start from, from basics. What does the company do? How does it make money? And how did. What's the origin story here?
- [20:03]
Chamath Palihapitiya
I like to write things down because I think it's like, it's. It keeps everybody honest.
- [20:07]
Jason Calacanis
Writing is clarity of thought. Like that's what writing is. It just clarifies your thought perfectly.
- [20:14]
Chamath Palihapitiya
I wrote a product spec for something that I called co founder. And the idea is, why can't everybody in the world have an incredibly capable co founder? And why couldn't there be as many or more companies as there are people? Now, bear with me for a second. If you go all the way back to, let's just say the 15 or 1600s, there was hundreds of companies. And I'm sure if you go back many hundreds of years before that, there was probably the one moment where the first company in the entire world was created, but from that one ultimately grew to hundreds, which ultimately now I'm going to assume there are tens of millions of companies in the world. Maybe hundreds of millions of companies.
- [21:05]
Jason Calacanis
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- [22:05]
Chamath Palihapitiya
So the trend is inexorably in one direction, but in order for you to go from 100 million companies to, say, 10 billion companies, what you needed and what you will need is something that helps you fill in for all the weaknesses that you have. And I called that co founder. And so the idea was, what if your co founder could, you know, when you said, I'll just use a very simple example. I want to open a flower shop. It's a very legitimate business. And your co founder says, great, I'm going to spawn these 19 different processes. One is going to do a market analysis of where in our city is the best traffic patterns for demand. Another agent will then ping all the commercial real estate agents and ask it, what are the available spots in all of these different geographic corridors that the first agent identified? The third will go and do a crawl of the Internet and give me back a market summary of the kinds of flowers that one would need. The fourth will go and ping stripe and activate a stripe merchant account. The fifth will go and, you know, work with Spoton to get a terminal delivered to my storefront. The sixth will engage a construction crew to do the kit out of my store. The seventh will be a supply chain agent. Right? So you can go on and on down the line. And then you can imagine if instead of saying that, instead you said, I want to build an airplane company. Maybe it's not 10 agents, maybe it's 10,000. But the point is that there can be a conductor, an orchestrator at the absolute top level who can help you Execute on all of those things. That's where I originally started in the spec that I wrote. The problem was that the market was not ready for something like that. And my best guess when I read it over and over again is that's a 30 year or 40 year journey. So then I had to wind it all the way back and say, what is a logical starting point today that over time can earn our way into being that omnipotent co founder for every human on earth? And you know, maybe just to double click on that. Why that? Because I think for me, this idea of enabling economic mobility, giving every single human on earth the ability to be economically independent, self sufficient, take care of themselves, take care of their family, have money to spend on the things that they want, that to me is a very powerful idea. It's an extremely decentralized view of capitalism and democracy at scale. Yes. So just seem like, you know, I have audacious mission.
- [24:42]
Jason Calacanis
Right? Yeah. And if you look at what's wrong with America today in our great journey as a capitalist society is self reliance has been replaced in some ways with victimization and handouts have replaced pulling you up by your bootstraps and agency. And what you're talking about is basically reconnecting people with that, the pioneer spirit of this country. And as an immigrant to the country and somebody who had to fight for tooth and nail for everything you got, which people take for granted when they meet Chamath circa 2020s, you know, I know the story. You had to fight every inch. So if you have to fight for everything, you really want to see other people have that opportunity. It's the clearest path to fixing this K shaped recovery. The issues we have that we talk about on all in every week is just to empower people to start their own companies.
- [25:34]
Chamath Palihapitiya
Yeah. Then I had to kind of say, okay, if that's where I want to be, where, where do we start? And you know, I learned two really incredible facts. The first is that if you look at the world's gdp, call it, you know, for the purposes of this conversation, $130 trillion, I would say 90% of it, requires some sort of technology to make it come to life. Some sort of software of some kind. There's a certain percentage of the GDP that does not require that.
- [26:06]
Jason Calacanis
Yeah, increasingly smaller and smaller.
- [26:09]
Chamath Palihapitiya
Yeah, increasingly smaller and smaller. So it's kind of what Marc Andreessen said, software really is eating the world. So that was one interesting factoid. And the second is when you look at software, what I learned was software can be bucketed into two categories, it costs around $5 trillion a year. So think about as $5 trillion enables, call it $100 trillion. Okay, so there's a 5% take rate that software extracts to enable most of the GDP of the world. And that 5 trillion can be further subcategorized into $1 trillion of licensing revenue. So this is what you would Pay Workday or ServiceNow or Jira or linear GitHub, whatever, right?
- [26:57]
Jason Calacanis
Yeah.
- [26:57]
Chamath Palihapitiya
Trillion dollars of those licenses and then $4 trillion of maintenance, migration and services. So meaning once you implement workday, you typically bring in a suite of consultants to just help you make sure it doesn't break all the time.
- [27:15]
Jason Calacanis
Yeah, or that you get your value from it. Because somebody has got to make sure the distance between this huge contract that was signed by management, some CTO somewhere actually gets implemented and it's worth the money you spent on it. Or else somebody loses their job eventually. Might take five years. But I remember when I was in it, this was an acute thing. Like some top down person, like, hey,
- [27:37]
Chamath Palihapitiya
we're going with Lotus Notes.
- [27:38]
Jason Calacanis
And then it was up to us to make sure Lotus Notes actually delivered the value. Not Lotus Corporation.
- [27:44]
Chamath Palihapitiya
But it occurred to me when I looked at that, because I had not really looked at that very carefully, I had this kind of like light bulb moment, which is I contrasted that to what we had done and a lot of what my team had built at Facebook. And I thought to myself, well, hold on a second. Why is it that Facebook, which is an exceptional business, only uses an extremely small amount of that $5 trillion and most of it was built internally? And then I remember what I had learned from my friends at Google and it was the same thing inside of Google. And then I remember what Elon had taught me about Tesla. Same thing at Tesla. You had all these examples where at the extreme end of success, all the best companies almost had an allergic reaction to that traditional software stack. They refused to use it. And so the light bulb moment for me was, oh, I understand. Like imagine Jason, you and I both want to start a restaurant and we're given ingredients. We both get sesame seed buns, we both get three burger patties, we both get tartar sauce, we both get the same pickles. At some point you're going to start to wonder to yourself, how do I differentiate myself from Chamath's Burger company?
- [29:03]
Jason Calacanis
Yeah, source pat of meat.
- [29:05]
Chamath Palihapitiya
And you're going to say, I'm going to source my own ingredients, I'm going to make these things myself. And I'm going to take the risk because I think there's better margins and better success in doing it my way. But for most companies, even though they say that on the surface, underneath, with respect to the software that they use to run themselves, it is exactly the same. That is why companies like SAP and Oracle can be as big as they are. They've structured and standardized this idea that at a certain level of scale, the only solution is their solution. But I had seen firsthand, and I had enough friends and examples of other great companies that took a different route. Now, normally you would say, okay, but that means nothing. Nobody's going to, you know, how do you go to a defense contractor and all of a sudden convince them to make custom software? They can't do that.
- [30:02]
Jason Calacanis
No. And I would agree they've got other things on their plate.
- [30:06]
Chamath Palihapitiya
Yeah, I would have agreed with you until AI.
- [30:08]
Jason Calacanis
Right.
- [30:09]
Chamath Palihapitiya
And the reason is I saw this cost curve where the unit cost of production was going to approach zero. So there was no task that was either too menial, too manual, too repetitive, or too difficult. So both ends of the spectrum, that couldn't be accomplished at some point by these models based on how fast they were accelerating their learning.
- [30:32]
Jason Calacanis
Right. That was what you saw just around the corner was, hey, this vibe coding stuff, which people are dismissing, hey, this is bullshit. It's just stupid. It actually was, if you, if you tracked it, you used it every month, you could see every two or three months that it made some significant leap forward.
- [30:50]
Chamath Palihapitiya
I, my thought was that vibe coding was going to be a great way to realize what the art of the possible was, but end up with a bunch of trash like prototypes basically, at best, but probably not even that.
- [31:01]
Jason Calacanis
Proof of concept. Yeah, like.
- [31:03]
Chamath Palihapitiya
And so in the first instantiation of 8,090, I said, we have two goals. Goal number one is let's help companies get the margin benefits and the upside of the kinds of custom software that companies like Facebook and Tesla and Google benefit from, number one. And number two, along the way, how do you create a mechanism of learning, the kind of data that can be collected by that process, by the unbundling of that process, so that incremental runs of software become safer and faster, faster and simpler to build. So first is do a job. Second is try to orient and create a network effect in a flywheel inside of doing the job.
- [31:51]
Jason Calacanis
Okay, so you have identified a real problem and you put together a solid solution and a business model that you believe in. So you're all set to launch your new company.
- [32:00]
Chamath Palihapitiya
Right?
- [32:00]
Jason Calacanis
Not so fast. If you want Investors and potential customers. To take your new business seriously, you need to consider forming a Delaware C Corp. And that's where Northwest Registered Agent comes in. They're going to give your new company a real identity. That means an address for your public filings, a domain, a custom website, a business email, and of course a phone number. And that's going to take just 10 minutes and 10 clicks. They don't charge hidden fees. Customer service is available around the clock. They're not overwhelming your inbox with spam, and they make it easy to cancel at any time. So get all the advantages of a Delaware C Corp. Independent, regardless of where in the US you're operating from. Visit northwestregisteredagent.com twist for more details and the links are in the show notes.
- [32:45]
Chamath Palihapitiya
What we did was we created a product and we called it Software Factory because we felt like that was a very honest representation of what this V1 goal is. It's just to create a factory that makes software. And we thought it could give value in both of those ways to people. So let me explain. So Software Factory is exactly what you think of if you went to a Tesla Gigafactory. Raw material comes in the front, finished Teslas come out the the back, and in between there are all these very logical stations and different tasks are done at these stations. In our case, what comes in at the front is just pure raw intention. And that can be for the kinds of business people and senior leadership of a company that deals in high level business requirements.
- [33:44]
Jason Calacanis
McKinsey decks whatever your business is, whatever
- [33:47]
Chamath Palihapitiya
your business goals are, regulations, new laws get passed, maybe say it in a different way, a consent decree that you get from the US government, whatever. The point is that at the senior level, you know, you're managing risk and you're allocating capital towards ideas. You want to give a shape to that. And then you want to be able to put that in the part, in the front part of the factory and have your colleagues and your teammates and the people that work for you extract from it a pretty detailed prd, right? A product requirements doc. And what's great is it's not just the humans that collaborate on that. Now you can have agents working behind the scenes to make that PRD incredibly high fidelity.
- [34:29]
Jason Calacanis
And those PRDs really represent AOL was where you learned it. Yeah, like they were big on these PRD docs. They were huge.
- [34:36]
Chamath Palihapitiya
By the way, you're bringing up a very good point. Like when I talk about the Software Factory, what it is is an embodiment of what people Call the product development life cycle or the software development life cycle. They're interchangeable terms. The reality is that PDLC and SDLC lost its way, gave way to a lot of what we created at Facebook in terms of an engineering driven dev culture, which is move fast, break things, build first, poor documentation. And you know, when we did that, we did that in a very specific moment in time, not because we cared about those words, but we were the, you know, 35th social network on the.
- [35:16]
Jason Calacanis
Yeah, people forget. Yeah, there were like many before, you know, my space.
- [35:20]
Chamath Palihapitiya
We had all these giants above us, including Friendster, including MySpace. You know, we didn't have money and so we added to. We had to move fast.
- [35:29]
Jason Calacanis
Right, that was your advantage.
- [35:31]
Chamath Palihapitiya
But now engineering organizations start up with this idiotic idea that you should document, you should just wing it. You should just grip and rip this stuff and don't write anything down.
- [35:40]
Jason Calacanis
And you know, that one happens.
- [35:41]
Chamath Palihapitiya
You get a lot of crap that gets into prod. You have an enormous amount of tribal knowledge. It's unfortunately trapped in many humans heads. It's not well documented. You have no sop. So when things break, things get really bad. Why not have a system where intent comes in the front, you can shape it. Humans, AI agents. And then when you lock that down, Jason, the next most important step is to extract from it a very detailed, what we call an engineering plan or a blueprint. Right, like, like when you sketch out a house, the next step is you give it to the architect and say, give me the buildable blueprints, which give you all of the little technical details so that the house can stand on its own. The foundation is strong, all the wiring makes sense. And so our module, that step in our software factory, you know, allows you to do everything from right, you can upload, you know, mermaid diagrams, you can do anything that you need to represent the system. And then when you lock that, only then can you do what most people go right to doing right now. Now look, you can skip these steps, but we don't recommend it. The third step is you extract work orders. And this is where now, you know, vibe coding failed. If you could direct an agent to code with relatively strict guardrails, the agents are excellent. You've experienced this in some of the projects that you're doing. But the reason, I suspect, is because you've specked it cleanly and precisely.
- [37:17]
Jason Calacanis
Yeah, and the more you give it, the more precise it becomes. It's a very counterintuitive thing. You would think that a stream of consciousness and rambling and Throwing everything at it would create chaos. These machines are very good at taking a large set of feedback and actually making sense of it and making a plan out of it. It's kind of actually its strongest ability right now. And so this is why I have the foot pedal. Because I just, when I do a prompt now, I hit the foot pedal and I just keep talking and talking and talking and talking. Let it go. And that it makes sense of everything I said. And then it asks follow up questions because I asked at the end. Ask me any follow up questions but what's not clear or things I'm missing and you know, blind spots I might have. When you do that pedal to the metal strategy, boom, everything changes. Which I think is your refinery thing, which is, hey, we're just going to pull in all of your stuff.
- [38:13]
Chamath Palihapitiya
What are your refinery like again? Exactly right at the front. Our thing is you just dump everything. Zoom, meetings, whatever, we'll sort through it for you and we'll give you a spec of a prd. And now you can be there collaboratively in multiplayer mode in one doc, debating, questioning, asking, approving, denying. And then you go to an engineering plan and then you go to work orders. This is the same as a GitHub issue. And then you can send it to a coding agent and we support all of them via mcp. So you can use cognition, you could use Codex, you can use Claude, cursor,
- [38:49]
Jason Calacanis
whatever, you can use cursor, you can
- [38:50]
Chamath Palihapitiya
use whatever you want. And by the way, the reason we support those is our view is all of those vertical tools are going to converge. That's not where the skill is.
- [39:01]
Jason Calacanis
It's all going to reach parity is what you're saying.
- [39:03]
Chamath Palihapitiya
Yeah, they're all going to be the same plus or minus. Whatever real skill is being able to keep this whole system in sync.
- [39:10]
Jason Calacanis
Right?
- [39:10]
Chamath Palihapitiya
Because then when you make the code, how do you generate evals, how do you generate unit tests, how do you wrap those together? And then how do you get it into prod and then maintain it as a system? So for example, you build a product. I'll give you an example of one of our customers regulated health care company. And with the triple B, a lot changed, they just feed that in to refinery. We understand the diff between that PRD and what needs to happen to respect the law. And once that's approved, it gets auto propagated into the engineering plan. Auto propagated into a set of work orders. Humans review and approve them and then put into the code because an agent goes and writes it and now the system is completely in sync.
- [39:59]
Jason Calacanis
Yes.
- [39:59]
Chamath Palihapitiya
The biggest problem that companies have is the drift that happens. Right. Everything gets out of sync. By the way, it also works in reverse. So we built the factory so that it can work in forward or reverse. So for example, an engineer gets a pager duty, wakes up at 3am in the morning, they all of a sudden have to like, you know, fix a bug or patch something and they put production code in. We detect that and now we auto propagate the work order, we auto make the change in the engineering plan and then we make the change in the prd. So now everything is, everything is, is linked together. We call that binding. Everything is binded together so that everything is in sync. Now that may seem like overkill for a small product, but when you go to the big guys and you talk about what they're dealing with, they're not here to fuck around with some stupid vibe coding tool. Like this is the, this is the level of governance and auditability that they need. Why? Because if you think about the kinds of products that many of our customers make, they're in highly regulated markets, they have, you know, huge upside for doing it, but they have huge risk as well. Jason.
- [41:09]
Jason Calacanis
Yes. You have to mitigate like as a finance, health care, education, any of these verticals.
- [41:16]
Chamath Palihapitiya
Pharma.
- [41:16]
Jason Calacanis
Pharma.
- [41:17]
Chamath Palihapitiya
You do make a mistake. The blast radius can be large. Yeah.
- [41:22]
Jason Calacanis
And, and can take years. Look at, I mean your time at Facebook. I don't think you were there for all of it. But they've, they're under three or they've been under three or four consent degrees for mistakes made, speed, errors. Whether it's fair or not, whether it's political or not. Put it all aside. It all speaks to having a tight plan. Having this harness people are calling it, having the software factory allows you to trust the AI more and it allows you to be less.
- [41:47]
Chamath Palihapitiya
A control plane.
- [41:48]
Jason Calacanis
Control plane.
- [41:49]
Chamath Palihapitiya
The reason we call it a control plane is like it's a plane that sits above all the fray. All the chaos models will come, models will go. We work with all of them. We allow ourselves to be able to take advantage of the best in class model for the best in task, for the best task at that time. Yeah. But it mostly is a product that's about multi user collaboration, control governance. And then what I told you is this emergent property where whenever you're building these products we sit it on top of a knowledge graph. And what, what that is, is this is very similar to sort of the architecture that I had in mind at Facebook and the architecture when we led the Series A in Slack. You know, I wrote this memo for Stuart which was called Intercompany Edge Effects. You know, like, I, I don't think I'm like head and shoulders better than anybody at most things, which I'll, I'll be total. But there is one thing where I've just been in it for, for a lot longer than most people and I see these patterns and that is around network effects. And so this third time around, I wrote the PRD for this network effects and how to build it and how to architect it. And at Slack specifically. Yeah, no, no, here at 8090. Yeah, but I'm saying it's built on the experience of Slack and it's built on the experience of Facebook. And what I see is this ability to use the nature of these models to help improve the n first piece of software based on its experience building the end pieces before it. I don't want to give too much of that away, but, but that's working too. So, so basically what we have, Jason, I guess in a nutshell is we've created a factory. It gives companies a lot of control. It allows them to document things. It allows them to take out of tribal knowledge what is in humans heads and document it for the first time in a long time. It allows these systems to stay complete and in sync. It allows them to unbundle a lot of that 5 trillion they're spending and slowly but surely kind of, you know, how do you eat the elephant one bite at a time. It's like, okay, I'm going to take a shot at this specific workflow. Oh, great. So, you know, for example, like today there was a guy that tweeted, you know, that this is a third party. And he said, we've, you know, use Software Factory now to unbundle $5 billion of ISV licenses. $5 billion. And I saw that and I was like, man, this product works. This is great.
- [44:32]
Jason Calacanis
Yeah, I mean, you have product, you've got the signs of early product market fit, which means you'll get to pull eventually, where people will just be like, I need this. And what people don't realize is in those large companies, there's a long list of projects they would like to work on. They have two choices. Generally. They can hire IBM, they can hire a software company, then they have the implementers they can hire alongside them, McKinsey, Ernst and Young, whoever it is. And now you're giving them a third way, which is, hey, are you Smart enough to use these new tools to control your destiny. And then take those middlemen. We're talking about the middlemen in wine and those folks like, are they actually adding value or are they damaging the core brand? And you would, you could argue. And you know, for every time one of these implementations happens and we saw it up close and personal, it was a waste of money and didn't get used and get thrown away. Or it's just years of frustration and you lose anyway here, at least you're getting closer to the craft.
- [45:26]
Chamath Palihapitiya
Yeah, well, look, you know, here's, here's what I'll say about that. I mean, I think that there are some phenomenal organizations that I think have the potential to really thrive. I think the big consulting firms. So take, I'll take two specifically that I'm relatively close to Ernst and Young and then Deloitte as an example. I think that these guys can thrive in the world of AI. Then you look at companies like, you know, PwC or Accenture, and it's like, it's like very critical to me. But it's like they picked a model provider and it's like, how can you pick one of Anthropic and OpenAI? Not because they're not good, these models are incredible. But two reasons. One is you're then tying yourself to only one technological roadmap and you see the leapfrogging that's happening.
- [46:10]
Jason Calacanis
You have no optionality. Yeah.
- [46:12]
Chamath Palihapitiya
And then two is, I think Anthropic and OpenAI have realized what we've realized, which is the end boss of Tokens. So if you want to generate ROI, you must be able to sell ROI, meaning return on investment on token spend to corporate Fortune 2000, Fortune 5000 CEOs, CEOs who can see a line of sight to making more money than they're spending. The thing that we all can see is that they are the most important customer. Why do you think Anthropic and OpenAI have started consulting?
- [46:51]
Jason Calacanis
JVs? Yeah.
- [46:53]
Chamath Palihapitiya
So, you know, for Ernst and Young and Deloitte, what I, what I've told them is like, wow, you guys have made the best decision. Now obviously I'm biased because they picked us, but when you have a control plane, you can now be model agnostic. You can solve your clients problems. You can actually work together. We work together really closely with them. They're incredible partners. It's incredible because now we get the benefit of decades of relationships. Right. And trust that they've built and independence and auditability. And now we can work together. To actually, like, solve people's problems. So step one, for, like the next few years, we're going to be doing a lot of this, which is selling these big transformations into large corporate enterprises and then doing the methodical work of implementing it and making it successful. I think if we can do that, Jason, in three or four years from now, we move into phase two, which is how do you take software factory and then slowly submerge it under the waterline? And that's the setup for phase three, which is how then do you have this just little, you know, maybe it's a voice pedal called co founder that exists. But what will co founder sit on top of? Co founder will sit on top of an extremely robust software factory. Right. Ultimately. And the understanding of how to get work done and how do you tie it to actual GDP and outcomes.
- [48:15]
Jason Calacanis
And if you think about it in terms of infrastructure, we turn a faucet on, water comes out. We don't even see all of that underpinning, and we take it for granted.
- [48:25]
Chamath Palihapitiya
Right.
- [48:25]
Jason Calacanis
And we're kind of moving towards that with the solutions you're building and intelligence as a service in just in general. But there's a lot of things that happen before that water comes out of your spigot. And what we saw with Uber and some other folks were you give people unlimited water, they're just going to let it run and they're just going to be like a golf course. It'd be like making almonds and in
- [48:49]
Chamath Palihapitiya
the bathtub because there's a valve where the water just runs.
- [48:52]
Jason Calacanis
Yeah, let it run. Who cares? Like, I forgot I put the bath on. And yeah, this is what happened with, with token maxing, I think. And also it's. It's got it, like, slot machine type addiction to it, which is you give it a job, it comes back, oh, the job's almost correct. And you're like, oh, I almost hit my flush. You know, if you're playing cards, let me see another flop, let me see another flop. Give me two flops, and you get
- [49:15]
Chamath Palihapitiya
this, like, incredible rush.
- [49:17]
Jason Calacanis
But more often than not, it's 60 or 70% of the way there. So you got to pull the slot machine again, which means you got to put another $100 bill in for tokens.
- [49:25]
Chamath Palihapitiya
Right?
- [49:25]
Jason Calacanis
It's pretty, pretty funny. Big announcement today. You've done your, I believe, is it the Series A and the other one's considered seed or Series B.
- [49:33]
Chamath Palihapitiya
Series A. I mean, you technically are the seed, although we're calling you the preferred A one.
- [49:39]
Jason Calacanis
And okay, I'll take it.
- [49:40]
Chamath Palihapitiya
But yeah, you're the. You guys. So yeah, we raised $20 million when we started two years ago. Literally almost two years ago to the day.
- [49:49]
Jason Calacanis
Yeah.
- [49:50]
Chamath Palihapitiya
And it was great. It was, you know, all the besties, you and fun Freeberg and Sachs and then some incredible angels. Nikesh Aroro, the CEO of Palo. Chairman and CEO of Palo Alto Networks. Adam d', Angelo, who I worked with, he was a meta and founder of Quora on the board.
- [50:08]
Jason Calacanis
He is podcast shy. I tried to get him on this podcast for a decade. It's. He's just so podcast shy. He just loves his work. Huh. What's Adam like?
- [50:14]
Chamath Palihapitiya
He's great.
- [50:15]
Jason Calacanis
He seems very smart, very thoughtful.
- [50:17]
Chamath Palihapitiya
And then, you know, like a bunch of our friends from the, from the group chat, like Andrew Bogut, David Lee. Love this guy. Dayton, Diego Burdick. And it was so. It's wonderful.
- [50:25]
Jason Calacanis
Isn't it nice to pass the hat with your friends for that first round? It's just, it's a really great feeling and we've seen it now with our friend Sonny Madra passed the hat twice for us. We had, you know, two nice outcomes there. It's just a nice feeling if you can get there with your friends.
- [50:41]
Chamath Palihapitiya
So we raised, we raised 20 million in the seed two years ago. And then, yeah, I'm very excited. We raised about a hundred in the
- [50:54]
Jason Calacanis
A
- [50:58]
Chamath Palihapitiya
which was great. And we had an incredible lead. Mark Benioff and Salesforce Ventures.
- [51:03]
Jason Calacanis
Amazing.
- [51:04]
Chamath Palihapitiya
And then we had an incredible new group of folks also join. Thomas Lafonte, CO2 Yuri Milner, Xander Lurie.
- [51:15]
Jason Calacanis
Oh, wow. Just part of Edition Great humans. Now this is the largest you've raised for a startup, obviously. What's it like? What are you learning as a CEO versus a capital allocator? Because I went to see the office and sometimes I call you like, hey, let's get lunch or can you come to this event or do something? You're like, I have a sales call.
- [51:37]
Chamath Palihapitiya
Which by the way, I tell everybody that's I do. It's, I sell the enterprise software now. That's what I do.
- [51:42]
Jason Calacanis
You're an entrepreneur. You're doing the founder led sales, which is always the best way to do it because then there's nothing between you and the truth. And you can then have this clarity of vision. And that's why founder led sales for the first couple years is so important because your sales team will massage you, massage the client. The truth gets kind of obscured. 20% on either side. And now you're living in a house of mirrors. Like, your sales team's making you feel 12ft tall. They're doing the same thing to the client, and, like, reality is just distorted. But talk a little bit about what you're learning. Being a CEO versus a capital allocator or, you know, being some.
- [52:20]
Chamath Palihapitiya
I think it's the top. I think it's the same job. Meaning the difference between being an investor is I was only investing one of those five units, but being a founder CEO, you are allocating all five of those units now. You know, I benefit definitely from having, you know, distribution that most founders don't start with. Right. You know, large Twitter following, obviously, being able to do the podcast with you, that definitely has helped me, and it's given me an advantage.
- [52:52]
Jason Calacanis
It gets you to. What I tell people is it gets you the meeting. It doesn't close the deal.
- [52:57]
Chamath Palihapitiya
Right. Doesn't close the deal.
- [52:58]
Jason Calacanis
It will get you the meeting. People ask you for a selfie in the lobby, but you're not closing the LP unless your returns are there. You're not closing the client unless the value is there. So you can't overestimate it. Yeah.
- [53:09]
Chamath Palihapitiya
You know, where do I spend my time now? It's like, you know, it's.
- [53:13]
Jason Calacanis
It's this.
- [53:14]
Chamath Palihapitiya
It's this constant state of worry, to be honest. Like, it's existential dread. I don't want to let my friends down. I don't want to let my investors down. I don't want to let my employees down in terms of the actual, you know, so that creates this kind of, like, omnipresent anxiety that I think I'm actually pretty good at absorbing. Like, you know, in. In many ways, Jason, like, I grew up in a pretty complicated household. I've been pretty open about that.
- [53:44]
Jason Calacanis
Sure.
- [53:45]
Chamath Palihapitiya
That was incredible training for this moment specifically. You know, my dad was an alcoholic. My dad, you know, didn't really think twice at times just to, you know, beat the shit out of me, which it was what it was like. I don't. I have no grudge, but it's really made me able to absorb chaos, I guess.
- [54:05]
Jason Calacanis
I mean, if you look at all the great founders, you're going to find this, like, dysfunctional childhood on the margins or at the core of it. And, you know, it's the pressure that makes the diamond. Right. And then you get into a business situation and you're like, this is nothing compared to getting the beat out of me or living in terror or, you know, whatever.
- [54:25]
Chamath Palihapitiya
I just want to do right by the people that have taken.
- [54:27]
Jason Calacanis
Yeah.
- [54:28]
Chamath Palihapitiya
That put their faith in Me. And so where do I spend my time? Maybe so, you know, I spend a bunch of time, obviously, kind of like in the machinery of getting more business, because I think that that's very crucial. I spend a bunch of my time as the product manager of our network effects business. So, you know, there's the principal engineer and I, he. We sit side by side and, you know, we're like little buddies pairing on this thing. I spend a bunch of time there, and I've been spending a lot of time right now in the organizational design of 8090. So. Meaning we don't have an org chart and we don't have a hierarchy. And so you may say, well, how does a company, you know, and look, we. Like, last year we did 17 and a half million of bookings. This year, if we execute, maybe we get, you know, we should have a decent chance getting to 100 next year. I've already told them what the plan is, which is 500. I have no idea whether they're going to get there or not. But my point is, I wanted to take all the. All the drama off the table, and we're making a lot of progress. But the default, Jason, was to create an org chart. People would ask to hire people. Then it's like, who should report to whom?
- [55:43]
Jason Calacanis
Yeah. Then you get Game of Thrones starting fivedoms. It's not the way to succeed.
- [55:48]
Chamath Palihapitiya
That's not how it should work in a world of AI. And so instead, I came with a framework, and, you know, I call it system on a chip. And so what does that mean when you look at the iPhone? The iPhone's an incredibly beautiful product. It clearly works. It's incredibly successful.
- [56:05]
Jason Calacanis
Some would say the most successful product of all time in terms of profits and distribution. Yeah.
- [56:10]
Chamath Palihapitiya
Let's take two examples inside the iPhone. Let's take the camera chip and the power management chip. What's so interesting to me is if you break open the iPhone, what you see is a circuit board, and what you see are a bunch of chips with a bunch of interconnects. So in the case of power management and the camera, the camera has no idea what the power management function does, except that it gets a signal. That signal is very specific. You know exactly what it is, and it can act on it. And I tried to take that analogy, and I said, you know, why aren't we organized like a circuit board? Why aren't we a set of chips and a set of interconnects? And what that does is it reduces each function into understanding what are the inputs and outputs of that function. I'll give you one example. So I went to marketing and I said, okay, don't ask me who reports to who. None of this stuff. You have two inputs. One is money, and the second is all the content that you may need. And the only output that you can generate are leads. Now, those leads can be enterprise leads. They could be leads for people who want to buy subscriptions to Software Factory. The leads could be job applicants. But your chip takes in these two inputs, generates one output. Now draw your internals for me, and let's go debate the internals.
- [57:27]
Jason Calacanis
That's where you start to get into tactics and strategies and how the. And loops, loops processes.
- [57:34]
Chamath Palihapitiya
And so what you start to see are, like, people designing cores, right? To use chip architecture language, cores and chiplets. And we debate the interconnects. And then, you know, the leads now feed into sales, right? And then I go to sales and I'm like, all right, let's design your chip sales demo. Finance. You know, they get leads and they get, you know, and a customer.
- [57:56]
Jason Calacanis
Client comes out the end.
- [57:57]
Chamath Palihapitiya
Yeah, no, they get just. TCV is only allowed to come out the end. That's all they're allowed to exude their exhaust is TCV. And so then TCV goes into the 8090 Enterprise team to then build the stuff. It goes into finance to account. And so my point is, we've been playing this game essentially, of reimagining the company as a circuit board and reimagining everything as a chip. And the chip is comprised of these cores and chiplets, and everything has interconnects. And now you get to a place, Jason, in a world of AI, where agents can sit at these boundaries, measure everything. And I'm not saying that we've eliminated politics at all, but I'm saying it could be a path to it. So I've spent a lot of time trying to structure the mechanism of our company so that we can scale without the typical failure modes.
- [58:50]
Jason Calacanis
I think your customers are also going to go through this kind of change. We're seeing it when we debate, oh, these job losses, these layoffs, Is it AI window dressing or is it actual reality? And then we debate it in a very granular way. It's obviously both, which makes the debate great. But the interesting thing about this moment in time, those middle managers who were responsible for massaging this chip and getting things in and out, and then what happens between the chips, There were humans
- [59:18]
Chamath Palihapitiya
there, and those humans would bring their example. This is a great example. So so let's just say that marketing generates leads. Yeah, well, what happens at scale is they'll generate a lead and sales will say, the lead sucks. Yeah, the lead is weak. And instead what should happen is at the boundary of those chips, there should be a dsp, right? Something that qualifies a signal as high or low, what scores it on a spectrum. And now we know what the leads are, we know how they convert. And to your point, there's nobody debating and arguing. It's not about personalities and emotions. It's about what does the numbers say?
- [59:53]
Jason Calacanis
A much simpler process. And, you know, it's so great to hear you doing this because I'm also learning, learning with you and did a similar process where I took all the applications we have and we started scoring the applications for year zero, year one startups. And then we just have this great Socratic debate. The humans are in the loop, hey, what should we weight the scores? And somebody had put into the weighting that the founders were coachable. And I was like, wait a second, how did that get in here? And they're like, well, you know, like we have these problems with these people who are hard to deal with as founders, and then we have these ones who are coachable. I said, by the way, all of our money is made with the uncoachable ones.
- [60:31]
Chamath Palihapitiya
Yeah, yeah.
- [60:32]
Jason Calacanis
So you just put into the system something that takes the diamonds and throws them in the refuse pile because they're a little sharp. They're supposed to be sharp. They're fucking diamonds, folks. Go back into the garbage and find me the diamonds you threw away. I want the uncoachable, difficult people. Those are the ones we make the money off of. It is one of the great aspects of systems thinking. And I kind of feel like the future is people who can think in systems, whether it's first principles, second order effects, and just understand the. I guess some people call it the idea maze in business thinking. But the more you can understand the entire playing field, each of the chips, the more you can make that incredible grand product.
- [61:15]
Chamath Palihapitiya
Right. I want to give credit to two people. This system on a chip org model for me was the output of reading Jack Dorsey's memo. And to be honest, I couldn't understand it. And I thought I was dumb. And I was like, you know, Jack, Jack was talking about building a world model and a sales model. And I really couldn't get to the level of detail to understand what he meant and what he was doing. And so I was just kind of churning in my head, churning in My head churning in my head. And I had a important meeting internally where I was talking to my co founder, Sina, and it kind of out popped this idea. I was like, sina, I just want a bunch of socks. I want to just be able to see IO and then I want to debate the pin out and the interconnects. And then he and I kind of sketched it together. And the second was Elon. I don't know if you remember, Jason, when Elon opened Tesla's first gigafactory, when we went to that party.
- [62:07]
Jason Calacanis
Nevada. We went there.
- [62:08]
Chamath Palihapitiya
Yeah, Nevada, Yeah. He showed me the layout of the factory and I said, oh, what is this? Is this a chip? And he was like, no, dummy. This is the machine that makes the machine. This is the factory. And that has stuck with me to this day. And the reason is because to your point about abstracting one level up, it's not about making the machine, it's about designing the system that then enables the machine to be made. So, you know, when I'm sitting there designing the org, I'm trying to think through, like, what is the repeatable system that makes it like an iPhone and less like a brittle org chart. Right. Or when we're designing software factory, what is the network effect that allows this thing to just spin faster and faster? Every single piece of software that we see. And I think if we get these things right, we have the chance to build something quite interesting.
- [62:58]
Jason Calacanis
Yeah. And it's great. You're in the arena, trying things, running a company.
- [63:02]
Chamath Palihapitiya
All of those things.
- [63:03]
Jason Calacanis
All of those things.
- [63:04]
Chamath Palihapitiya
And the haters are going to be so magic.
- [63:06]
Jason Calacanis
I mean, you're going to pull it off too. And they're going to be like, oh, he can actually build a company too. In addition to a podcast. I took a couple pictures when I was there because I got to visit. Yeah. Yeah. Here's the first picture. This is you working in the factory. Oh, no. This is you on the cells. There's chamath. And there you are. Look at that. Wow.
- [63:27]
Chamath Palihapitiya
You did armpit there I am in the factory. Yes.
- [63:29]
Jason Calacanis
Getting dirty. Getting. You're just rolling up your sleeves, getting dirty, sweating. So you really can do both.
- [63:34]
Chamath Palihapitiya
You can do both.
- [63:35]
Jason Calacanis
We have photographic evidence. You're able to hit the road in that. Let me see that suit again you're wearing. This is the JC Penny suit. Yeah. Rugged.
- [63:45]
Chamath Palihapitiya
Look at that with the burn, that suit.
- [63:46]
Jason Calacanis
I mean, listen, you got to go knock on some doors. You know, the young folks love to hear from you. Love to hear from other. And There you are in the drink with me. I mean, that one looks actually the way these Chinese. These are Chinese models, by the way, that we've been playing with internally. Oh, there. You didn't like that one. Oh, that one. That. That's a. That bottle went bad. This is what the idiots who work for me and I do. We're, like, producing a podcast that they just make images to try to get me to break up on hair. So they're showing me these as we talk. We're image maxing. We're image maxing.
- [64:19]
Chamath Palihapitiya
We're meme maxing.
- [64:20]
Jason Calacanis
It's pretty funny. But let's look back and young people coming out of school now, whether they've. Let's put aside, like, how in debt they are, we all agree you shouldn't go in debt. It's kind of a settled issue. We understand the future is AI. So for our kids, we have kids of similar ages. We have teenagers and some younger kids. Over the next decade or two, they're going to be going through college, they're going to be into the workforce. What are you raising them? How are you raising them in terms of skills, hard skills, soft skills, whatever, in between? But how are you thinking about getting them ready to take on the world and be productive in it? And then what's your advice to people who are in college? You got a lot of your Waterloo alumni. What are you thinking now? And just dream of consciousness, because this is a dynamic field here.
- [65:11]
Chamath Palihapitiya
I don't have a good answer. I. I have not tried to answer this for my kids because I feel like I. I ask this question more than I answer it, and I don't really know. And the only thing that I've concluded is that I think it's very important for my kids to have their own adventure. I want them to, you know, do something interesting and have some wins, have some losses. But beyond that, I don't really have much of a. I don't. I don't have a plan. I just hope that they find an adventure. And if I can be a part of helping them find that, that I think is going to be the whole challenge. Because, like. And why do I say adventure? Because I think it's kind of like, all encapsulating. Like, if you think that the food, the shelter, you know, your basic necessities are essentially covered for you in a. In this next iteration, where most things are abundant.
- [66:04]
Jason Calacanis
Yeah. Modern society, a society.
- [66:07]
Chamath Palihapitiya
Society evolves.
- [66:08]
Jason Calacanis
Abundance. Yeah.
- [66:09]
Chamath Palihapitiya
It's still not going to change. Millions of years of hardwired physiology. So how your brain has evolved, that's not going to change in one generation.
- [66:19]
Jason Calacanis
No.
- [66:20]
Chamath Palihapitiya
And so I think if you, if you understand that, you know, the humans desire for agency and for risk, problem
- [66:28]
Jason Calacanis
solving, socialization, there's some core things that are just inherent in who we are. We're going to want to play games, we're going to solve problems, we're going to want to socialize. And if you don't do those things, by the way, you're going to all of a sudden have people telling you you got to put your kids on SSRIs or speed to get them to have those things.
- [66:45]
Chamath Palihapitiya
And it's like, yeah, the best. That's why, that's why I think the best word that I have come up with is adventure.
- [66:51]
Jason Calacanis
I like it.
- [66:52]
Chamath Palihapitiya
And I would like my kids to have a chance to have an adventure. I mean I've had a, I've had a great adventure, you know, and it's still, it's still only half done.
- [67:02]
Jason Calacanis
Yeah.
- [67:03]
Chamath Palihapitiya
And you know, you've had a great adventure. Like, it's like this is what you want.
- [67:05]
Jason Calacanis
I mean the kid from Toronto, I mean you were Toronto originally. Ottawa, Ottawa, kid from Ottawa, kid from Brooklyn and now look like. And we still have 20, 30 great years. Who knows if they're going to solve some life extension. God forbid we'll be doing episode 2000 of All in somewhere. But yeah, I've been, I've been thinking about a lot too. I don't have the easy answers, but the one I came up with is very similar to your adventure, which is exposure, exposing them to possibilities, exposing them to, you know, high agency people. And I think if you can expose them to these things then it's enough because young people have that energy. They'll find something that will pull them to it. But I wish somebody had exposed me earlier to entrepreneurship a little earlier to risk taking. I had to find that myself. Right, you had to find it yourself eventually. And that's like I'm taking them to Tokyo with me for Founder University and I'm gonna let them sit in on it. And it's like I just thought to myself, man, if I, if a 10 or 16 year old jcal had experienced Tokyo, you know, my first, my first time on an airplane was When I was 15, 16 years old, I went to Florida. We didn't have the money for airline tickets. That was out of the question was how far can we drive the van before it reasonably breaks down.
- [68:25]
Chamath Palihapitiya
Were you upset when your dad had only bought you a one way ticket?
- [68:28]
Jason Calacanis
Yeah. He was just like, good luck getting back, son. It's always great to catch up. Congratulations, 80 90. I think I gotta talk to you about branding. You're getting very good at branding. I love the. With me, branding. Great on that job on 8090 and software factory. Both of them are interesting names. 80 90. Hey, 80% of the cost for 80% of the features, for 90% less.
- [68:55]
Chamath Palihapitiya
90% less is how it started. I'm not sure if we'll deliver that,
- [68:58]
Jason Calacanis
but it's still great as an idea. But Software Factory is iconic, so I think we could retire 8090 at somewhere and just call it TSF. Like, there's TFL. The French Laundry we went to. This is like TS F, and people will start referring to it. Hey, did you talk to tsf? Hey, what did TSF say? Or have you tried TSF to solve that problem and just, you know, TSF it or whatever? Because when we were up at the French Laundry, which. How great of an experience was. Two days at French Laundry.
- [69:32]
Chamath Palihapitiya
Yeah.
- [69:32]
Jason Calacanis
I mean, just amazing. Give people a little sample of how crazy our lives are now. And just getting to go hang out with. With TK up there.
- [69:41]
Chamath Palihapitiya
I mean, I think. I think being around these kinds of people are very inspiring. For me, it's like, you know, you can be as successful as you want, but then there's just a lot of people that stop, and then there's a certain core group of maniacs that never stop. And I admire that. You know, Buffett, Thomas, Keller, these guys could have stopped a long time ago. They keep going, and I just find it deeply impressive.
- [70:07]
Jason Calacanis
And the intentionality.
- [70:08]
Chamath Palihapitiya
Why is that? I think. I think it's because they're playing their own internal game. They. You know, the problem with, like, defining your life in terms of external measure is at some point, you'll hit it.
- [70:17]
Jason Calacanis
Yep.
- [70:18]
Chamath Palihapitiya
Then what? And then. And then you'll think, oh, I guess that's it. And then you kind of stop. And instead, I think you have to be deeply selfish about this, which is, you got one trip around the sun. Just never stop.
- [70:29]
Jason Calacanis
Yeah, just keep. Why not?
- [70:30]
Chamath Palihapitiya
Keep all the things you want to do? Just never stop up.
- [70:33]
Jason Calacanis
Yeah. Be relentless. That's another thing for these kids. I. I'm. I'm big on the real. The. You know, some things take, like, four days or five days to get good at. Some take, you know, five hours. So if you look at skiing, right? Like, gosh, when you started skiing, man, it was like watching Big Bird coming down the ski the hill blindfolded. And now you're like, whoa. Cut nest turns. You could do a diamond, but you stay on the blues like you. You could skiing. You could skate. Five years later, you can actually ski. Ish. You're like the Sri Lankan skier.
- [71:04]
Chamath Palihapitiya
It's like unbelievable.
- [71:05]
Jason Calacanis
You could be on the Sri Lankan Olympic team. I don't know if there's any.
- [71:10]
Chamath Palihapitiya
The only person more awkward than me is Freeberg, which gives me some solace.
- [71:13]
Jason Calacanis
I mean, Freeberg come diamond. Every time he comes down, it's a knee injury. I'm like, are you coming out tomorrow? He's like, no, my knee, my hip, my thigh. Poor guy, he's not built for it. But what I did with my daughter, my 16 year old specifically, was I was like, what are things we can do together, Daddy daughter date. That take like that third or fourth time to have the unlock where you go, ooh, I like this. So pickleball. Skiing, anything like that, that takes like three or four times to get good at it. Just builds that resiliency. And once they've done the third or fourth one, they're like, what's next? What's next? What skill can I learn? That's kind of hard. There's your hour plus with my bestie Chama Polly hopping.
- [71:52]
Chamath Palihapitiya
Love you, bro. I really appreciate you, Jason. Thanks.
- [71:54]
Jason Calacanis
I appreciate you too, bro. Yeah. Oh, thanks for coming back on the show as one of the Twist all Stars for summer of 2026. Nine more to go, folks. It's going to be a great summer. Keep tuned in to the podcast feed. Bye bye.