Chamath Palihapitiya on Forgiveness and Happines

Lex Fridman

You learned from your, so after Facebook, you started social capital or what is now called social capital. What have you learned from all the successful investing you've done there about investing or about life or about running a team?

Chamath Palihapitiya

I'm very loath to give advice because I think so much of it is situational. But my observation is that starting a business is really hard, any kind of business. And most people don't know what they're doing. And as a result, we make enormous mistakes. But I would summarize this, and this may be a little heterodoxical. I think there are only three kinds of mistakes because if we go back to what we said before, in the business, it's just learning. You're exploring the dark space to get to the answer faster than other people. And the mistakes that you make are three, or the three kinds of decisions, let's say. You'll hire somebody, and they're really, really, really average, but they're a really good person. Oh, yeah. And they really weren't candid with who they are, and their real personality and their morality and their ethics only exposed them over a long period of time. And then you hire somebody, and they're not that good morally, but they're highly performant. What do you do with those three things? And I think successful companies have figured out how to answer those three things, because those are the things that, in my opinion, determine success and failure.

Lex Fridman

So basically hiring, and you just identified three failure cases for hiring.

Chamath Palihapitiya

But very different failure cases and very complicated ones, right? Like the highly performant person who's not that great as a human being, do you keep them around? Well, a lot of people would err towards keeping that person around. What is the right answer? I don't know. It's the context of the situation. And the second one is also very tricky. About if they really turned out that they were just not candid with who they are and it took you a long time to figure out who you were? These are all mistakes of the senior person that's running this organization. I think if you can learn to manage those situations well, those are the real edge cases where you can make mistakes that are fatal to a company. That's what I've learned over 11 and a half years, honestly. Otherwise, the business of investing, I feel that it's a secret. And if you are willing to just keep chipping away, you'll peel back enough of these layers will come off and you'll see it. The scales will come off and you'll eventually see it.

Lex Fridman

I really struggle with, maybe you can be my therapist for a little bit, with that first case, which you originally mentioned, because I love people. I see the good in people. I really struggle with just a mediocre performing person who's a good human being. That's a tough one.

Chamath Palihapitiya

I'll let you off the hook. Yeah. I think that those are incredibly important and useful people. I think that if a company is like a body, they are like cartilage. Can you replace cartilage? Yeah. But would you if he didn't have to? No.

Lex Fridman

Okay. Can I play devil's advocate? Yeah. So those folks, because of their goodness, make it okay to be mediocre. They create a culture where, well, what's important in life, which is something I agree in my personal life, is to be good to each other, to be friendly, to be good vibes, all that kind Of stuff. You know, when I was at Google, just like the good atmosphere, everyone's playing and just, it's fun, fun, right? But to me, like when I put on my hat of like having a mission and a goal, what I love to see is the superstars that shine in some way, like do something incredible. And I want everyone to also admire those superstars. And perhaps not just for the productivity's sake or performing or successful company's sake, but because that too is an incredible thing that humans are able to accomplish, which Is shine.

Chamath Palihapitiya

I hear you, but that's not a decision you make, meaning you get lucky when you have those people in your company. That's not the hard part for you. The hard part is figuring out what to do with one, two, and three. Keep, demote, promote, fire. What do you do? And this is why it's all about those three buckets. I personally believe that folks in that bucket one, as long as those folks aren't more than 50 to 60% of a company, are good. And they can be managed as long as they are one to two degrees away from one of those people that you just mentioned.

Lex Fridman

Yeah.

Chamath Palihapitiya

Because it's easy then to drag the entire company down if they're too far away from the LeBron James, because you don't know what LeBron James looks and feels and smells. And, you know, so you need that tactile sense of what excellence looks like in front of you. A great example is if you're like, if you just go on YouTube and you search these clips of how Kobe Bryant's teammates described not Kobe, but how their own behavior, not performance, Because there was a bunch of average people that Kobe played with his whole career, but their behavior changed by being somewhat closer to him. And I think that's an important psychological thing to note for how you can do reasonably good team construction. If you're lucky enough to find those generational talents, you have to find a composition of a team that keeps them roughly close to enough of the auric. That way that group of people can continue to add value, and then you'll have courage to fire these next two groups of people. And I think the answer is to fire those two groups of people. Because no matter how good you are, that stuff just injects poison into a living organism. And that living organism will die when exposed to poison. So