The Ledger
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Sethi: Social Capital marketed data capabilities ahead of actual execution
“I don't think we successfully did that, but I think we did successfully marketed it ahead of what we could do, but we did bring some of the brightest minds around the table.”
Palihapitiya: Manager concentration consistently decays returns over time
“Manager concentration always drives decaying returns. And the problem is either the surface area of their skill becomes very rigid and fixed, and so you force them to go out of their sweet spot. Or even worse, they become risk averse because they have not refi…”
Chamath: Building a 21st-century Berkshire has always been my ambition
“I wanted to build Berkshire And that was always my ambition.”
Chamath: Social Capital delivered 5x-6x fund returns and 40% IRRs
“And now looking back, we have six X funds, we have five X funds, we've generated 40% IRRs, we've generated billions and billions of dollars of returns.”
Social Capital allows emerging managers a 30% drawdown before intervening
“We give you a 30% drawdown before we really get involved so that you can learn the business of managing losses.”
Chamath Palihapitiya aimed to take Social Capital public by 2022 or 2023
“And I do think that it's very important for TopCo to go public as soon as we can. And just to be very honest with you, I'm very focused on trying to find a way to do this in the next two or three years”
Social Capital emerging managers receive 30% carry with no hurdle under $50M
“The way that we have structured the compensation, all the way up to about fifty million, basically you take 30% of the profits, and there's no hurdle. Over fifty million, we start to impose this logic of a hurdle, and the reason is because at that point, the q…”
Palihapitiya: Social Capital's 2020 returns will be 30% to 40% on billions
“In fact, the reality is, you know, this year, actually, I'm not going to front run my returns, but they're going to be somewhere between 30 and 40% on many, many billions.”
Chamath Palihapitiya generated over $1B in personal compensation from carry
“And that has been a net delta to me of at least a billion or a billion and a half dollars of compensation.”
Chamath: Zero-Rate Regimes Force Investors to Understand Tech Compounding
“I think that incredible opportunities abound in a world of zero rates because it forces you to have a very, very unique viewpoint on future returns. It is somewhat of a much easier job when the risk free rate is between six and 10% to just check out. You can b…”
Sethi: Social Capital was sole firm with growth and data science team
“Social Capital was the only firm that I had met that had built out a growth and data science team at the time.”
Chamath: Social Capital 1 used budget-based fees and 30% carry
“And so I ran a budget-based fund, but with 30% carry. I had a very favorable LPA, a limited partner agreement, and all of those because I negotiated them on the behalf of myself as an LP, and so I was able to go to the other LPs and say, guys, I went from a fi…”
Palihapitiya: Social Capital aims to expand manager platform to crypto and collectibles
“Debt is another area where I think we could do some stuff soon, but my commitment is to try to get into crypto and cards and art and cars and all kinds of other things.”
Palihapitiya: Leaving profit on the table builds loyal partner alignment
“Creating non-zero-sum outcomes is really healthy. You can come to a place in your life where you can say, I'm going to capture every single last dollar of profit here. Or you could say, you know, I'm going to be a little inefficient. And in that inefficiency, …”
Social Capital to run $500M-$1B best-ideas book over emerging managers
“We're going to have to run a best ideas book where we're going to run 500 to a billion dollars on top of this thing, and hopefully, if we can generate eight, nine, 10% of alpha there, we will feel like then we've broken even.”
Palihapitiya delays close investment decisions by a week to avoid bias
“One of the guardrails that I've developed for myself is whenever we're close to an investment decision, I really detach away from everybody else, and I basically take an extra week, and I delay the decision.”