Chamath Palihapitiya joined Kara Swisher on the Recode podcast to talk tech. Actually, tech was just a proxy for talking about life. Here are some quotes from Palihapitiya we can disassemble, understand, and use. Software we can install today.
1/ “I’m really good at risk…I’m relatively fearless about money because I never really had money.”
Palihapitiya said this about his time in investment banking. We may not be investment bankers, but this is still good advice. If we don’t get used to something, we don’t think we need it.
In The Hour Between Dog and Wolf, John Coates explains what happens behind the scenes in our minds. We get chemically attached to successes and things, and start to try to get more of them. Coates writes that some traders would reach for trades to make up for losses because they had envisioned and committed to an upgraded house on Martha’s Vineyard. This never ended well. This is part of the reason we suggest a low overhead approach.
Palihapitiya cleared this pitfall, by never running this race. Because he never had anything, he had nothing to lose (or reach to keep).
2/ “Whatever he (Kevin Connor) needs me to do, I’m going to do. (I’d) answer every email…Kevin needed work done and I would do the work, and I keep getting promoted.”
Palihapitiya adds another voice to our theory of career capital. Introduced by Cal Newport in his book, So Good They Can’t Ignore You, it’s the idea that rare and valuable skills require rare and valuable jobs. But you don’t start at rare and valuable, you start at answering every email. You start in the backwater.
In his latest book, Gary Vaynerchuk writes the same thing, that if his kids don’t have the skills they need, he’ll start them at the bottom of the family business that bears his name. Many people start at the bottom, doing whatever is needed.
Terry Gross said, “I was a volunteer at a station of volunteers….there was a lot of peer pressure….it toughens you up, and you learn… it doesn’t feel good but it was effective.”
3/ “In hindsight it (the Winamp source code) was the pin for the grenade that destroyed the music industry.”
Palihapitiya is many things, including intellectually immodest. When Swisher asks why the Facebook phone failed he said it was because of his ego. Observations of the aplomb. Our grenade pin quote articulates another good tool, part-of-the reason thinking.
Introduced by Sanjay Bakshi, it’s the mental model that forces us to think of things being made of many parts. Dropping Winamp code online may have been the pin, but what about the rest of the grenade?
Highlighted in the – great – book, How Music Got Free, Stephen Witt tells the story of the downfall of the CD in favor of the digital download. Other parts of the reason included; lackluster albums where only a few songs were good, faster internet speeds to exchange data, middle class factory workers, and music executives with lagging strategies.
There may have been a pin, a tipping point, the straw that broke the camel’s back, but that’s never the only thing. It’s always one of many things.
4/ “None of it was planned, but I was around some pretty historical moments for our world.”
Palihapitiya was part of some major moments; the AOL/Time Warner merger, Winamp, Facebook. He didn’t know it at the time. No one does. James Manos said that the first season of The Sopranos was about making a good show – not a cultural one. Sophia Amoruso didn’t set out to create a fashion brand, she was just bored at her desk job checking ID’s at an art school. James Corden didn’t think Gavin and Stacey would be a hit. B.J. Novak didn’t think The Office would be either. Amy Schumer said that she’s still not conscious of it, rather, she’s just doing the thing that’s right in front of her.
People who make things that become big are always more focused on the making of it, rather than the largess.
5/ “I liked him (Mark Zuckerberg)…what’s the worst that can happen?”
Palihapitiya said that he joined Facebook because it was a win-win opportunity. He wanted to be around young people and create something, and there was the chance to be part of something that might be a rocket ship.
Chris Hadfield adopted this strategy to literally get on a rocket ship. He wrote about this mindset of aiming for space:
“It’s probably not going to happen but I should do things that keep me moving in the right direction, just in case – and I should be sure those things interest me, so that whatever happens, I’m happy.”
This, do the small things that make you happy, but that could also lead to big results has examples elsewhere. Casey Neistat took this approach before making his snowboarding through Times Square video:
6/ “I was curmudgeonly mostly on purpose to make sure we didn’t get lost in ourselves.”
When Palihapitiya saw an Audi in the Facebook parking lot he took a picture, and emailed it to everyone. “This is what will bring us down,” he wrote. His actions seem overbearing (though he tells Swisher is was inspirational), but they provided a ballast, the outside view.
When Bethany McLean worked on her book, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, she noted how persuasive – CEO – Jeff Skilling was. He didn’t get pushback, a part-of-the-reason cause of the downfall. Palihapitiya made it his job to do this at Facebook.
7/ “Every time there is a new lily pad in that four hour block of time (play), they (Facebook) buy it.”
Palihapitiya theorizes that Facebook divides a day into three parts; sleep and sundry, work, and play. Facebook wants to be the biggest player in that play period. The Facebook app is one part of that time, Instagram is another. Each company is a “lily pad” that Facebook might add to their pond.
This theory fits nicely with my current project, Is Snapchat Disruptive?. The framework there comes from Professor Clayton Christensen, who writes that companies who were once disruptive can’t again be disruptive without a major change. One way is to change their values and processes – the very things that are most profitable.
Another way is to buy companies, and keep them as separate entities. They can grow on their own. That’s what Facebook looks to be doing.
8/ “Work on things that keep you really morally disciplined and then you set your trajectory 40 years into the future, and then you don’t get distracted.”
This productivity advice echoes what Gary Vaynerchuk suggests too. His analogy is a bit tidier, keep your head in the clouds and mind in the dirt. In his book, Smarter, Better, Faster, Charles Duhigg found that the best goals were stretch goals broken into SMART components.
9/ “What Mark (Zuckerberg) is becoming, is a master capital allocator. What Warren Buffett is, is a capital allocator. What Larry is learning to become, is a capital allocator. Jeff (Bezos) is actually the best capital allocator of all of them….he takes just enough small bets.”
This is another leg in Christensen’s disruption framework. Companies that have disrupted an industry or encumbnant (Amazon selling books online) and then sustained (Amazon selling everything else online), need to be open to new ideas. These new ideas need resources. They need capital allocated to them.
A quick summary for Amazon might look like this: they tried the phone, it failed, they shut it down. They tried Alexa and it’s succeeded so far and they’ll continue to follow where that may lead. Both Tim Cook and Mark Zuckerberg have danced these steps. Apple’s first phone failed. Facebook’s too.
Warren Buffett bought Berkshire Hathaway when it was a textile mill. It was one of his worst investments. Geico was one of his best. Buffett’s advice? “If you get into a lousy business, get out of it.” That’s good capital allocation.
10/ “Dealing with that, when you don’t win, is such great training for work.”
At the end of the interview Swisher says she can’t stand to play poker because she loses. That’s good, Palihapitiya says. Figuring out how you lost is golden.
Charles Duhigg’s latest book, Smarter, Better Faster tells the story of how Annie Duke abandoned her Ph.D. and picked up poker. Duhigg summarizes Duke’s – and other people’s – success as stemming from losing well. Good losers, he writes, create mental markers. When along the same path, good losers notice these, and choose another path. This is what Duke did.
11/ “I don’t think she was the right choice…the minute he (Dan Loeb) exists is a huge red flag.”
Palihapitiya thinks Marissa Mayer is the wrong choice at Yahoo. I don’t know about Mayer, but this logic is sound.
In my research on why start ups failed, an early believer bailing was a kiss of death. If a VC backed company didn’t get their seed round investors to lead their A-Round, it was like a scarlet letter.
Thanks for reading, I’m @mikedariano on Twitter.