Chamath’s Investor Letter

Chamath from Social Capital released his first annual letter a few days ago. He’s had a long and storied career, lately as a VC founding Social Capital, and previously spearheading acquisition for Facebook. I’ve been following him for some time. Google him for more.

There were many notables in his ~15-page letter covering topics from investor returns to the current state of VC to their views on AI and their future investment thesis in light of these “later innings” of the internet.

This is one of the early nuggets that jumped out at me from the piece:

Said more simply, Big Tech will get bigger and will leave less room for obvious companies
doing obvious things. The demands of innovation are going up, and the quality of the ideas and
teams working on those ideas matter now more than ever in this David v. Goliath landscape.

The issue of big tech’s consolidation he speaks to is real. We watch it every day via many proxies. The FAANG moats get larger while customers supposedly get more for their dollars now and most likely less in the long term.  Many great companies will continue to die on the treadmill next to their outsized and overcapitalized foes.

I continue to be concerned when I think of macro issues like Facebook owning and monetizing this age’s “town square” while Facebook and Google’s combined ad duopoly continually raises acquisition and reacquisition costs for digital customers. Amazon is also playing with free and unlimited capital for the annexation of everything valuable well beyond B2C. And don’t get me started on all the issues with software patents, IP and closed systems like Apple, which make it harder for the next wave of startups to find an early foothold by being “taxed” from go on multiple fronts. I don’t know if regulation is the solve, but there is certainly a fair amount that’s broken or breaking in today’s tech landscape. #exhale

On the topic of Innovation, I’d agree that everyone will need to spend more time, money, effort and energy to actually find durability. The easier or “more obvious” wins are neutralized in months versus years or let alone Drucker’s decades. And big tech’s gravity for attracting the true A talent needed for real innovation is only becoming harder to overcome.

Back to Chamath’s letter – this is the view of one man, albeit a smart and experienced one, on where the puck is and is going. If you play in the digital world as a consumer, employee, leader or potential investor, you will at least expand your perspective via this quickish read.