The immigrant child who began his journey into wealth at Facebook Inc., made billions as a risk-hungry investor and became a married piper of the current blank check position sees nothing less than Warren Buffett from the Reddit era.
“No one is going to listen to Buffett,” Palihapitiya, founder of Social Capital, said in an interview with Bloomberg “Front Row”. “But there has to be others who will take that healthy, take the baton and do it as well as the younger generation in the language they understand.”
Social media is the language, of course. That’s where the 44-year-old billionaire talks about his contracts, trolls the establishment and considers “everything Chamath.” He recently stopped profiting from a potential run for California governor. At times, he prints shirtless selfies for his 1.3 million followers. Feeding is a digital stream of consciousness.
With Twitter as his bull, Palihapitiya has undoubtedly become the king of special purpose construction companies, the hottest thing on Wall Street. Along with Ian Osborne, a public relations relative who turned treasurer, he has supported six SPACs, raised a total of $ 4.34 billion and acquired businesses in space travel, health insurance, financial services and real estate.
Lightning rod
Along the way, Palihapitiya has made a fortune for himself and his investors, and has helped undo a frenzy that involves everyone from Colin Kaepernick to former House Speaker Paul Ryan. racing to market their own SPACs. It is also a lightning rod for skeptics who thrive on relentless self-promotion and who see blank check companies as proof of a bubble reduced by the massive printing of government money.
If SPACs symbolize speculative mania, it is Palihapitiya against that moment.
Palihapitiya said that anything that appeals to many will attract its replicas and wannabes, and many will certainly fail. He is confident that his brand and investment acumen will not only make people rich, but help democratize finance and provide access to ordinary investors.
Plus, there’s the whole Buffett thing. It grows its empire into a Berkshire Hathaway-esque conglomerate for the 21st century, with investor conference calls, an analyst day and its own annual meeting. All of this, in his vision, generates enough wealth to reduce the inequality gap in America.
It’s a very grandiose material.
“I want to have a Berkshire-like instrument that has everything, you know, not to feel egotistical, but everything Chamath, everything Social Capital,” he said.
It was also Palihapitiya who played a key role in the frenzy surrounding so-called meme stocks, tweeting on January 26 that he bought GameStop Corp. call options. and helps fuel its short-term rise. He left the trade before hitting GameStop, making a profit of $ 500,000 which he donated to charity.
Palihapitiya then joined the Reddit crowd of WallStreetBets in beating short sellers and rejecting Robinhood Markets, which temporarily banned the purchase of meme stocks, as “a handful of corporatist junk.”
He admits that astronomy is not like Buffett. But then again, maybe that’s the point.
“Who I am is the result of my generation and my media culture, which is at the forefront – not always big sides, but multi-faceted,” he said. declared. “
Boom SPAC
The Palihapitiya bro-ish method – cocksure and full swagger – is not for everyone. It could be said what caused its venture capital firm in 2018. But its SPACs have delivered results, so far at least.
The first SPAC he built with Osborne was joined by Richard Branson’s Virgin Galactic in 2019 and is now trading at $ 59, up from the usual offer price of $ 10. His other five are also good above $ 10, including the two that have not yet announced ownership – a testament to investor confidence and also to the heart of the central bank which has increased risk funds across the globe.
Critics argue that SPACs are flawed and risky, with incentives that strongly favor sponsors and attackers at the expense of individual investors. Palihapitiya says it is working with Credit Suisse Group AG on ways to reduce share shares to hedge funds and allow retail money to participate in so-called PIPE finance.
“On the contracts I make I carry 20%, and I think I can find targets and find opportunities that will make that more reasonable than the final analysis,” he added. all his SPAC, he has invested millions of dollars of his own money.The only reason he said that he will sell any shares forever is to release money for other endeavors.
Rise, Fall and Rise
In Silicon Valley, where his rise was meteoric and ultimately turbulent, everyone knows who “Chamath” is. It gets that way in financial circles too. It’s not “Jamie” or “Ray”, but on its way there.
Born in Sri Lanka, Palihapitiya emigrated to Ottawa as a boy. He worked part-time at Burger King to help his parents meet. After graduating in electrical engineering from the University of Waterloo and trading for a year, he moved to California.
At Facebook, his responsibilities included nascent mobile business and international markets. He left in 2011 to establish Social Capital and took early steps in Slack and SurveyMonkey. Palihapitiya also bought part of the Golden State Warriors basketball team in 2011, Bitcoin in 2012, Amazon.com Inc. shares. in 2014 and Tesla Inc.’s modified debt. in 2015.
And then it seemed to fall apart. His marriage spread, his main partners left in Social Capital and several investors were willing to pledge new money. Many believed that Palihapitiya had ignited.
In three years, it’s bigger than ever.
Palihapitiya estimates its wealth at somewhere between $ 10 billion and $ 15 billion, far more than public publications would suggest. Most of that – his privately owned insurance, software and healthcare businesses, his SPACs, the new seed program he started for amateur money managers – will be part of the property company which he models on Berkshire.
One of the slogans of Palihapitiya is that there are only two important things: inequality and climate change. He said his mission at Social Capital was to invest in solutions for both. That’s why he’s also making a “big bet” on getting an emergency supply for lithium-ion batteries so that the U.S. doesn’t have China’s mercy in its efforts to tap green energy. It is expected to cost billions of effort.
His populist claim has won millions of Palihapitiya followers. He recently lent credit to the rumor he was planning to run for governor. While Palihapitiya is upset about everything from taxes to crime rates in California and is funding the #RecallGavinNewsom effort, he maintains that he has no plans to seek office.
Instead, he said he would send back candidates who share his medieval views and eventually plans to “spend hundreds of millions a year” building a machine that will ‘can have a conservative effect on the Koch and Mercer families.
Meanwhile, Palihapitiya says he has no plans to “cut and run” like the other billions fleeing his state, including Tesla’s Elon Musk and Oracle Corp’s Larry Ellison. His strategy: be loyal, stay on brand, hide nothing.
“I make better decisions when I am assertive and transparent,” he said. The best way to do that is to live my life outside for all to see. “