Chamath Palihapitiya: VCs will have to adapt to AI-reshaped world

If we accept the argument that the current boom in artificial intelligence will lead to dramatic productivity gains, it follows that small companies will be able to accomplish things that only larger companies could in the past .

In a world like this, venture capitalists may need to change their approach to financing startups. That’s what billionaire investor Chamath Palihapitiya, a former Facebook executive and CEO of Silicon Valley venture capital firm Social Capital.

It “seems quite reasonable and logical” that productivity gains from AI would lead to the creation of tens or even hundreds of millions of one- or two-person startups, he said Friday. episode of the All-in-one podcast.

“There are many forms of financial engineering that are disappearing in this world,” he said. “I think the work of the venture capitalist is really changing profoundly. I think there are reasonable arguments to say that it doesn’t exist.

Palihapitiya became the face of the SPAC boom and bust a few years ago due to his involvement in special purpose acquisition companies. Also known as “blank check companies,” SPACs are publicly traded shell companies that acquire a private company, thereby taking it public while avoiding the rigors of the IPO process.

At one point, Palihapitiya suggested he could become his generation’s version of Berkshire Hathaway President Warren Buffett. “I want to have a Berkshire-type instrument that is all, you know, not to sound selfish, but all about Chamath, all about social capital,” he said. said early 2021.

Buffett’s right-hand man at Berkshire, Charlie Munger, recently expressed his disdain for venture capitalists. “You don’t want to make money by screwing your investors, and that’s what a lot of venture capitalists do,” the 99-year-old said. said on the Acquired podcast, adding: “To hell with them!

Palihapitiya suggested that venture capital firms could be replaced at some level by “an automated system of capital versus goals…you want to make many, many, many little $100,000s.” [or] $500,000 bets.

Once a small-team startup reaches a certain level, it can “go and get the $100 million and $200 million checks,” he said, adding: “I don’t know how any of that would be supported financially otherwise “.

Many Silicon Valley executives expect that AI will lead to the disappearance of certain types of jobs, but will result in greater productivity and more jobs overall. Among them is Jensen Huang, the billionaire CEO of Nvidiawhich makes the chips in high demand by companies rushing to launch AI services.

“I have a feeling it’s probably going to generate jobs,” he said. recently said THE Acquired podcast. “The first thing that happens with productivity is prosperity. When companies are more successful, they hire more people because they want to expand into more areas.

He added: “Humans have a lot of ideas.”

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