20VC Social Capital's Mamoon Hamid on Disrupting The Venture Model & Advancing Humanity By Solving The World's Toughest Problems

In this episode of the 20 minutes VC, host Harry Stebbings interviews Mamoon Hamid, co-founder and general partner at Social Capital. Hamid shares his journey from a Silicon Valley engineer to a venture capitalist, emphasizing the importance of investing in technology to solve global challenges in healthcare, education, and financial services. He recounts his early career at Xilinx, his transition through business school, and his venture investments at US Venture Partners before co-founding Social Capital. Hamid highlights the firm's focus on long-term impact and the balance between investing in traditional enterprises and those with longer gestation periods. The discussion also delves into the importance of founder CEOs, the evolution of top tech companies, and the challenges of maintaining culture and ambition within a growing VC firm.

• Mamoon Hamid is the co-founder and general partner at Social Capital.
• Social Capital was founded in 2011 with the mission to use technology to solve world problems.
• Mamoon oversees private investing in sectors such as healthcare, education, financial services, consumer and enterprise software.
• He is on the board of several companies including Slack, Intercom, Netscope, and Greenhouse.
• Mamoon's prior experience includes being a partner at US Venture Partners and working at Xilinx.

"Mamoon is cofounder and general partner at Social Capital, a firm he cofounded in 2011 with the mission to transform society by using technology to solve the world's hardest problems."

This quote introduces Mamoon Hamid and the core mission of Social Capital, highlighting the firm's focus on societal transformation through technology.

• Mamoon started his career in Silicon Valley in 1997 at Xilinx as an engineer.
• He was initially unaware of what venture capitalists (VCs) did.
• Xilinx was involved with .com bubble companies, and Mamoon's exposure to a company acquisition by Cisco sparked his interest in VC.
• Xilinx started a corporate venture fund, and Mamoon had the opportunity to evaluate a company, which he enjoyed.
• This interest led him to consider business school to transition into venture capital.

"I moved to Silicon Valley in 1997 to join a semiconductor company called Xilinx as an engineer right after college."

This quote outlines Mamoon's entry into the tech industry and his initial role at Xilinx, setting the stage for his eventual interest in venture capital.

• Mamoon decided to attend Harvard Business School to pivot towards venture capital.
• During his MBA, he interned for a small VC firm and worked with Blake Crikorian at Sling Media.
• These experiences solidified his interest in partnering with entrepreneurs aiming to change the world.
• After business school, he joined US Venture Partners (USVP), focusing on semiconductors but soon shifted to web and SaaS investments.
• His first investment at USVP was in Box, which influenced his focus on SaaS and productivity software.

"So after giving it some thought, I thought about returning back to business school, making the transition from an engineer or product person to more see if I could do this venture thing full time."

This quote captures Mamoon's decision to pursue an MBA as a strategic move towards a full-time career in venture capital.

• Mamoon worked with Ted Maidenberg, a future co-founder of Social Capital, at USVP.
• He met Chamath Palihapitiya, another future co-founder, while they were both junior-level VCs.
• The three reconnected in 2011 and discussed the founding of Social Capital.
• They considered the impact of the next 30 years of their careers and the role of technology in making a significant impact.

"And in 2011 we all sort of reconnect and talked and remember vividly the summer of 2011 where we started talking about social capital."

This quote reflects on the pivotal moment when the co-founders of Social Capital came together to discuss the vision and founding of the firm.## Long-term Impact and Investment Focus

• Social Capital set out to invest in sectors with significant importance to the world but lacking substantial technological advancement.
• Areas of focus include healthcare, education, and financial services, which have long time horizons for development and impact.
• The youth of Social Capital's founders contributed to the ambition of thinking in long time horizons.
• Investments also extend to traditional enterprise and consumer sectors, balancing the portfolio.

"And so we set our sights on trying to invest in areas that meant something to the world, like healthcare and education and financial services, areas where technology hadn't made a large enough dent."

This quote highlights the strategic focus of Social Capital on sectors that can benefit greatly from technological innovation and have a long-term impact on society.

• Venture fund cycles are typically 10 to 12 years, which may be too short for companies in certain industries to establish themselves.
• Successful companies often take around eight years to reach a point of exit, IPO, or liquidity.
• There is a potential loss for VC funds that exit early from investments in companies like Amazon, Facebook, or Google.
• Social Capital balances its portfolio with long gestation cycle businesses and more predictable, faster value-creating businesses.

"So fund cycles are short and they are limiting in what the investors, the vcs, end up doing."

This quote emphasizes the limitations imposed by the traditional venture fund cycles on the ability of investors to support businesses with longer development and adoption cycles.

• Social Capital invests in businesses with longer sales, adoption, and feedback cycles, such as healthcare and financial services.
• The firm balances its portfolio with investments in enterprise software and consumer businesses that show faster value creation.
• Investments aim to address significant issues like chronic disease management, which inherently take longer to show results due to slow adoption by hospitals and patients.

"It's a balance, like balancing ambition and fulfillment with what you do and the money making part."

This quote reflects the strategy of balancing ambitious, long-term investments with more immediate, profit-generating ventures to sustain the fund and its goals.

• Social Capital began with a small, diverse team and has significantly expanded over the last 18 months.
• The team is built around a shared mission to advance humanity by solving tough problems with technology.
• Team members are expected to have technical skills, experience in substantial roles, and a relentless desire to continue striving for success despite long feedback cycles.

"We look vastly different now. Five years in, and most of that has happened over last. Most of the changes happened over the last 18 months."

This quote indicates the rapid growth and evolution of the Social Capital team, emphasizing the importance of adapting and scaling the team effectively.

• Social Capital has implemented mechanisms to maintain culture and open communication, such as Slack bots for feedback.
• The firm encourages transparency and collaboration through the use of its own software tools.
• The partnership includes a dozen partners from diverse backgrounds, contributing original thought to the firm's improvement.

"Slack bots that give run sort of weekly pulse reports of how things are going, how people have any feedback."

This quote illustrates the proactive approach Social Capital takes to maintain its internal culture and communication as the team grows, using technology to facilitate feedback and transparency.

• Social Capital is not just a VC firm but also functions like a company building a product, with a focus on investing.
• The firm has a growth and data science team that works with portfolio companies post-investment to achieve hypergrowth.
• The team's experience in successful tech companies informs their approach to helping portfolio companies with product market fit and strategic growth initiatives.

"Our product may be related to investing, but there's a lot of things that are beyond that."

This quote conveys the broader scope of Social Capital's operations, extending beyond traditional venture capital to include hands-on growth strategy and product development assistance for their investments.## Investment Team Composition

• The investment team at Social Capital consists of individuals who have built products at prominent companies.
• These companies include Facebook, Servermonkey, Optimizely, Yahoo, and Dropbox.
• The team's experience with successful products at notable companies is a key aspect of their approach.

"Our investment team was mostly folks who've built some amazing products at companies like Facebook and Servermonkey, and optimizely and Yahoo and Dropbox."

The quote emphasizes the caliber of the investment team at Social Capital, highlighting their past achievements and the reputable companies they've been involved with.

• Social Capital experienced a significant growth period at the 18-month mark.
• The team decided to ramp up its efforts in response to this growth.
• Inflection points are recognized as critical moments for both team expansion and strategic changes.

"I'd love to touch on inflection points with 18 months obviously being the inflection point in terms of team growth and when you decided to really ramp it up."

This quote discusses the importance of recognizing and acting upon inflection points, particularly in the context of team growth and the scaling of operations.

• Social Capital has become one of the best performing VC funds.
• The stature of Social Capital has risen over time, with no single turning point.
• Small successes contributed to the courage to take on more significant challenges and opportunities.

"So when was that bar raise in terms of stature for social?"

The speaker inquires about the moment Social Capital's stature increased within the venture capital ecosystem, seeking to understand the factors that contributed to this change.

• Social Capital's ambitions have remained consistent, but their ability to act on these ambitions has grown.
• Early investment successes provided the privilege to expand their activities.
• The third fund raised was $600 million, doubling the previous fund sizes and necessitating a larger investment team.

"Yeah, I think our ambitions have always been the same, but you have to earn the right to do more and more."

This quote reflects the philosophy that success and proven track records enable a venture capital firm to scale its ambitions and operations.

• The expansion of Social Capital included the growth of the data science and growth team.
• A talent and brand team, as well as a discovery team, were created to focus on specific functions within the firm.
• The discovery team incubates new ideas with a separate decision-making process from series A investments.

"We also started a discovery team, which is run by my partner, Jay Zaveri."

The quote introduces the creation of specialized teams within Social Capital, highlighting the strategic decision to diversify and innovate within the firm's structure.

• Social Capital believes in seizing opportunities and not letting them go.
• The firm's culture encourages pushing forward aggressively to partner with the best companies.
• Small wins are seen as a chance to assert oneself in the industry.

"And if you don't take the mantle, it's just like a startup for Facebook. It's like it's their time to take the mantle."

This quote illustrates the mindset of taking initiative and capitalizing on opportunities, drawing a parallel with how startups must seize their moments to lead.

• Top US companies by market cap are predominantly tech companies.
• Tech companies achieve hyperscale due to business attributes like network effects, customer lock-in, and high gross margins.
• The speaker is bullish about the future cohort of tech companies potentially surpassing previous generations.

"Yeah. So technology companies are unique in some ways where they will achieve hyperscale because of some pretty beautiful business attributes like network effects and achieving lock in with your customers."

The quote explains why technology companies have been so successful, emphasizing their unique business attributes that enable rapid scaling and dominance in the market.

• Successful tech companies have not only benefited from inherent business attributes but have also innovated internally.
• Companies like Microsoft, Facebook, Apple, and Amazon have pivoted to new business lines that became significant contributors to their market cap.
• The speaker believes that continuous innovation is a key factor in these companies' growth and dominance.

"These great successes have only come. They've innovated and created new lines of business that have become the dominant market cap creator for these companies."

The quote highlights the role of internal innovation in the growth trajectories of the largest tech companies, suggesting that innovation is integral to achieving and maintaining market leadership.

• The top tech companies have been driven by founder CEOs who foster an environment of innovation.
• This leadership style is characterized by a sense of ownership and a desire to maintain a leading position in the market.
• The speaker suggests that this founder-driven approach is central to successful transitions between market segments.

"I think if you look at all those companies, all five of those companies driven by founder ceos."

This quote points to a common characteristic among the top tech companies: being led by founder CEOs who have created a culture that supports innovation and market agility.## Evolution of Tech Companies

• Tech companies often start with a core business and then expand into new, ambitious areas.
• Uber began as a taxi company and is now venturing into autonomous vehicles.
• Airbnb started as a vacation rental service and is potentially moving towards becoming a comprehensive housing solution.
• These expansions represent moves into massive categories like transportation and housing.
• The tech industry ethos is that work is never finished and there is always more to innovate and accomplish.

"a private company, they could have just been happy being a taxicab taxi company, but they're doing autonomous vehicles."

This quote exemplifies the ambition of tech companies like Uber to go beyond their initial business model and explore futuristic technologies like autonomous vehicles.

"Airbnb is probably going to take over where people just live. They will become the property manager for people who own homes and they will become the Craigslist for people who want to find a home."

This quote suggests that Airbnb's potential growth could lead it to dominate the living space by not just offering vacation rentals but also managing properties and facilitating home finding, akin to Craigslist.

• The vision and authenticity of a founder CEO is crucial in venture capital investment decisions.
• A founder CEO should be able to think five steps ahead but focus on executing the next one or two steps.
• This balance allows for progress in the present while earning the privilege to reach future goals.
• Successful founder CEOs work on current projects with an eye on future opportunities.

"the most important thing that we look for is the founder with a vision and authenticity who is five steps ahead but is executing on the next one or two steps."

This quote highlights the importance of a founder CEO's ability to have a long-term vision while effectively managing the immediate next steps of their company's development.

• The trend of companies staying private longer allows for experimentation and growth without public market scrutiny.
• Being private enables companies to undertake bold projects, like Uber's investment in autonomous vehicles, without immediate pressure from shareholders.
• However, going public also has its benefits, such as increased discipline, brand enhancement, and the ability to attract retail investors.
• The decision to remain private or go public is multifaceted and can be viewed from different perspectives.

"these companies could go public faster and you could drive them to go public faster being private and when money is available at will at great valuations for these companies so that they can experiment and do autonomous vehicles."

This quote discusses the advantage of staying private for companies like Uber, which allows them to access funding and experiment with projects that might not be well-received by public markets.

"it drives discipline, it creates better brand for you. You get to have retail investors, you get to have various benefits that one gets by being a public company as well."

This quote acknowledges the advantages of becoming a public company, including the discipline it brings, brand enhancement, and the broadening of the investor base.

• "Blue Ocean Strategy" is a favored book for its alternative approach to market thinking.
• Inspiration is drawn not from a single individual but from various traits admired in different people.
• The "shopping cart philosophy" is about selecting admirable qualities from multiple sources rather than idolizing one person.

"It's called Blue Ocean Strategy. It helps help me think about markets in a more orthogonal manner."

This quote explains the reason for the book's preference, which is its unique perspective on market strategies.

"Pick up different characteristics from different people that you really respect."

This quote describes the "shopping cart philosophy," which involves learning from various individuals' strengths rather than following a single role model.

• The goal is to advance humanity by solving the world's most challenging problems with technology.
• Success is viewed as a continuous process, with the understanding that the job of innovation is never done.
• The vision includes creating a lasting impact and being proud of the work accomplished.

"The vision is to advance humanity by solving the world's most difficult problems with technology."

This quote defines the overarching mission of the speaker's work, which is to use technology to address significant global challenges.

"Our job is never done."

This quote encapsulates the continuous nature of the mission to advance humanity, suggesting an ongoing commitment to problem-solving.

• Constructing a team that can endure generations is a primary challenge.
• The latest investment was in a company called Front, chosen due to the admiration for its CEO, Matilde.
• Team building is likened to a lifelong partnership, emphasizing the importance of choosing the right people to work with.

"team construction and building a team that can last generations along with us."

This quote reflects the speaker's focus on creating a durable and lasting team as a critical aspect of their work in venture capital.

"front is the latest investment."

This quote informs about the most recent investment decision, indicating a strategic choice based on the qualities of the company's CEO.