tv Studio 1.0 Bloomberg October 4, 2015 7:00am-7:31am EDT
♪ emily: he has been dubbed the "venture cowboy," not just for his signature shirts, but also for his brash, freewheeling way of doing things. along with bets on uber and instagram, he also wrote a $25,000 check to buy a piece of twitter. he amassed so many outside shares, he was the biggest outside investor by the time of the ipo. he recently made news by outlining his vision for the future of twitter, addressing the possibility that twitter sells to a bigger company like google or facebook. i sat down with lowercase capital's billionaire founder chris sacca just days before twitter's ceo dick costolo
announced he was stepping down. thank you so much for being here. i hope you don't mind me calling you brash. chris: that's probably accurate. emily: you just released a 8500-word missive about twitter. about what twitter can be. before we cut to an ad of a medicare sponsored scooter, what is twitter's future? chris: 8500 words sounds like a term paper. but i had been invested in twitter since the first time anyone could be invested. i have been a user of twitter since 2006. i have been obsessed. it is part of my business. there have been more than one billion people who have tried it and not stuck around. twitter needs to be easier and less intimidating for these people. emily: what has been the reaction from twitter? have you heard from dick? chris: no, i haven't heard from dick since i posted that. to be clear, i don't talk to dick that frequently anyway. we are pals. it is not out of the ordinary for me to not hear from him. i talked to a bunch of other people at the company.
it was a well received post that i think, done right, sets them up for success. it points wall street in the direction of this is how you should be evaluating the company. you should not be headhunting the ceo, you should be focusing on these things. if they execute all of the stuff that i laid out, no one would be asking the question about whether dick costolo should be ceo anymore. emily: what is the problem and what should twitter do? chris: right now, it is scary to tweet. and when you do, it feels kind of lonely. they need to do a better job if where if you don't do a lot of work, you can follow tweets related to the game, the election, the protest. time for the heart. emily: you want a heart? instead of a star? chris: you use periscope. the endless stream of hearts is amazing. emily: the hearts do make you feel good. chris: it makes you feel acknowledged, heard, valued. but "favorite," it is like, is this really one of my favorite
posts? so for most people, they do not do it. emily: dick costolo was on the show, and he said twitter is the very best way to connect to what is happening in your world. i'm confident that that is where twitter is, and everyone at the company is confident that this is what twitter is. is that enough for you? chris: mission statements and taglines usually leave most people feeling empty-handed and directionless. it is a complex product that has to appeal to myriad audiences. i don't think a single tagline is going to do it. emily: you have been waving the pom-pom for nine years. you have a room in your house painted aqua? chris: we have a twitter blue room in the house. twitter has been good to me over the years. emily: why now? chris: why speak up about it now? i think we have the right team. i think dick finally has his squad. emily: why did you do this publicly? why didn't you pick up the phone and email them?
chris: i have. i wanted to take a shot at doing it externally. the audience important for me was those working at the company, not just senior management who have been working there a long time that are just, "yes, yes, yes." if the company starts delivering on it, i think everybody wins. emily: you are not an engineer, you're not a product guy. why should they listen to you? chris: good question. i do not know. i have a good track record that has worked out well. uber, kickstarter, gawker, i would like to think one or two of them might be lucky, but it is probably not an accident, at scale. i think you have to trust your own intuition as a person. i think one of the most interesting challenges in silicon valley is that the people who are not your users do not have any voice. that is one of the challenges all of these companies need to start incorporating. this is a company that has the potential to be bigger and more meaningful than a facebook. if dick executes on this stuff, then that is the ceo of this company. emily: have you talked to the
founders? i know you're close to ev. chris: i have not talked to jack recently. i did bump into evan on the way to the studio. i can say that many of those things were not my original ideas all, but ev and i have discussed while he was working there are things that i believe would be worth doing. the ideas i shared are not the five-year future of twitter, it is where they should be now. they have lost years and they are just playing catch-up. emily: google buying twitter. is that realistic? chris: it is really realistic. emily: but speculation has been going on about this for years. chris: if google were to buy twitter, it would instantly improve the stuff google has. this board, there is no one that wants to be independent forever. nobody owns 50% of the stock or somebody who could block a deal like that. emily: you think google would realistically buy twitter? chris: i think google would love to buy twitter. i think they never got social
personal identity, real time, or anything, they haven't nailed that. that said, zuck would not let twitter go to google without putting in a bid. there is just no way. emily: you think zuck would bid for twitter? chris: zuck looks at twitter and sees so much potential in it. "clown car inld, a gold mine"? people i know who are close to him -- but his perception that twitter is not doing everything they could has not changed. he would love the opportunity to own it and to improve some of the things. you have satya up at microsoft who has watched it, used it. back when we did the search monetization deals when twitter first started selling some of its search data to partners. it was satya who came down, when microsoft revisited it was across from me and dick costolo. i think alibaba may be interested, too. emily: you think facebook, google, alibaba, microsoft, they
would all buy twitter. chris: all those companies would benefit strategically. they would all be able to explain to their shareholders why they would pay a lot of money for it. and it would fit into their companies without blowing out or competing with something. emily: what about apple? chris: i do not think apple cares. i do not think it is in their bones. i do not think they don't care enough. particularly with apple, i think they go in a different direction. they don't care as much about the human or social elements. i just want to be clear about this, though -- i don't think twitter should sell to them. there is literally unlimited potential in what twitter can
build to get to a few hundred more million people. if they do that, the stock will be trading in the $70's, $80's, and $90's. that is why i am not campaigning privately or publicly for it to be sold. if the board stops believing that at any point, i don't see anybody on the board that would block that sale to someone who think they can do a better job of it. i think sometimes when of the founder is still running the company, people just defer to their judgment. i think you are allowed to be weirder and a bit more eccentric. people are just like oh, that guy, he is in the future. i think because dick doesn't have the benefit of being the founder, and people don't give him that benefit of the doubt by default. emily: what if some of the things you suggest don't happen? chris: if they do not happen, the company will just go sideways. the stock will go sideways, there will be more distraction, more people calling for management's heads, it will be harder to land the talented people they want to work there. so of the things not working, user growth isn't accelerating, revenue isn't accelerating as a result, they should give the company to someone who can do better with it. emily: do you have a preference among those? as an investor? chris: no, i don't. if this company has to sell to others, that is a letdown to me. when facebook tried to acquire twitter, jack and ev went down to a meeting with zuckerberg. when they came out of the meeting, they called dick and i for advice. we happened to be in hawaii. we are there on speakerphone listening to the facebook offer, trying to decide whether to take it.
we just chewed over the terms. i do not think there was any wavering over whether this would be a big, independent company. those guys always knew it was going to be huge. they have always been a couple steps ahead of us and how big it would be. emily: do you want something more here? do you want to be a board member? chris: no, they get my help for free when they wanted. emily: do you want to be ceo? chris: jesus. i don't want a "job" job. [laughter] no, i like what i do for a living. we have over 100 investments now. lowercase capital consists of 3 people. we are one of the biggest funds in terms of money under management, but there are three of us. we don't have office space. my coo works out of the back of a winery that she runs. my partner is in l.a., working on planes moving from portfolio company to portfolio company. we do it all ourselves. i don't really have an assistant. emily: how big do you think uber can be? chris: that is truly limitless. ♪
♪ emily: what is the myth of chris sacca, and what is the reality? chris: i never followed the step-by-step path you're supposed to do to do this. i had no business being a venture investor. i had no business quitting my job at google. i am like, all right, i am going to strike out on my own, google is getting pretty big. it felt pretty bureaucratic. i am not good at playing company politics. you know who was, was sundar, we used to do meetings together. i just knew that this guy was going places. emily: he's obviously done well. chris: yes. he will be the ceo of google someday. it was just obvious back in the day that he could be that. emily: what do you think of how he is leading google now? chris: sundar is an incredible compliment to larry. i use that as a foil in meetings. he is brilliant, we both have good ideas, but he can actually navigate a big company, and i can't. i have sharp elbows, i have opinions, i'm impatient in ways that i think are more similar to elon than sundar. emily: in what way? chris: i am tough to work with. i demand everything to be exactly right. i grew up with just -- with my
parents, excellence was expected. it was not even demanded. we had to do everything right the first time. emily: at google, you were described as this guy who maybe would go to meetings and get stuff done and might have rubbed people wrong way. how do you feel about that portrayal? chris: it was accurate. i was projected on high as the guy who got [beep] done. that said, i did not fit into the hierarchy. i totally know why it rubbed some people the wrong way, but i stand by the stuff i did to get stuff done. emily: what do you think about the moon shot? is that what they should be concentrating on right now? chris: yeah, i do. there is nobody here who would tell you that self-driving cars is a small idea and it will not pan out. that could be worth more than all of google is today. the stuff they are doing in health could change the world forever. the stuff they are doing in robotics could change everything. i think where they have dropped the ball are things that are
incremental from where they are right now. it is a bummer that youtube is not more social. the comments there are a disaster. emily: what about facebook? chris: i've no doubt about facebook's ability to maintain their relevance and to reinvent itself. they have used their market capital to buy the coolest stuff. zuckerberg knows how to execute. he was on top of instagram, and he knows how to close out that deal. emily: do you think kevin sold too early? chris: kevin walked away from that deal, at the time it was signed, something like $300 million to $400 million which is somewhere around $600 million to $800 million now. you tell me that you wouldn't treat everything you have right now for $800 million. emily: could he have more? chris: i am sure he could have had more.
but he could have zero, too. i do not think it is any of our place to question a guy like that. he has the best of all worlds. he sold the company, made a ton of money, and now he has been left alone to continue to execute on what he's wanted to do. kevin is having an amazing life. he is djing in vegas. i've never seen anyone dress better than that guy. he has his finger on the pulse. he drinks the best bourbon. he goes to fashion week in paris, and everybody falls all over him for how he has changed the world of fashion. there is no -- i don't feel bad for kevin one bit. emily: what about snapchat? here to stay, or just a fad? chris: snapchat is very real. those guys came up to me after an event i did once, and they said they were big fans, we would like to sit down. i was like, eh -- i didn't get it. i first, i did not understand it. i didn't pass, but i didn't follow up. i passed on dropbox, i passed on airbnb. when i was at google, i told eric not to invest in gopro. these are the times that i focus so much on the negative case that i miss all of the positive. i said that airbnb was really dangerous. i think somebody might get raped or murdered while they are staying at someone's house and the blood will be on your hands,
i literally said this out loud. billionhave a $20 hands. on their emily: you didn't pass on uber. you own 4% of the company. chris: i was lucky to be one of the very first investors. i had deep convictions about what it could be. emily: you don't think uber has used very dirty tactics? chris: i don't. i think they have used aggressive tactics. i think travis has been invented in his tactics. emily: how big do you think uber can be? chris: that is truly limitless. i do not think it is worth less than $150 billion to $200 billion by the time it goes public. they are nailing down the food business. that is a whole other business. emily: taking on fedex, is that some think they would do? chris: they are delivering packages in hong kong now. there is that cool company, ship. i did not invest in it because i think it is likely that is something uber will likely do. i don't own postmaid stock or instacart stock because i think it is something uber will do. i think travis' ambition to execute on that is -- i think travis' ambition is boundless and his ability to execute on that is unlimited.
emily: you mentioned your hot tub in turkey. travis is the unofficial near -- mayor there. you disclosed that you do not talk anymore. why not? chris: i think travis has a personality like mine. we have strong opinions. if i am involved in your business, i will share my opinions about how aspects are going. they will be very strong opinions, likely in your face. we have a different way of doing it. i think i can rub people the wrong way. it can be pretty mutual. in particular, i wanted to own more uber stock. so at the time, i was trying to buy it from more people, and travis didn't like that. i think that scratched the surface of more tension that was between us already. emily: have you tried to mend the fence? chris: yeah, i think working together professionally for now is kind of the best way for us to get along. what can i do for uber, that is a good way for us to collaborate for now. emily: what is the craziest thing that has happened in the jam tub? chris: the only thing crazy that
♪ emily: what do you think is going on right now in silicon valley? we are seeing unicorn valuations. chris: decacorn. emily: decacorn. chris: you know the culture secrecy we have here in silicon valley where you don't tell people your numbers or your business model, you don't tell them about the future. emily: isn't that dangerous? chris: it is really dangerous. the stories of founders living lavish lives and investors doing really well is attracting more attention and more posers, and with that attention comes sloppy discipline and a ton of money. think about the early days at y combinator. 12 companies, demo day lasted all day. everyone ran live code, there were 15 of us investing, we
could ask questions, walk up and try it during demo day. if the deal didn't get done that day, we could work on it. demo day today, what is it, 80 companies a class? 450 investors. 3 minutes, no live code, and those deals, half of them are done before they even present at demo day. i think overall it goes to a desperation on behalf of investors to be a part of this game. a lot of companies are raising that probably shouldn't be raising. they are probably not a good company. they are taking money away from companies that should probably use that money. they are taking talent away from companies that could use that talent. they are taking investor and advisor attention away. i think there is a lot of waste happening in the valley right now. some of these valuations and the accessibility of capital is just bananas. it is an amazingly rigged game, the investing game. where it all comes together is i don't think the public market is going to hold up forever. i do not think the global economy is going to support the market being open. i think by the end of this year, the public market basically
closes down for anything with quality lower than an uber, frankly. emily: so what happens when that happens? what do you mean by that? chris: you have a bunch of companies sitting around with no exit path. there will be down rounds. emily: you think by the end of the year, the tide will turn? chris: yes. by the end of the year, the market seizes up. i think there will be some pain out here for the companies themselves. emily: what happens to all of these unicorns and decacorns? how many of these are horses masquerading? chris: i think there are naive investors with no discipline throwing out term sheets with nine figures with no diligence. i will give you an example. icahn investing in lyft -- his publicly stated rationale, if uber is worth $50, then lyft is worth $2. if you really look at this thing, it will not be a two horse race. lyft will not survive, and travis will never buy it.
lyft doesn't survive this. uber is a better company with better mass, better brand, higher quality of service. emily: you are an uber investor. chris: i am a huge uber investor, but i would be a bigger investor on that thesis alone. i would never buy lyft shares because they are never going to compete. emily: so icahn made a big mistake. chris: he made a big mistake. this is a winner take all game. and travis will take all. emily: will there be a downturn? chris: in silicon valley? emily: yes. chris: yes. it is kind of inevitable that the funders putting this money to work will not see it all back. emily: are we in a bubble? is the bubble going to pop? chris: there are multiple ways to define that bubble. emily: yes or no? chris: yes, a lot of these companies are going to go away. there will be impacts for real estate. do i think it'll be like 2000, when you can't get a u-haul because they are gone all one way out of town, no, i don't think so because this is the epicenter of innovation, just out of whack right now. emily: what you think is the
biggest problem in silicon valley that is not being talked about now? chris: there is nobody normal left here anymore. all of the actual, normal, regular people have been priced out. the artists cannot live here anymore. the musicians cannot live here. you do not even meet nurses -- or doctors, frankly, who can afford this city. that is messed up. i think the biggest problem here is computer science programs are so lucrative now, that kids do not need to pay money to get to them. they do not need to get jobs. they never waited tables. they have never parked cars. we have a generation of software engineers working at these companies who have very little compassion. we have an increasingly limited worldview that is really out of touch with how the rest of the world lives. i would like to see more people get the hell out of here and be around real people every now and then. we do not have anyone here who represents the voice of the normals, and they are not even
♪ >> he has been called the king of techtopia. peter thiel is one of silicon valley's most audacious and contrarian investors. he made his name founding paypal and funding facebook. he is now is backing rocket ships, dna manipulation, meat grown in labs, and a start-up island off the coast. he has paid kids to skip college and start companies instead, in hopes of building a better future, faster. and building flying cars along the way. joining me is the bold and controversial venture capitalist and now the author of a new