Chamath Palihapitiya: Meet The Venture Capitalist Who Runs The Biggest Home Game In Silicon Valley

If you are familiar with Silicon Valley, home to some of the most prominent tech companies in the world, then you have probably already heard of Chamath Palihapitiya. The venture capitalist, born in Sri Lanka and raised in Canada, took Silicon Valley head on working for AOL, Winamp, Mayfield Fund, and eventually got in on the ground floor with Facebook.

His hard work and hustle paid off handsomely and his net worth now exceeds $1 billion. Palihapitiya left Facebook and in 2011 founded Social Capital, a venture capital firm that provides seed funding and private equity to software startups. The Palo Alto-based company now boasts $1.1 billion in total assets. In 2015, Palihapitiya even managed to win an NBA Championship as an owner of the Golden State Warriors.

But when he’s not competing on the basketball court or in the board room, Palihapitiya also manages to get in some poker. The 38-year-old poker fan has made deep runs at the World Series of Poker and on the World Poker Tour, but spends most of his time on the felt at his own personal high-stakes home game. In addition to other Silicon Valley CEOs, the game also includes professional athletes and even the poker brat himself, Phil Hellmuth.

Card Player spoke with Palihapitiya about how he got bit by the poker bug and why the game helps him keep his ego in check.

Julio Rodriguez: You graduated from the University of Waterloo, which is coincidentally also the alma mater of many notable poker pros. Did you learn how to play poker in college?

Chamath Palihapitiya: When I was in school, which was 1994 through 1999, poker really wasn’t that popular yet. We didn’t have the Mike McDonalds and the Nenad Medics at that time. Back then, what was really popular was euchre. It took over in our dorm and at the end of my first year, I basically ended up on academic probation because all I was doing was playing euchre for money.

It wasn’t until about four years later, I had graduated and was working for an investment bank, that my boss at the time taught me poker. I literally fell in love the first time I played. I spent the next year losing before I figured it out. I did all of the typical things that most people do. I read Super System and slowly tuned my game up. I also shifted to limit games, which really helped me really learn the math and give myself a little confidence, because I was such a terrible no-limit player. I moved pretty quickly up the ranks and was playing $100-$200 limit after starting off at $0.50-$1. Then I added Omaha, which took me about six months to figure out. Then in 2003, I made the decision to confront my past losses and really learn how to play no-limit. I’ve been playing no-limit hold’em or Omaha games pretty much ever since.

JR: Did you take a more academic approach to learning the game or was it mostly trial by fire?

CP: I think the latter was more helpful for me. The mental part of the game, the mindset and confidence level, is so important to play the game well. The best thing for me was taking that step away from no-limit where I didn’t have it and spend the time grinding limit games, isolating my emotional state and making good, structured decisions. Only after that was I able to learn the more fluid parts of no-limit that I didn’t have.

JR: Given your success in the business world, you obviously don’t need to play poker for the money. What is it about the game that keeps your attention?

CP: Part of it is the competition aspect of poker, but I also think that no matter who you are in life, you always want to be learning. Poker is one of those things that I know I just can’t master. I can be very good at it, but I’ll never master it completely. So I know that with poker, I’ll always be learning something new. The second thing for me is that, honestly, it keeps my ego in check. It’s a good reminder of the struggles that entrepreneurs go through, whether it’s funding or starting a company. There’s a lot of trials and tribulations and it’s really healthy to realize that you’re not always on the right side of every situation. Getting sucked out on and losing a big pot, that’s something that can teach you a lot about life if you take it the right way.

JR: Phil Hellmuth was quoted as saying that you are his best friend. It was even reported that he gave you one of his 14 World Series of Poker bracelets.

CP: All of that is true. We met about seven or eight years ago. You know, I think for both Hellmuth and I, this might sound crazy, but neither of us, frankly, have a lot of really close friends. We actually became close friends pretty quickly. Our families are in each other’s lives and we spend a lot of time together. Just recently, he was in my poker room and we were just talking about life. So there’s a lot of times where we don’t even play, we just talk about our lives. It’s good to have a sounding board like that.

JR: The two of you play a lot of Chinese poker together. He even put some of your match on Twitch.

CP: He smashed me. That game is so momentum driven that when you get on the wrong side of things it’s hard to stop. That’s one game that really channels tilt. I really do think that. At least in no-limit there are strategies you can use to minimize tilt, but not in Chinese. The game is also so new that not everyone has the knowledge to even take more conservative lines, but that will change over the next few years. I started playing that game in Las Vegas four years ago. I ended up in this game for $5,000 a point with Robert Mizrachi and this guy from Macau. To see what has happened with that game, where none of us really knew what we were doing, to how it’s played a few years later is incredible.

By the way, I think that game is the future of poker in many ways. It has the best chance of becoming our equivalent of solitaire and becoming a gateway drug of sorts for casual card players to understand hand values and the logic and strategy of poker without having to commit a lot of time or money. It’s a game that can appeal to a much broader group of people.

JR: How much poker are you playing these days? Do you go to the local cardrooms or is it mainly just your private home game?

CP: I don’t go to the cardrooms. We have a home game that includes other CEOs in Silicon Valley, a bunch of investors and venture capitalists, and a bunch of athletes like some guys from the [Golden State] Warriors that will play from time to time. It’s a good, eclectic mix that allows us to drink some wine, have great conversations and enjoy the game. I think it’s the best game in the world. It’s just high enough stakes to feel the pain if you make a bad play, but we’re also not trying to decapitate anybody either. More importantly, the quality and the intellect of the people in the game is what really makes it worth coming back for.

We were recently playing $100-$200 no-limit with Hellmuth and some other people. Someone straddled and I raised with 6 4 to $1,100. Another player raised to $3,000 and then someone else made it $10,000 all-in. I put them both on very big hands, obviously, with the second guy most likely having kings or aces because he snap shoved into a reraise. My logic was that if I cracked these guys it would make for a great story, so I called. It turned out to be kings and aces against my measly 6-4 suited and the flop came down 9-4-4-x-x and I won the pot. Of course, Hellmuth explodes from his chair and starts yelling, “How could this happen?” and “What were you thinking?” Honestly, I wasn’t being cavalier, I just thought the play had good story value.

There was another hand that you can read about in Andrew Bogut’s (Golden State Warriors player) Twitter feed. I raised to $1,200, Hellmuth raised to $4,000. I reraised to $10,000, Hellmuth shoved and I snap called. We both ended up showing down A-J. He had A J and I had A J. At that point, he starts talking and says, “See, you got it in bad again.” Of course the flop has two hearts, the turn was another heart and the room got really quiet. The dealer put out another heart on the river and everyone exploded. To his credit, Hellmuth was very polite about that one and told me nice hand.

JR: In the past you donated all of your WSOP winnings to charity. Is charity one of your motivations to continue to improve as a player?

CP: I’m just super competitive and I want to win. If I’m in a position to win, I want to be motivated by the right set of factors. When I can donate to an organization like the Boys & Girls Club or Lean In, that gets me more fired up.

JR: Is your poker playing style anything like how you conduct business?

CP: I’m a pure feel guy. Now that I feel so good about the numbers, I can kind of ignore them and go with my gut. I get to react and gamble accordingly. It’s fundamentally the same thing when you are evaluating a startup. You’re making high pressure decisions with tremendous ambiguity and there’s no easy way around that, so you often just have to go with your gut.

JR: You said, “Failure should be celebrated, but stupidity should not be celebrated” at the 16th Founders Showcase. Can you give an example of a past personal failure you celebrated that has helped you get to where you are at today?

CP: I worked at a very well-known venture firm (Mayfield Fund) in 2005. It was one of the oldest and most reputable firms, but I felt like a failure. Within six months, I had tried to sponsor some investments in what has turned out to be some great companies like Yelp, LinkedIn, and Facebook, but I was completely unsuccessful. Despite all of that I had accomplished leading up to this job. I thought I had finally made it and achieved my life’s ambition as a junior partner, but it didn’t work out that way. As I reflected on that failure, however, I realized that it was because I was making a secondary decision to what my instincts were telling me. My instincts told me these were fantastic businesses that were going to change the world, so I told myself that if they weren’t going to invest, that I should quit and go work for one of them. So I did and went to Facebook, which obviously turned out to be a great decision.

JR: As a guy who has done very well for himself financially, do you have any advice for those in the poker community who have trouble keeping their bankroll?

CP: I feel really strongly that there is a greater need for bankroll management education in the poker community. It’s one of those things that everyone assumes they have but it’s just not the case. Someone will spike a huge tournament and then they have no problem putting all of that money back at risk. There are phrases we use in Silicon Valley, “Eat when served,” or “When the music is on, I like to dance.” These are clever ways of saying, when you can take money off the table, you have to treat yourself to that. The best thing a young poker player can do is find a way to funnel the cash into something they can’t touch. The reality is that you won’t win forever, because very few have. If you look at the poker world right now, you can count on one hand the players who have been winners for the last 25 years.

JR: Are you optimistic about what are you seeing from the poker industry right now?

CP: It’s not in the best shape to be honest. In order for there to be a really healthy ecosystem, you need a lot of new players coming into the game. The only way that happens is with a lot of ultra low-stakes games that are really liquid, and the only way that happens is with online poker. Obviously online poker in the U.S. currently operates in a very grey area in terms of regulation, then you add in the lack of safety and security because of bots or hackers and it creates some concerns about whether the game can really continue to thrive.

JR: You’ve been within striking distance of a big win before. In 2011, you finished 15th in a $1,500 no-limit hold’em event at the WSOP. In 2012, you took 11th in a $5,000 event. Where would you rank a major tournament win in your list of accomplishments?

CP: If I won a bracelet, it would be a top ten accomplishment in my life. Getting married, having kids, starting my firm, winning an NBA championship, and then the bracelet. That’s how much I want it. The business accolades come and go, but if I’m thinking about seminal life events, it would absolutely be up there if it happened one day. ♠