Businessman and investor Chamath Palihapitiya has predicted that developing blockchain and DeFi initiatives will oust Visa and Mastercard, two of the largest payment processors. The Sri Lankan American billionaire made the prediction during an episode of the “All-In Podcast” which he co-hosts with industry veterans, degenerate gamblers and besties,” Jason Calacanis, David Sacks and David Friedberg.
In the Dec. 29 episode, the four hosts weighed in on their predictions for 2022 on business, politics, science, tech, and crypto. “My biggest business loser for 2022 is Visa and MasterCard, traditional payment rails, and the entire ecosystem around it,” Palihapitiya said, adding that the world’s long-standing payment systems are a “totally constructed duopoly that doesn’t need to exist.”
He said his forecast is based on Amazon’s decision last month to prohibit the use of Visa credit cards in the United Kingdom due to excessive transaction costs. Both Visa and Mastercard have been underperformers in 2021, with stock values nearly flat year-to-date compared to the S&P 500’s almost 27 percent increase.
Speaking about his “most profitable spread bet” in the coming year, he chose the “long well-thought-out, Web3 crypto initiatives that are rebuilding payments infrastructure in a completely decentralized way.”
A former Facebook executive, Palihapitiya is CEO of Social Capital, a Menlo Park-based venture capital firm which he founded in 2011 to invest in companies in fields being ignored by other venture capitalists, like health, financial services, and education. The firm has since expanded to also invest in tech companies like Amazon, Tesla, and Slack. In 2018, Palihapitiya closed his VC funds to new investors.
Palihapitiya, who often describes himself as the Warren Buffett of the new generation, is one of the main proponents of SPAC (Special-Purpose Acquisition Companies), one of the hottest trends among dealmakers in Silicon Valley. According to the Economic Times, SPACs are “investment vehicles, which have been around for decades,” and “have emerged as a popular alternative to the traditional IPO, or initial public offering, for several private startups.” The Wall Street Journal reported that “SPACs are raising more money and outnumbering traditional IPOs.” Last year, SPACs raised $38.3 billion since the start of 2021, compared with $19.8 billion by traditional IPOs, the Journal said. They are also known as ‘blank cheque’ companies and are shell companies created with the sole intention of merging with a private business.
Through his SPAC group Social Capital Hedosophia, Palihapitiya has sponsored six such companies, raised a total of $4.34 billion, and acquired businesses across several sectors including space travel, health insurance, financial services and real estate. Through Social Capital Hedosophia Holdings I, he took Virgin Galactic public and made it the first listed human spaceflight company. In January 2021, Social Capital filed for seven new SPACs.
Before founding Social Capital, Palihapitiya served on Facebook’s senior management team in several capacities, most recently as the vice president of User Growth, Mobile & International. During his four years at the company, Palihapitiya is credited with helping orchestrate the social media platform’s massive growth.
Before that, he worked at AOL and became the company’s youngest vice president while heading AOL’s Instant Messenger division. Palihapitiya first entered the venture capital world in 2006 as a principal at Mayfield Fund.
He has 1.3 million Twitter followers and has built a loyal audience with his podcast. He is a regular on CNBC as an analyst. He has been engaged in political lobbying as well. In 2013, he was listed as a founder of lobbying group FWD.us, which pushes for immigration reform, improving education, and enabling technological innovation.
Born in Sri Lanka, Palihapitiya moved with his family to Canada at age 6. He attended Lisgar Collegiate Institute and graduated at the age of 17. After graduating from the University of Waterloo in 1999 with a degree in electrical engineering, he worked for a year as a derivatives trader at the investment bank BMO Nesbitt Burns.
He moved to California to be with his then-girlfriend, Brigette Lau, and they later married. In 2018, Palihapitiya filed for divorce. Palihapitiya currently lives in California with his girlfriend Nathalie Dompe, an Italian pharmaceutical heiress and model.
Palihapitiya is also a minority stake owner and board member of the Golden State Warriors. A poker player of international repute, he has three World Series of Poker (WSOP) and two World Poker Tour (WPT) wins. In 2011, he finished 101st out of 6,865 entries in the World Series of Poker’s Main Event.