Why this top Silicon Valley investor was 'disappointed' LinkedIn sold out to Microsoft

When Social Capital partner Chamath Palihapitiya woke up to the news the Microsoft bought LinkedIn for $26 billion, he was stunned. And it wasn't just because of the price tag.

"One, that's immense courage by Microsoft to basically put themselves out there," Palihapitiya told Business Insider.

"Two, that's a really courageous thing for Jeff [Weiner, LinkedIn's CEO] and Reid [Hoffman, LinkedIn's founder] to basically decide that they could do more for their employees by giving them a buffer and safe harbor of being a part of the Microsoft family."

Palihapitiya had watched as LinkedIn's stock "collapsed on basically air" in February, falling 43.6% in one day and shaving off $11 billion from its market value. Its public investors showed "tremendous fickleness," in his opinion. LinkedIn CEO Jeff Weiner ended up selling to Microsoft to give the company a chance to control its own destiny and avoid the outside craziness of the markets.

While Palihapitiya was amazed by and supported the transaction, he also thought LinkedIn would've been fine on its own.

The collapse of the stock and subsequent acquisition "robbed a bunch of others, including me, of the opportunity to own what is just a fantastically useful well run quasi-monopoly," Palihapitiya said.

"Buffett tells you that these are the kinds of businesses you want to own forever," he adds. "For me, I was disappointed that it was acquired only because it means I can't own it anymore, and I'm not a particularly enthusiastic Microsoft shareholder only because it doesn't meet my growth targets."