Peter Thiel, technology entrepreneur and investor. AMA
My short bio: Hi, I'm Peter Thiel, co-founder of PayPal and Palantir, first investor in Facebook, venture capitalist at Founders Fund, and author of Zero to One.
Ask me about startups, business -- or anything.
My Proof: http://imgur.com/4gsDLkS
Update: Thanks reddit -- I had fun so I hope this is fun to read -- I have to go, but I look forward to the next one!
No, the CIA is a front for Palantir.
What is one piece of advice you have for entrepreneurs today?
Start with focusing on a small market and dominate that market first.
What is your view on bitcoin? will it replace the current financial system we have?
PayPal built a payment system but failed in its goal in creating a "new world currency" (our slogan from back in 2000). Bitcoin seems to have created a new currency (at least on the level of speculation), but the payment system is badly lacking.
I will become more bullish on Bitcoin when I see the payment volume of Bitcoin really increase.
What did you think when you first met Elon Musk?
Very smart, very charismatic, and incredibly driven -- a very rare combination, since most people who have one of these traits learn to coast on the other two.
It was kind of scary to be competiting against his startup in Palo Alto in Dec 1999-Mar 2000.
Why do you think more wealthy people don't fund anti-aging research? What do you think could be done to encourage them to do more?
Most people deal with aging by some strange combination of acceptance and denial. I think the psychological blocks to thinking about aging run very deep, and we need to think about it in order to really fight it.
what is one thing you believe to be true that most do not?
Most people believe that capitalism and competition are synonyms, and I think they are opposites. A capitalist accumulates capital, and in a world of perfect competition all the capital gets competed away: The restaurant industry in SF is very competitive and very non-capitalistic (e.g., very hard way to make money), whereas Google is very capitalistic and has had no serious competition since 2002.
In your view, has the Thiel Fellowship been a success? Do you think that, in retrospect, some of the fellows would have benefited from more time in school or the workforce?
Yes, on both a micro and a macro scale.
Micro: the 83 fellows have collectively raised $63 million, and a number of their companies are tracking towards solid Series B venture rounds. Almost all of them did and learned far more than they would have in college.
Macro: we started an important debate about the education bubble. Student debt is over $1 trillion in this country, and much of that money has gone to pay for lies that people tell about how great the education they received was.
Thanks for doing an AMA! A lot of people on reddit care about Net Neutrality, and also have a healthy distrust of government. The commonly proposed solution being suggested by the EFF and other pro-technology and net neutrality organizations is to classify broadband/internet service as a Title II common carrier (AKA as a 'telecommunication service' that can not discriminate data, instead of 'information service' which can). My main hesitation with this is that this would give the FCC even more control over ISPs, which may have unintended consequences on the freedom on the internet. What are your views on current net neutrality issues, and do you have any ideas on this or other solutions?
We've had these debates about net neutrality for over 15 years. It hasn't been necessary so far, and I'm not sure anything has changed to make it necessary right now.
And I don't like government regulation: We need the US government to regulate the internet about as much as we need the EU to regulate Google -- I suspect the cons greatly outweigh the pros, especially in practice.
What do you think about NSA/Snowden and the impact on cloud, security, and general startups in the USA?
It is a much-needed debate.
BTW, I don't agree with the libertarian description of the NSA as "big brother." I think Snowden revealed something that looks more like the Keystone Kops and very little like James Bond.
The first thing an intelligence agency should do is counter-intelligence, and the NSA could not even figure out that there was something suspicious about an IT person downloading all those files. And once they knew Snowden had done this, they apparently still couldn't figure out what all he had taken...
It was inappropriate that the US was tapping Angela Merkel's cell phone. But I suspect that this was news to Obama as well. And more generally: the NSA has been hovering up all the data in the world, because it has no clue what it is doing. "Big data" really means "dumb data."
At Disrupt this week, you mentioned that "Uber was the most ethically challenged company in Silicon Valley". However, if the power law holds true, isn't it optimal strategy to do anything to win?
Not optimal if you break the law to the point where the company gets shut down (think Napster). I'm not saying that will happen to Uber, but I think they've pushed the line really far.
What do you think of the American healthcare system and the prohibitively expensive nature of even the most common of medical treatments?
We would never design a system like this if we were starting from scratch.
If technology involves doing more with less, than US health care (like US education) is the core of "anti-technology" in this country: For the last four decades, we have been spending more and more for the same (or even for less).
When you backed Elon Musk with SpaceX, was it because you believed in/knew Elon, thought space travel was important, or because you were looking for a return?
So, unrelated question, but I'm just curious--- What was your reaction to THE SOCIAL NETWORK movie?
The zero-sum world it portrayed has nothing in common with the Silicon Valley I know, but I suspect it's a pretty accurate portrayal of the dysfunctional relationships that dominate Hollywood.
Peter, what's the worst investment you've ever made? What lessons did you learn from it?
Biggest mistake ever was not to do the Series B round at Facebook.
General lesson: Whenever a tech startup has a strong up round led by a top tier investor (Accel counts), it is generally still undervalued. The steeper the up round, the greater the undervaluation.
Favorite rap artist?
How do you feel about your obvious likeness, Peter Gregory, as portrayed in the HBO show Silicon Valley? Do you take it as a bad omen that the actor died?
I'm flattered, but not totally obvious to me -- e.g., I think super thin cars are a sign of economic stagnation, not of progress...
I did not know him personally, but it is just really sad that he died.
How do you combine your libertarian politics and your Christian faith? Is there a contradiction you struggle with or do you see no conflict at all?
To think of Christ as a politician might be the easiest way to get him all wrong.
The theological claim that Christ is the "son of God" is also the anti-political claim that Augustus Caesar (the son of the divine Julius Caesar) is not the "son of God." So I think that Christ should be thought of as the first "political atheist," who did not believe that the existing political order is divinely ordained.
Now, I think that there is lot of resonance between political atheism and libertarianism, even if they are not strictly identical...
Who was the "Peter Thiel" in your time when you were 22? Would he have taken a meeting with you then? What advice would you have for a 22 year old hustler who wants to meet you.
At 22, I didn't think it was important to meet people.
Do you think misogyny is a serious problem in Silicon Valley?
If we want to have more women in tech, it is not enough to get more women engineers and executives -- we need more women founders, because it is the founders of companies that set the cultural tone for so much that happens in Silicon Valley.
That doesn't seem to really answer the question of whether you think it's a problem.
It exists, and is a problem, but I wouldn't rank it as the top problem.
It is much bigger problem that people, both men and women, can't even afford to live in Silicon Valley because we are not building any housing. And a lot of talented men and women can't even look for an overpriced apartment in SV because they can't even get a visa to get in the country.
What do you think is the most exciting example of a company showing "determinate optimism" today?
The dual Elon Musk empire of Tesla and SpaceX.
Have you ever read anything from Henry George? If you have, any thoughts? I think he gets an unfair treatment from almost every school of economic thought, including the Austrians, no, especially the Austrians.
When it comes to the three factors of production, it bothers me how lazy academia is when it comes to land. The fact this guy induces so much rage from every political faction and almost all schools of economic thought (from fringe to keynesian) seems like a signal he might be on to something.
Yes, I think George is a really interesting thinker. The idea that we should tax land heavily (and perhaps not tax anything else at all) is very interesting, since many of the bad monopolies in our society involve the unholy coalition of urban slumlords and pseudo-environmentalists.
What do you think of the economist Thomas Piketty's forecast for greater inequality over the next 50 years as returns to capital compound and the gains are owned by fewer and fewer individuals? Doesn't your monopoly theory of innovation imply this inequality will get worse and worse?
Three parts to Piketty:
1 He describes a world of greater inequality. I think this is happening and is an important phenomenon.
2 He explains the phenomenon as driven by high returns on capital. I think this explanation is incorrect (the real returns have been negative since 2008, with interest rates at 0% and inflation at 2% in the US).
3 He proposes much higher marginal tax rates and a wealth tax. I think this is very bad policy and almost impossible to implement, and will result in massive distortions as people try to shelter more income and wealth.
I think we need to find ways to grow the overall economy faster -- without faster growth, inequality will be the least of our problems.
Mr. Thiel, you're gay. Why do you financially support so many anti-gay GOP politicians?
If I thought they were anti-gay, then I would not support them.
I do not find myself fully on the side of any of our political leaders -- because none of them are fully on my side.
Hey Mr. Thiel!
The Thiel fellowship is sponsoring our hackathon next weekend, Hack the North. You guys have been a huge part of the hackathon community and we love that (PennApps this weekend!).
Given that you're impossible to get a hold of, I figured I'd ask you here, in the shortest notice possible:
Would you like to be a judge at our event? We'd only need you on Sunday, Sept. 21st from 11am-3pm!
It would mean a lot to many of the students attending, especially since we have a huge highschool attendance for this event! You'd be judging alongside your peers, such as Sam Altman and Chamath Palihapitiya, and more!
Send me a message if you're available on that day!
And as for a non-favor question, how about this:
What are the next big sectors and technologies to look out for, in your opinion?
Can’t make it — will be in New York then. But my colleagues Mike Gibson, Jonathan Cain, and Danielle Strachman will be there (and Danielle is judging) so you’re in good hands.
Which country is best for starting the company? Is USA dominate here, or might be some changes?
USA is still best for software companies. I worry that other sectors are too heavily regulated here...
Which are your favourite books? (both fiction and nonfiction)
Lots and lots of them...
I like the genre of past books written about the future, e.g.: Francis Bacon, The New Atlantis JJ Servan-Schreiber, The American Challenge Norman Angell, The Great Illusion Neal Stephenson, The Diamond Age
Did Anton Chigurh kill Carla Jean Moss at the end of No Country for Old Men?
Probably. But the real issue is that Chigurh did not overcome chance himself.
"No Country for Old Men" is the movie that chapter 6 of my book is directed against.
I like your initiative for change (i.e. challenging higher education). Any plans to challenge the patent system?
Bonus tip for philanthropists: Find a way to sue Intellectual Ventures. If we could get rid of these parasites, we'd all be better off.
Can you comment on how you think artificial intelligence may change society in the coming decades? And what you think we can do to increase the chance that these changes will be positive?
I think AI is still a fair ways off. But the economic questions (e.g., how will this impact our work?) are secondary to the political questions (e.g., will AI be friendly?).
The development of AI would be as momentous as the landing of extraterrestrials on this planet. If aliens landed, the first question would not be about the economy!
Do you follow sports? What's your favourite sport? Favourite team?
In the Soviet Union, chess was considered a sport -- and I think that's the one thing the communists got right.
Do you worry about the polarization of American politics? Do you think Libertarianism has a chance to emerge as a true 3rd party?
Polarization is happening because of the lack of growth and the increasingly zero-sum nature of our society. Without win-win solutions, there is less room for compromise.
Paradoxically, I think the polarization masks the increasing sameness of the two major parties. They hate each other more and more, as they become more and more alike, like the Capulets and the Montagues in "Romeo and Juliet"...
You've spoken a great deal about stagnation and a fair amount about what institutions and individuals might do to combat it. What advice do you have for adapting to it? Short of becoming an entrepreneur, what does the prospect of technological stagnation mean for how average individuals should invest and plan their lives?
If our great expectations about the future are not realized, then we need to save way more than we are doing today. China (with 40% savings) is perhaps more "rational" than the US (with about 0% savings), at least in a world of general stagnation.
What were you trying to say when you claimed you won't invest in founders who wear suits, when you have clearly done so in the past?
No absolute and timeless sartorial rules.
But, in Silicon Valley, wearing a suit in a pitch meeting makes you look like someone who is bad at sales and worse at tech.
Hey Peter, thanks for doing this.
My question is about where you see the future of early-stage investing going in the next few years.
The undisputed 'best VC funds' in the Valley (names like a16z, Sequoia, etc) have all generally adopted the strategy of basically choosing companies that are already clearly on their way up and going to be successful, positioning themselves as the 'go-to' firms for capital, and investing large amounts at large valuations. They've publicly shied away from seed-stage, which is now largely dominated by YC, AngelList, FundersClub, and so on. Do you think this disparity will keep widening? Where is the future of seed investing? Perhaps one answer is to go earlier and earlier, investing before they even are at seed stage, such as with the Thiel Fellowship.
Secondly and relatedly, I think it's obvious that the balance of power has shifted over the past few decades from the venture capitalist to the entrepreneur. What are the ways with which the best and upcoming VC firms can differentiate themselves and convince the best companies to take their money? Is it by having a giant and powerful relationship db/management system like a16z? Is it by assembling teams of technical talent, recruiters, designers, etc to help portfolio companies as much as possible? Or is it by trying to discover more fundamental truths about why companies succeed?
I agree the balance has shifted somewhat towards entrepreneurs. It is more important for VCs to be supportive of founders. Sociopathic investor behavior that worked shockingly well in the 1980s and 90s will work much less well in today's more transparent and founder-centric world.
As an investor, I think one must always maintain a certain amount of humility. There is only so much we can do to help the companies in which we invest. And because of this, the act of making the investment (rather than the ability to fix things later) remains by far the most important thing we do.
Peter, what are some of the hard examples you find yourself using these days when you present the idea that the rate of technological progress has slowed? I assume you are calling upon the energy area, to make this case.
Biomedical area, generally: We've made a lot less progress in the "war on cancer" than was expected in the early 1970s. And our expectations of future progress have been diminished so much that a comparable declaration of "war on Alzheimer's" would be unthinkable today.
I'm a first-time entrepreneur working on a 'bits' company. I recently read your comments on ‘bits vs atoms’ companies, and my long-term ambition is to work on the latter.
Given the incredibly cheap infrastructure now available for software companies, it seems more practical to begin with a much less capital intensive software company early in my career. However, my ambition is to build up - a la Elon Musk - to working on more capital-intensive and ambitious ideas that involve ‘atoms’.
Do you agree with this rationale? What advice do you have for an entrepreneur/company looking to move along this trajectory?
I understand why people are starting way more companies in the world of bits than in atoms, and this does make sense on the level of the founders of many of these companies, for the reasons you cite...
But as a society, I do worry that we've gotten the balance a bit off.
What do you think about the case on Ross Ulbricht and Silk Road. is it a sign that the drug war is coming to an end since drugs are sold online to anonymous buyers?
We're at the beginning of the end of the drug war, but it will still have a lot more casualties before we get to the end of the end.
What is the Straussian interpretation of Zero to One?
Perhaps you should not become an entrepreneur...
Medical research is one area in which technological growth has most strongly slowed down, for largely institutional and regulatory reasons. Yet you've invested in companies and funded nonprofits that are fairly ambitious - trying to combat aging and solve other large problems.
What secret do you have about doing actually-effective medical research and ventures?
I like it when the DNA of these companies resembles that of software companies -- a group of really committed founders with a clear vision of what they're trying to do.
Unfortunately, many of the ventures are instead led by part-time university professors (who rationally decide not to give up tenure) and a "hit or miss" mindset on whether the technology is going to work.
2 parter...1) Do you think everyone should learn to code, or at least startup founders? 2) What has been the most difficult mental barrier to your success?
I think people should start learning to code in junior high school. I am still a fan of the two-person founding team, with one more on the business side and one more on the technical side.
Second part: Even when one understands that exponential growth and exponential forces are incredibly important, it is still hard to internalize this. PayPal was growing at 7%/day at the time of the launch (Oct 99-Apr 2000, from 24 users to 1 million), and we did not fully fathom the rocket we were riding.
What is your view on Neoreaction?
Sounds like a self-contradiction -- if you're reactionary, why do you need the "neo?"
Hi Peter.. if you were not from United states, do you believe you could reach the same position as you are now?
One can never run this experiment twice, but...
I was born in Germany and my parents emigrated to the US when I was 1 year old. I think Germany and California are in some ways extreme opposites -- Germany is pessimistic and complacent, California is optimistic and desperate. I suspect my life would have turned out very differently had we stayed in Germany.
Why don't more investors put their money into "sci fi" tech? It seems that there is a severe lack of imagination among people with money at their disposal.
Also, basic research suffers from lack of funding and a conservative government bureaucracy. Does this concern you, and do you have any thoughts on how to fix this?
There is a lack of imagination, but it also is the case that the business models do not work well for a lot of "sci fi" tech.
I think there's been a Gresham's Law in science funding in this country, as the political people who are nimble in the art of writing government grants have gradually displaced the eccentric and idiosyncratic people who typically make the best scientists. The eccentric university professor is a species that is going extinct fast.
I have heard stories about you at PayPal not wanting to hire MBA's. And now we all know your stance on college. I have 2 questions.
- Why did you refuse to hire MBA's?
- Do you think there needs to be a change in K-12 education to lessen the demand for college?
1 no absolute ban, just think most MBA's tend to be high extrovert/low conviction people -- a combination that in my experience leads towards extremely herd-like thinking and behavior 2 yes, I think K-12 should give people enough skills to be able to contribute towards our society -- it is failing because it does not even come close to this
Peter, you have spoken many times before about Artificial General Intelligence and I know you have many friends in the AGI community including the folks at MIRI, Kurzweil and Goertzel.
Why do you think there is not more support for (specifically) AGI research among major investors, as opposed to more narrow approaches, given what we expect to come from it?
The worry is that AGI has no value short of the final product, which may be worth trillions of dollars and a century away...
Hi Peter, Do you think a successful early startup can be based exclusively outside of Silicon Valley (even outside of the US)?
Yes. It's more affordable, in almost all ways.
You miss out on the network effects of Silicon Valley, but sometimes these network effects lead to negatives as people end up behaving more lemming-like in the SOMA hotbed...
Hi Peter, How would you advice founders when they have to split shares? How much for each founders?
No hard and fast rules, but if you don't want to split shares evenly then perhaps you should not be co-founders.
How do you think about VR? 0-1?
Massive trend, but I think the valuable 0-1 companies will identify a more concrete area of focus within this large trend.
How do you feel about large investments going to startups that have many daily active users and no revenue? Why don't investors prefer products that have revenue?
The right strategy is often to scale users before scaling revenues.
While some of these startups may be overvalued, we need to resist the temptation to always think that we're seeing a redux of the 90s bubble wherever we look.
There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.
- Henry Ford
Do you agree with this rule? If so, what do you think will happen to companies in the long term as a result of not paying the highest wages possible?
Great rule, but you need a monopoly for this to work in practice. In super-competitive businesses, you cannot afford to pay people above-market wages -- e.g., a restaurant that does this will go out of business fast.
I think Google is implementing it the best in Silicon Valley today.
What do you think of Vinod Khosla's statement that "95 percent of VCs add zero value. I would bet that 70-80 percent add negative value to a startup."?
No clue where these numbers come from.
The sentiment is too much in the "I'm OK/you're not OK" quadrant for my liking.
How important do you feel social responsibility is as a contributing factor to a companies success?
A sense of mission is critical, but I think the word "social" is problematically ambiguous: it can mean either (1) good for society, or (2) seen as good by society.
In the second meaning, it leads to me-too copycat companies. I think the field of social entrepreneurship is replete with these, and that this is one of the reasons these businesses have not been that successful to date.
How much of Zero to One was an organization of your thoughts from CS183 and how much was new content?
In the class, I wanted to teach everything I knew about business.
In the book, the goal was to pack this three-month class into a very disciplined 200 pages. There's a fair bit of new stuff, but the material is organized much better.
And, btw, I think that "organization of thoughts" is often the key to producing great content -- so they're not really separate categories.
What do you think of AngelList and 'democratization' of angel investing?
Is it going to ruin people's finances or is it good for them? What should be the barriers and safeguards, if any?
Way too early to tell how good the returns on this will be...
I think people should be free to invest their money as they see fit and think that angel investors generally have a very good understanding of the great risks in startup investing.
What are your thoughts on Edward Snowden? Do you think he did the right thing?
Marc Andreesen seemed to be pretty mad at Snowden and labeled him a traitor, what are your thoughts on Andreesen?
I think Andreessen is half-right: Snowden is both a hero and a traitor.
It is really unfortunate that there were no internal checks in our system, and so it took something like Snowden breaking all the rules for us to have a serious discussion about the NSA.
As a Girardian acolyte, I'm curious if there any private truths you can reveal to us?
Well, it wouldn't be private if I revealed it here...
Go ahead and message me and we'll talk off-line.
You mentioned in the Tim Ferriss Podcast that you think when startups fail it is simply a tragedy. Do you think anything can be taken out of it when the unfortunate does happen?
Unfortunately, not very much... Failure is typically so overdetermined that people never learn all the reasons for which they failed.
Is Palantir a front for the CIA?
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