March 31st, 6:40pm
Venture Capitol Interview with Peter Thiel
Present: Sonia Vora, Kevin Brosnan, Esther Lee, Will Hallisey, Milan Chang
Length: 14 minutes
Esther Lee: Okay, so our first question was kind of about your background: so where was the inspiration for going into technology coming from more of a humanities background, and where did the technology knowledge come from when you started at Confinity?
Peter Thiel: Well, um, it came from—well I had gone to Stanford undergrad and Stanford Law school, so I had been there for seven years and I had a lot of friends who stayed in the Silicon Valley area so as the tech boom—as the internet boom in the 90’s started I was connected with a lot of the people who were involved so it was sort of a very natural—there were many natural points of contact with it. I had done some technical things as an undergrad, I had done some programming, I had done a number of different science classes, but my—in my key contribution at PayPal was really figuring out the business strategy and things like that. And I do think that the model of business plus technical co-founder is still a very good one. I know things have shifted more towards technical founders but I actually think that every business has generally both a technology and a business strategy component, and it’s important to get both right.
EL: Okay, awesome. Do you want to do the next question?
Will Hallisley: Yeah, a question we had for you was how has your background in philosophy affected the way you approach and handle your business ventures?
PT: Yes, it’s always somewhat attenuated how you connect the dots in these things, but there are these sort of big picture questions that you’re inclined to ask in philosophy and I do think that there is something about business that has this sort of polymath feel to it where it’s very interdisciplinary where you want to focus on the details, and the product, and the right people to hire and how do you build a team, but then you sort of have these intermediate scale questions like what are other people doing, what is the competitive landscape like, and then you have bigger picture questions like where is the world heading in the next decade, next 20 years, how does it fit in the larger story of our world? And I think that a lot of the good entrepreneurs are able to answer and engage in these sort of questions from a very micro to this very macro perspective, and I think that there is something about philosophy that’s somewhat of a very interdisciplinary major and it really helps you—I found it helped me think more clearly about many different things.
EL: So as college students, and I know you had a lot to say about education in general in your book, what advice do you have for college students now?
PT: Well, um the negative advice is that your advice does not end at age 18 when you got into college. And I think it would be kind of depressing if it did, but I think that we have a K-12 system where everything is geared not to life but to college. And what’s very important to think through is what you will do with your lives not just with what you’ll be studying in college. I’ve often talked about a bubble in education and I think it’s one of the things that it characterizes is that education is seen as the all important, be-all and end-all of everything and it’s best seen as this much larger story of our lives and we would do well to think really hard about how it integrates with all sorts of different things and ideally you’re studying and learning about things you’re both really interested in, really good at, and that then maybe down the line will have some sort of practical application or will at least somehow connect with what people will be doing later. And I think there’s something very dangerous when it becomes an end in of itself. I certainly look back on my college education and I did not think about where it would go so I was a humanities major. Then you default to law school—which you think of as the interdisciplinary law school program—but it’s advertised as broadening you when it narrows you further and then you end up at sort of a big corporate law firm. And so I think that when one—I sort of had a quarter life crisis in my mid-20’s—and so when you don’t think about the plan of your life, you end up defaulting to being buffeted by sort of various default choices which are not that good.
EL: So, I’ve seen some of your previous interviews where you talk about engaging in philanthropy and especially how you engage in trying to answer that contrarian question of what important cause is no one supporting. So what have you found to be the answer to that question—what causes is no one supporting that they should?
PT: Well, um I’d say what good and unpopular causes—what are good and unpopular causes; sort of one way to frame the contrarian question in philanthropy. You want something fundamentally good and then not conventional. You know I think strangely a lot of things that are related to intensive technological progress are not really seen as—are very underfunded. So certainly anti-aging, breakthrough science, breakthrough technology; not all of these things are simply businesses or for-profits, there are certainly important parts of them that have the quality of basic research that probably would not get funded simply by for-profit businesses. They’re not being funded terribly well by our government or by our state, so I think it’s a very natural thing for non-profit organizations to look at more carefully. I have this diagram in my book where I have globalization versus technology, globalization is always on the X axis and technology’s on the Y axis, the philanthropy version of that is to describe globalization in a non-profit context as some sort of utilitarian redistribution of resources to Africa, to poor people in the US, things of that sort. Where technology has some sort of intensive investment in making the best things even better and I think too much of the non-profit world is too focused on bringing up the poorest instead of making some things dramatically better. There’s another way I found that’s very effective at deflecting requests for money, by explaining that diagram and asking “which one does your non-profit fall under?” And that sort of gets rid of 99% of the requests.
EL: What do you think the role of federally funded R&Ds should be or is in created zero to one businesses and what is the role of universities in that as well?
PT: Well, in theory, both could have some sort of a role, they’re not doing terribly well as it is. I end up being politically quite libertarian because I think a lot of these institutions are working extraordinarily badly and so this is sort of an argument that when they’re working very badly they should probably be doing less or none of what they’re currently doing. But my libertarianism isn’t sort of this absolute and timeless thing, where I think that there is a case where these institutions worked better in the past. So we did have a Manhattan project, we did have an Apollo space program, these sort of things would no longer be possible today. A letter from Einstein would be lost in the White House mailroom, we could never send somebody back from the moon. And so I think it’s very important to reflect really hard on why this decline happened and what you could do to reverse it if possible. A lot of my explanations have to do with the politicization and bureaucratization of science, research, innovation where in the university setting the professors who are nimble in the art of writing government grant applications have somehow had the effect of displacing the really eccentric and creative scientists who drive things forward. A scientist and a politician are extremely different kinds of people: scientists’ interests are in the truth, a politician has a very troubled relationship to the truth. And so when you politicize a science you are basically and fundamentally destroying it. I think a lot of the funding mechanisms have had this deep politicization problem with them that’s very underappreciated.
EL: What type of university, or what characteristics of a university, would be best suited for the 21st century.
PT: You know I don’t think there’s a sort of one-size fits all approach, I think that what we have to somehow get away from are all the sort of hypertracked approaches that people have where it’s assumed that people should do the same thing, study the same thing, be evaluated by the same sort of criteria. It probably—and so something much more heterogeneous would be good. You know something that’s much less geared towards people getting PHDs in graduate schools. The current universities are very good if your goal is to become a professor. That’s a strangely bizarre way to gear these institutions since most undergraduate students will not, could not, probably should not become professors. So we have too many people being geared towards PHD programs and post-doctoral programs and then these tracks don’t particularly work, and so I think that you have to rethink the undergraduate program where, what would you do if it was geared towards general success in life and not towards simply becoming a professor. When I was an undergraduate at Stanford, I thought in many ways that my best classes were in my freshman and sophomore year because they were these sort of general, broad introductory classes where you learned a lot of things. By your junior and senior year, things had gotten more specialized and it was already somehow more on a pre-grad school track which I think really does not make sense.
Sonia Vora: Do you think the push to increase STEM majors addresses that?
PT: You know I’m—I know that STEM is this movement towards something that’s more substantive, and is somehow better connected with the outside world, but I think they’re both troublesome abstractions. I think education is a ridiculous abstraction, I think STEM is still quite a bad abstraction—it’s not clear that we actually have a shortage of scientists, technologists, engineers or mathematicians. Most of these are actually really bad fields to go into. I was speaking at the University of Illinois a few months ago—7,000 people in the engineering school—very STEM-type majors. I asked the dean, “how many are studying computer science?” and the answer was 2,800. Then if you ask a question—you’re supposed to say “ooooh that’s a lot,”—if you say the opposite of what you’re supposed to say then you get to interesting territory. So if you say “what in the world is everyone else doing?” the diplomatic way of asking that is saying “what are the things that people who are not studying computer science and engineering, what are the areas where demand massively outstrips supply and people are able to get really well-paying jobs right upon graduation?” There is a very uncomfortable pause and then he answers, “well, I suppose petroleum engineering is the one other good one,” I then ask, “how big is the petroleum engineering department,” and he responds, “oh, we got rid of that a decade ago.” But I think if you were to actually drill down on STEM it’s computer science, petroleum engineering where there’s actually some sort of shortage, but physics and math are really hard fields and they’re incredibly badly paying. One of the people who works with me, who is somewhat left-wing, has this left-wing conspiracy theory that the idea that there’s a shortage of STEM people was developed in the Reagan administration as a lie to encourage an excessive number of people to go into science and thereby suppress the wages of scientists and engineers and so on. Well I don’t believe on the all-out conspiracy theory version of this—he has documentation of all of this, but I don’t actually believe the full out conspiracy theory—I think the effective truth of it is is that when we say there’s a shortage of STEM we are helping create a system that is generating an awful lot of people for where there aren’t an awful lot of well-paying jobs.
SV: That’s comforting for Georgetown students certainly.
PT: I mean the super polemical version I have of this is that the humanities people are better off than the STEM people because if you’re studying humanities then at least you know you’re not gonna have a job at the end, so you’re already scrambling at day one to figure out what you’re going to do. If you’re in STEM, you may be unusually diluted about how the education actually connects with the rest of the world.