A Conversation with Peter Thiel and Niall Ferguson

[Applause] good evening everybody welcome to the john f kennedy jr forum my name is trey grayson and i'm the director of the institute of politics and we're excited to have all of you here we see a lot of faces we don't normally see in the forum and we want to welcome everybody you can come back to the more political stuff to all of our tech friends in the audience but we're excited to have everybody here this project this tonight's forum wouldn't be possible without the partnership of the iop and the harvard program on constitutional government under the direction of harvard professor harvey mansfield we're glad to have professor mansfield here we're going to bring him up to introduce our moderator and our speaker professor mansfield [Applause] thanks very much um i first introduced peter thiel born in germany graduated from stanford stanford law school clerked after law school three years on wall street left for palo alto founded paypal founded a hedge fund clarion capital an early investor a canny investor in facebook author of diversity politics multiculturalism and the politics of intolerance at stanford said to be an avowed libertarian not your typical average billionaire more interesting and reflective than warren gates and bill buffett with their lukewarm bromides and bad advice perfect speakers for a harvard commencement where probably peter thiel will never be seen unless but let's not be obvious i also introduce neil ferguson lawrence a tisch professor of history at harvard a senior research fellow at jesus college in oxford a senior fellow at the hoover institution at stanford he comes very well credentialed is the author of books in economic history german inflation the house of rothschild the cash nexus the ascent of money the life of sigmund warburg books on war the pity of war the war of the world books on empire how britain empire how britain made the modern world colossus the rise and fall of the american empire all of which prepared him for his latest which is called civilization he's been named one of the 100 most influential people in the world but tonight he will contend himself with being moderator professor ferguson thank you very much indeed well harvey is quite right i'm i'm playing the part of charlie rose tonight and so please direct all your fire at my guest and i i'm going to use as little air time as possible so peter let me cut straight to the chase i know you're not allowed to talk about a fistful of dollars facebook anything like that but i can ask you a general question about about silicon valley is this dot-com bubble 2.0 and are we going to see another crash around the corner or do you see something that's more sustainable going on in silicon valley right now well i don't think i don't think we have a second full-on bubble in technology at this point it is it does seem that it's more sustainable the businesses are being built more slowly uh more incrementally the valuations are nowhere and the insanity level is nowhere like where it was in the in the late 1990s um at the same time uh it is of course all happening on a much smaller scale and uh and uh even though there's definitely some optimism around silicon valley especially around the computer and internet sectors it has not been enough to move the dial on the whole economy uh much less say not even say the state of california so if you uh if you were um you know if you were to say that uh silicon valley is doing fantastic um therefore you would infer that california must be the best state in the united states and that's not quite true so so i think that uh i think that uh there is no excessive optimism of the sort you had in the 90s but at the same end there are definitely pockets where there seems to be a lot of progress happening especially around computers in the internet but there are many other areas where uh where it's not been enough to move the dial for california and i believe uh for not enough for the country or the world as a whole well it certainly moved the dial for you and one of the most impressive things about your resume which harvey just read us is just how many winners you've you've picked i'm guessing there are at least some people in this audience who are only here in the hope that you will tell them what the next facebook will be so what what is the thing we've never heard of that you've already invested in that we'll hear about sometime next year when it's too late well i'm not gonna i'm not gonna hype any of my companies here i think that uh i think that um one of the things that's very different from technological progress uh versus globalization if you say sure the two big themes of the 21st century are globalization the developing world copying the west sort of horizontal growth if you will going from 1 to n and vertical progress technology people doing new things which is what the developed world needs to be doing going from zero to one the horizontal progress of the sort that you see in china is very straightforward and you have a very mechanistic way of figuring it out you can just look at what has been done and there's a way to just mechanically turn the crank and copy things there may be some problems with china it may or may not work as straightforwardly but there's something you can say about what you need to do um on the other hand in going from zero to one by definition every um every uh time there's a major innovation in technology either in science or in a business context there is something about it that has a non-repeatable character uh and there's something about that's very specific and unique and so the most important aspects of it are things that are are not easily repeatable and so it involves some complex judgments around where technology is what can be built are these the right people who can uh who can build a particular thing in many cases um it has a you know it's globally competitive uh you have to have if you're starting a new technology company you have to be the best in the world um and so much of it has the flavor of um you know you get a gold medal if you're the best but there is no silver and there's no bronze there's no you know there's often nothing in second or third place and so by the time there's a trend or a theme and people talk about what is the next um you know company and category x um that's often it's already already looking very much in the rear mirror and that's that tends not to be the right idea i want to shift now from your work as an investor to what strikes me is your equally interesting work as a thinker last year you published what i thought was one of the most interesting think pieces of the year national review a piece which uh deserved perhaps a little bit wider coverage than it got was entitled the end of the future and in it you made an argument that i found very striking namely that there's a kind of two-speed world right now and this has been true for some time you've been a part of an incredible time of innovation in the technology sector but that kind of innovation hasn't been going on elsewhere and you mentioned in particular the the energy sector as a place where there just hasn't been comparable innovation tell us a bit about the argument you made in that piece perhaps for those who didn't read it give us a quick quick review a quick summary well the question i try to pose is how much technological progress is happening are we still living in a time of accelerating technological change um and uh the answer was that we are seeing it in computers in the internet and basically nowhere else um and and you know the the most straightforward place where we're literally not moving faster is in transportation where you know if you looked at every decade from 1500 onwards you had faster sailing boats faster railroads than 19th century than faster cars faster airplanes and it basically today we're basically at the levels of 1970. if you include low-tech airport security systems maybe we're back to 1960 levels um and you know the concorde was um authorized in 76 decommissioned in 2003 and so that's one place where things have definitely not continued to accelerate uh if you broaden it from that to energy uh things have basically been stagnant if you define technology technology is doing more with less energy's had the opposite aspect where so much of it has involved things that are ever more expensive and and so even though oil prices are um are far above the levels of the of the early 1970s um alternate energies are costing even more so we've had sort of a failure both on the conventional side um and to date a very serious failure in alternatives which are you know costing more and there's a lot of questions what's gone wrong in that area uh you know and as you go down many other areas i think you see this pattern repeated you know i think biomedical progress which i'm also very interested in uh has continued to go at a pretty good clip you know life expectancy is going up about two and a half years a decade that's been a uniform trend since 1840 but even there i think there are a lot of reasons to be worried there may be one-third as many new drugs in the pipeline as there were 15 years ago the large pharma companies have basically responded by simply firing all the scientists and researchers that did so little have yielded so little progress in the last decade and a half and so i think there are many areas where things have slowed down um one if you want to frame it in one somewhat simplistic way i think that um i think that we have seen progress in the world of bits but not in the world of stuff and so anything involving a virtual world has seen progress this has been um in computers as well as finance so computer engineering and financial engineering were very good fields to go into even though people are a lot more skeptical of how much uh real progress there was was in the ladder at this point so why can i can i ask why do you think that is because it's something you said in the article well we don't really have space to get into that here but it's actually a really interesting question for me as an economic historian why has the innovation been concentrated in the virtual world of bits and is why is it stagnated in the world of stuff uh well my my my basic premise would be that it's been um we are we aren't willing to take risk and it's basically been uh regulated to death in all these other areas and so if you were if you were an engineering student when i went to stanford in the uh in the mid 80s uh you did quite well if you went to computer engineering electrical engineering was still a pretty good area and all other engineering fields were actually quite bad if you went to civil engineering mechanical engineering chemical engineering um to say nothing of nuclear engineering petroleum engineering aero astro engineering um and and i think to a very first approximation in a variety of reasons it's been very heavily regulated and it's been you know a lot harder to make progress when you ask why did all the rocket scientists go to work on wall street and people say well they were paid too much and we need to punish the wall street people um the other side of that that coin is they were maybe paid too little or to be more precise they were paid nothing at all as rocket scientists and you have to also think about uh that end of it so i from a libertarian perspective i tend to think that there was an enormous amount of uh of regulation and we've become much more a risk-averse society um i think there are there are certainly are other reasons that it's been de-prioritized uh you know there's probably a liberal argument that there was not enough uh money put into uh science and engineering and that that was somehow deprioritized there's a conservative argument that that maybe um progress requires sacrifice and sacrifice is motivated by war and that you know the apollo program the manhattan project um were motivated uh by a military exigencies that people no longer quite believe in and that so when you know maybe the space program ended with the apollo soyuz docking where if we were going to all be friends why should people be working 100 hours a week building new rockets i think i think there's a conservative argument there's a liberal argument i'm biased towards the libertarian one but it's possible they all have significant elements of truth by comparison with other people who who theorize having made their billions in silicon valley you seem on the on the pessimistic side if i compare your piece with something like eric schmitz for the first piece saying google is going to democratize the world or if i think of yuri milner's vision of the entire world being networked into a super brain that will solve all our problems i mean you seem like the sort of party pooper in silicon valley well do you show up to to to kind of make everybody feel slightly more pessimistic than they otherwise would is that temperamental is it ideological or do you or do you think that you simply have a different take on how the historical process works well i think there's a i think the question the question that's worth posing is how important and how valuable are computers and how valuable is everything else and how does one measure that so i i agree with um i agree with schmidt and milner that the computer revolution is continuing and we'll have major repercussions in various fields in the decades ahead on the other hand there are many other areas where there's a lot less progress so we for example have had very little innovation in agriculture which is in a biotech area where we had the green revolution that increased world food production by 125 from 1950 to 1980 and has stalled out very badly in the last in the last 30 years and so if you look at say something like the middle east you can look at it through the prison an optimistic technological prism which is that it's a shift from authoritarianism to democracy that's being mediated through through information technology twitter and other companies um and uh and that it's all sort of a story of positive technological progress or you can look at it uh through the prism of um that uh one of the triggers is that that basically food prices went up 30 to 50 percent in the last year and that the green revolution in the middle east is really linked to the failure of the you know what i would say was the true green revolution of the 50s and 60s and that you have to um say that that uh in many ways these are people these are hungry people who've become more desperate than scared which is sort of gives you a very different cut on what's going on i think there's a lot of truth to both and it's important to understand both of these stories so the people who speak about technology are almost all from inside the computer industry and i think it is it's worth asking how it fits with everything else uh certainly the part that's very odd is uh is when you look at wages in the u.s living standards when you take surveys of do people think that the next generation of americans will be better off in the current generation and the surveys have steadily been moving in a northeasterly direction where more and more people think they'll be worse off um and so you have a you have an extraordinarily disconnect between uh the uh the broad public opinion and um and the claims of of of these experts and it's an important question uh who is right this gives us a very different read compared with i don't know economists like paul krugman or jeffrey sachs who say well inequality is a result of deregulation what we shouldn't have done was deregulate the financial sector and what we need to do is increase you mentioned this point earlier increase the role of the federal government in research and development education and that kind of thing it seems to me you're saying something entirely the opposite from that which is that it was actually the regulation in these other sectors that prevented the innovation and trapped people in these in underperforming sectors do you in other words have a a broader critique uh of what might be called the liberal conventional wisdom believed by i would guess 99 of the people in this in this room because it's actually quite a profound critique you're making that everything should be deregulated uh well i i um i certainly think technology should be heavily deregulated and uh and that its regulation forced people to do other things so you know if you were if you lived in the soviet union um you know everything was outlawed and if you were a really smart talented person uh who didn't want to um you know who didn't want to compromise your integrity you became a chess player or maybe a number theorist and it produced great chess players and great number theorists and and the us has produced tremendous amount of innovation computers and finance and i think these things were on the whole good i like chess i like computers i like finance um but uh but i think we have to ask the question whether uh it implicitly distorted a lot of other things that have just sort of uh have sort of dropped from view i think the uh the economists uh like uh like krugman are um are most wrong on the on the view that uh you can do aggressive printing of money and aggressive fiscal borrowing here and so if you think of the technology slowdown as both a fact and a problem it's a problem we need to figure out what to do about but if start you have to start with it as a fact and uh and the big question about uh the current debates on fiscal and monetary policy is whether um you're digging yourself into a deeper and deeper hole which would be the sort of the tea party austerity view of this the merkle view in a way or are you digging yourself out of a hole which would be the standard keynesian view and i think the keynesian theory works well in a world of rapid progress so you can borrow lots of money you can smooth things out and we'll go back to this incredible trendline growth rate whereas if you're in a world where there's no progress that's a lot more problematic and i think you know a lot of the debates about the current crisis involve a debate about his about history um and people are very fixated on the 1930s as a data point and the conservatives and the republicans were wrong in the 30s they uh they basically uh believed that there was not that much progress happening and that you had to you had to stay on the gold standard you couldn't print money you had to um you couldn't have this deficit spending and sort of root canal republicanism was very much discredited um but i think it was not so much because keynes's theories were profoundly correct as it was that you had you had incredible technological progress so even in the 30s you had the creation of the movie industry of the aerospace industry the plastics industry home appliances were sort of popularized you had the development of the secondary oil recovery and uh and and so even though there was a major economic and financial crisis uh there were incredibly powerful tailwinds of progress that helped a great deal um and uh and even though i think a lot of the new deal economic theories were not quite correct um in a world of incredible technological progress you will have a tailwind that will power many delusional ideas let me ask one more question then go to the audience uh it's an election year you're a libertarian so i guess you want ron paul to be president right well i don't think i don't think that's going to happen at this point um no i think that uh i i would i would like i would like there to be uh i would i would i would like there most to be some serious discussion of these uh of these issues and uh i would like there to be a serious discussion of um of how we got growth restarted as a society and how we deal with some of these uh these uh these topics that are not even being discussed and what i think is uh is most disheartening about the political process is that uh so few of the real issues can be discussed and you sort of get the sense that people cannot talk about the growth challenges or the deficit challenges or any of these things because to do so is to automatically put yourself in a completely um unelectable position and uh and this is sort of uh you know so i think we are headed towards a time of austerity because i think it will be hard to get technology re-accelerated um and i think it will be a chaotic austerity it will not be there will be nothing planned about it because um because people are not able politically in our system uh to talk about uh about the various uh challenges we face fascinating let me now turn this over to uh the audience uh there are rules of engagement which i have to remind you of in my capacity as charlie rose all questioners must identify themselves and if you identify yourself as a journalist you will be stopped you're not allowed to ask questions here if you're a journalist that's what it says here your second rule one brief question per person no speeches so don't do that thing i once heard a german man do and say i have only nine points and three it it is a question we want from you and and so it has to have a question mark at the end you have to go up at the end of the sentence and i'll be monitoring that very strictly there are microphones dotted all around i believe four in different places i'm going to start with this microphone here yes sir good evening my name is ari cole and i'm an alum of the kennedy school class of 2008. also i'm a physician that does intensive care and primary care medicine i want to thank facebook for changing our world you guys are brilliant and thank you mark zuckerberg i'm sure you're watching somewhere in the world shaloha from harvard my question has to do with electronic medical records as an intensive care doctor sometimes our internal hospital systems of everything being put on the computer crashes and i have a critical patient or patients that i have to see daily in the hospital we don't have a backup system facebook has wonderful memory towards pictures for ekgs and chest x-rays and ct ability also ability to do notes between you know encrypted notes for patients um if you know an encrypted kind of file um between doctors and nurses about the patient what how could facebook help us in this situation of saving lives and you guys making money by being a medical records backup system or a protean system for hospital systems that can't pay the one to two million dollars to make those electronic medical records systems work i'm not a guru with algorithm algorithms or encryptions but we have a dire need to save lives in a critical situation how can we do this possibly splendidly long question i'm going to have a splendidly short answer i cannot answer anything related to facebook because we filed our s1 or an acquired period maybe i could uh broaden it out away from facebook and ask why is it that when you encounter the us health care system which is about the most is the most expensive in the world it appears to have the worst technology that you could possibly have i mean i still get handed a clipboard with a badly photocopied form every time i go to see a doctor no matter how many times i've been there it's amazing it's actually worse than the british national health service it really is and yet it costs three times as much in relation to gdp why is that is there a good example of your kind of uh your story of stagnation i mean the technology is surely there why is it not in health care well it's um you know our healthcare system like that in many other countries um involves significant elements of both the public and private sector uh and there probably is a role for some sort of technocratic solution our government is not oriented towards finding technocratic solutions um and so you know what uh if you're really going to reform health care in the u.s you should appoint someone as you know as the secretary of hhs who has an engineering degree or has run an engineering company and would figure out how to go about implementing these things of the sort of the sort the questioner asks and that's that's not the mindset we have the mindset we have is that all of these technology uh issues are just minor secondary problems that uh and that you know that is like probably the way unfairly that a lot of people in the audience would respond to that question is what an annoying stupid question this is because um but but it and and then on a policy level we should be talking about you know how do we provide money to uninsured people how do we do this how do we do that those are the ideas we should be talking about and the engineering questions of how we build these are are ones people people generally are not focused on and if you uh look at the obama administration or the bush administration i don't think it's really a partisan issue there are very few scientists and engineers because we don't think of these as the problems that need to be solved great so a question from this microphone here not about facebook good evening my name is alexander rasolimo i'm chairman of a think tank the center for security and social progress now your great success as a technology entrepreneur and investor is undoubtedly a reflection of your talents education and thinking abilities among other factors my question is how much of your success might you attribute to blind luck and could you give us some examples well i i think i should expect i once invested in a dot-com company and i just wasn't very lucky that's why i'm asking the question you know people always say that they're either they always say that they're either um brilliant or uh or unlucky so there's the the tends to be sort of a very large number of unlucky people and a very large number of brilliant people uh you know i think i think i've been i've been quite fortunate i was certainly you know in in in the right place and the right time and it's it's hard to really evaluate how much uh luck played because i can't you know run the experiment a thousand different times and figure that out uh i i do think it's um i do have a bias that it's not the best way to approach these things and so when i've looked at investing in technology ventures um whenever i've thought about it that i can't really figure out what's going on and this is just a flyer and it'll just have to you know it might work it might not work i'll put some money in um that's almost always been a formula for things not working and so you know once you think of the world as consisting of lottery tickets uh you have set yourself up to lose and what you have to do is to move beyond thinking of the world as just a lottery ticket and and even though there may be certain things that involve irreducible elements of luck i think that in many cases um an excess of emphasis on this um you know is sort of uh is not uh this intellectual truth about the world but is uh is really a kind of laziness where people don't want to think as hard about things as they as they should and so uh in my investing um where i've had where we've done our homework and thought the hardest about things that's what we've done the best where we've thought that it's just a lottery ticket that's where it's tended to go uh the most wrong and peter presumably you've invested in a hell of a lot of companies we only get to hear about the ones that are super successful but i mean have most of the things you've invested in by your standards actually failed um well i think the the uh i would say the the binary standard would just be um has the as an investor because the valuation of a given business gone up uh we've we've looked back on it they're probably about 140 businesses i've invested in over the last uh 12 years and you know something like somewhere slightly north of 50 percent have actually have actually worked which is not as high a rate as one would like but is certainly higher than the you know 1 in 20 lottery ticket type thing people tend to think great let me go up to uh the gentleman that microphone yes sir hi my name is matthew delafuente i'm a student here at the kennedy school studying social entrepreneurship i was wondering what would you practically do to save europe's current lost generation um well i i think that uh i think that uh you know i think that there's no straightforward answer but i i would say the first first step is you have to somehow uh understand what the nature of the problems are and the uh the critical question in europe as in the u.s is this question of how you get growth restarted um and i think without growth um you're gonna have just this uh the zero-sum game where um it's just a question of who takes stuff from whom and uh you know is does you know does germany take stuff from greece or does greece take stuff from germany um and you have to figure out a way to uh to get growth restarted that's that's what the debate needs to be about um and i think uh i think that in a way it's not a problem that's really limited to uh to europe i think you have the same problem in the us where i think you have the risk of a very serious risk of a loss generation as well and the growth rate's slightly higher but the deficits are much crazier in the us and so you know if you assume that's not entirely sustainable i think you know we really are in the same boat and of course uh japan is um is also the country people don't mention that often and so i think uh in some ways the entire uh developed world is in this uh in this boat where people um don't believe in growth you know actually actually one of the one of the things i think has become sort of problematic is the way in which globalization has um the emphasis on globalization has displaced an emphasis on technology so you know we used to speak of the world as the first world and the third world which was um maybe had some problems but today we speak of in terms of the developed and developing world the developing world are the countries that are copying the advanced developed countries and are going to converge to those this is a very pro globalization story and so it's very straightforward you tell young people in china or brazil or india is they should just copy things that are working um but when we talk of western europe and japan and uh the us as the developed countries we've already implicitly thrown in the towel because we are saying implicitly that these are the countries where nothing new will happen because they are developed and the question that needs to be asked is you know how would you go about um developing the developed world and how do you get back to the growth question and that's that's a question that needs to be uh flagged again i think there's probably a deregulatory piece that's very important there's a realism piece that's that's very important uh there's certain kinds of problems that uh that need to be tackled i think the energy problem is is a very critical one that needs to be tackled because the super high energy prices act as a barrier to all all sorts of uh all forms a lot of forms of growth so i think there are some very specific problems that one would need to address i'm really tempted to ask a follow-up question but i'm going to go to this microphone instead yes sir i'm jab ruff i'm an undergraduate student at brown university and your thoughts on the higher education bubble have let me do research on it and i think you're right my question is in practical terms as well how do you think a solution in the educational parent time will manifest itself just to be clear you've been quite critical about higher education mainstream higher education and they've even encouraged students to get out of a class and innovate beyond the campus tell us a bit about why we we've had a series of um bubbles in this uh country and so i think um in a world where there's not been a lot of growth but in which people have this cornucopian theory that growth automatically happens um what's happened instead has been a lot of misinvestment in stories of growth and so the tech bubble in the 90s um you know is unfortunately more fraudulent than real and it but people bought into it because they believed we lived in an age of miraculous progress the housing bubble of the last decade similarly had this element where people assumed that things would relentlessly get better in our society therefore housing prices had to go up and uh and so again a belief in progress in a world which was not progressing uh that combination uh helped sort of uh uh create these bubbles and i think so i think one of the questions one has to ask is why have there been so many bubbles and i one diagnosis i have on it is that a people have believed in a very rapid progress even though not as much has been happening as advertised and that combination has led to all this male investment i think we have at this point you know a very uh a very serious bubble in education where people are told this is a great thing to invest in that that you know human capital is the the best thing one can invest in and of course we are immediately forbidden to ask what the returns on these investments are how to measure it that sounds like an incredibly crass uh sort of a thing uh sort of a thing to do and i think very much like the uh the housing bubble um it probably has uh many similar parallels probably the subprime part of education is the worst um i'm sure none of this applies to harvard or stanford bubble here well it's it's um but but i think that uh but i think and then i think how it all ends is is quite hard uh to say how these bubbles normally end is um there's less that goes into the sector and people start thinking for themselves and so you know the education bubble is driven by something that's overvalued and intensely socially believed as the be-all and end-all as the magic solution to all of our problems and uh and it probably will end when people start thinking for themselves and so my somewhat abstract advice uh is that uh you should think for yourself i think when i look back on my own my own trajectory the mistake that i you know it's hard to know whether i would do it differently i might still go to college and and law school but a mistake i made was never thinking about um what the purpose of it was or why i was doing it it was just this automatic thing that you did because you were told um if you did it you'd have all these options that would get created and it would or sort of automatically uh work out on its own and in retrospect i would have tried to think harder about why i was doing it and and where where i saw it going because this would be a familiar story if you had dropped out of stanford and become a billionaire but you kind of played it much straighter than steve jobs educationally was there a moment when you sort of accumulated two or however many degrees when you thought it's all completely pointless did you did you have a moment of doubt about the education that you had excelled at well i think i think the uh you know i think there was a moment of doubt the point when i uh got onto wall street and you realized that uh that uh that it was basically like this never-ending tournament and uh the tournament uh just keeps going on and on and uh and when once you realize that uh the tournament's not over in high school and it's not over in college and it's not over after that uh you start it it forced me to ask more questions about was this the correct tournament was there time to do something different um and i do think that's that's one of the misconceptions so one of the big questions about education is what sort of a good is it is it an investment decision a consumption decision you know i think most people think of it as an insurance product where it's you're buying insurance to protect yourself from falling through the cracks in our society and i think even that's problematic because we should be asking why there's so many big cracks rather than how do i protect myself from it but the reality is that it's mostly just a tournament and you have to win the tournament uh you have to be realistic about winning the tournament and the kind of the kind of speech that people probably do not give at harvard um and this is where i think even harvard is probably wrong would be um or brown or any other university would be you know freshman orientation um you know congratulations you won the last round of the tournament and now it's going to just get much harder and um and you better redouble the effort because there are a lot of people who are ahead of you and if you can't see them they're so far ahead of you that you can't even see them um and um and if you were to try to give a version of that speech i don't think you would last very long as a president of any any university even a much lesser version of that would probably get you booted i want to hear that speech in full but let me take another question from the floor good evening tony wagner the first innovation education fellow at the technology and entrepreneurship center at harvard so follow up to the last conversation i've just finished researching and writing my fifth book called creating innovators the making of young people who will change the world so i'm going to press you for a little more depth on response to that last question what are the most important things we can do as parents as teachers as mentors and as employers to encourage and incent young innovators well i would say let me just the educational question um i would say is is that people you know the most the best reason to learn is because you're interested in the subject matter and uh and there's some some value in it and so uh so i would intrinsic motivation so i think one of the very interesting things with this program we started with the 20 under uh uh 20 students under 20 was that a number of them had actually already finished college and they'd actually skipped a number of grades and so i think the the test for parents who have talented students is whether they would encourage their students to skip as many grades as possible and if you think of education as a tournament then you're not going to have your kids skip grades because you want your kids to knock out the other kids on the harvard application process if you think of it as learning you will encourage your student to skip as many grades as possible so that would be educational advice would be to the extent you're able to skip grades you should skip as many as possible and encourage them to play chess uh you know it's it's i i'm not i'm i don't i don't i don't know it's you there's ken rogoff i'm kind of intimidated by all these great chess players i think it really always was bad chess is dangerous you know it's probably they're all these things that are dangerous people are good at them but sure i like chess you still play chess i still still play some probably too much you know not enough and too much at the same time well let me let me take another question from this microphone here yes sir hi my name is jeff engler from harvard business school um many libertarians would believe that uh government agencies like the environmental protection agency should be abolished all right number one is this your view and if yes whose job is it to steward the environment if anybody if any for the next generation well i think you know i do think environmentalism has played an incredibly uh important role in in in regulating you know a number of these sectors uh i don't i don't um you know and i think you know the challenge is that there obviously are some very real environmental issues there are some ways in which things have gotten meaningfully better so you know the air pollution in the u.s is much less than it was 40 years ago and was probably on trajectory or it's going to become become intolerable on the other hand i do think there is there is something about a lot of the regulations where they just sort of build up they build up and the cost benefits are never thought about and uh they're never quite evaluated and uh and the the cost is this very high cost there are many kinds of careers that are no longer options for uh for people to pursue um and so i think a great deal more honesty about that would be desirable and more honestly about what the real alternatives in many of these areas are so for example i believe that the u.s should be encouraging a crash program to build a lot more nuclear power and there is an environmental justification for this because if you take the climate change issue seriously this may be the uh the most likely way that you could produce power that has no carbon footprint but you have to make some trade-offs and debate about how likely that is versus how likely some technologies that may still be a lot more fictitious are that could be developed and so i think a lot more realism on the part of environmentalism would be good and i think a lot of it has become a sort of politically correct posturing where everyone tries to be more environmental the next person which is not necessarily the right way to get uh to the best dancers so peter just to be clear you prefer nuclear power to the uh the renewables the the fashionable uh green technologies uh wind and hydro and biomass and so well i prefer things that work and uh and i think i think we i think we should you know i think the the test for all these things is can you get it to work um at a lower cost than than existing um existing technologies and uh and there is a very serious people have badly underestimated the challenge of creating alternatives uh and and so i'm somewhat pessimistic about the prospects for the science and the technology and that's why i think we should put a significant amount of resources towards things that may not be perfect but can probably uh work work quite well versus all of our hope on on something that may not work at all can i can i press you a bit on this and ask a thought experiment question in a totally deregulated energy market in a in an energy market without any government agencies let's just imagine would there be a host of new nuclear power stations built as opposed to coal burning i don't i don't think nuclear power can be completely deregulated um you know you obviously have issues of nuclear waste you have even thornier questions about military uses of nuclear power so there's a global regulatory framework you need for uh for nuclear power so it is something that requires at least some level of regulation uh but there are very important questions about how heavily it gets regulated uh and if you can have a single senator in nevada um stop um the creation of any nuclear waste disposal site that effectively can block it in very powerful ways if it takes 20 years to build a plant instead of four years that's a regulatory thing that makes an extremely big difference and you end up with you know nothing getting built and that's why we're on a trajectory the alternative to you know expensive oil is even more expensive oil and the alternative that will be even more expensive oil and you know we can sort of maybe a miracle will happen and maybe not let me take a question from up here hi vedant mishra i'm a researcher at the new england complex systems institute you invested in palantir personally and in quid through the founders fund and both companies focus on extracting insight from open information my question is where do you think there's room for innovation in open intelligence and in particular do you think it can be directed towards making things for the populace at large instead of for just enterprise consumers um let's see this is a sort of very broad question i i think that uh i think that one of the one of the areas of the computer revolution that uh we're we've spent a lot of time looking at it in recent years is what's been sort of relabeled as the big data problem and so there are enormous amounts of data people are overwhelmed with information they do not know what to do with it and there are questions whether you can bring computers to bear on on helping um helping solve a number of these big data problems there probably are there are consumer versions of this there may there may be a lot of enterprise solutions a lot of comes up in an enterprise context where companies or governments do not actually know what's going on and it would help you know it would help to have something where you know what is what is going on the the consumer version would be could you tell somebody um could you tell somebody things about you know maybe it's a product they'd like to buy that they don't already know and so if you had a computer that knew more about what someone wanted then then they do that would be um that would be a powerful consumer application tell us a bit about palantir which is is a name not everybody will have heard but is one of your current it is a um it's a it's a software company which uh you know it we had so it's it's had its uh genesis in uh in trying to bring their some of the technology we developed at paypal on solving the fraud problem in into a national security context and the question was were there ways to look at the large amounts of data that you have to do something on the high tech side to prevent uh terrorism conspiracies various other uh forms of criminal activity and so it had both uh has both a governmental side and a uh and a uh large company side a fraud against banks things of that sort and it turns out there there is in fact a great deal that one can do with the data that we have and people do not know what to do with the data um you know it's if you sort of think about the picture of the world it's like if you have like maybe a million books in the main library at harvard um it's really more like a trillion books and there's a book in every every building in boston and cambridge is full of books and there's no card catalog and there are buildings where you just have middle envelopes with papers and there are buildings where you have papers strewn all over the floor and there are buildings with locked doors nobody can get into and um there are very powerful things that can be done if you are able to combine uh some of this information and data in uh in different ways and and we think that's we do think this is going to be a critical problem to solve in the decades ahead do you as a libertarian worry that you might inadvertently empower governments with tools of this sort in other words if you can solve the problem of how to manage all this data and please could you do my email inbox while you're at it but if you solve this problem but the wrong people have the tool this is big brother isn't it an omniscient state could be the accidental byproduct of your of your innovation well i i think the uh i think the alternative is uh is that you will have another terrorist attack on the us and then you'll get a draconian response a la big brother and i think to some extent um um the absence of a technological solution means that you will get much cruder and non-technological solutions so to the extent you think that the security problem is a serious problem and you outlaw technological solutions and you have a luddite approach and say we're just going to break all the computers and turn them off you will probably end up with with a much more draconian type of a situation and and i think that from a libertarian perspective i would say that uh um the aftermath of 911 in terms of reduction in civil liberties was uh was much greater than had you had some software that would have been able to connect some of the dots and help prevent those attacks and so i think that's a that seems to me to be you know not just morally the right thing to have this sort of software but also the right utilitarian cost benefit calculus somebody has been very patiently waiting at that microphone up there and i've been worried about the gender balance issue ever since this q a began so please help us thank you hello uh i'm corrine kersey i'm a freshman at harvard college so earlier you mentioned the uh the need to have unique businesses and unique investments created in that that that was the only choice of for people who have had such homogenized thought because of their education and you really need like these unique businesses for um for important innovations but then you also mentioned how in terms of health care you could have someone who was an engineer for example be appointed as a government head to uh to solve the problems in the healthcare forum so where do you see the balance and that's kind of is there any strain between where you would have a government more tournament uh side to these issues or where you would have the private and innovative unique kind of thought where do you see that straight and how do you how would you balance that well i you know as a libertarian i prefer private sector solutions um but i you know fundamentally we prefer more technological progress and so if we had a government that was aggressively pushing science and technology and prioritizing that over other things i think there would be you know there would be a number of things that would be said uh could be said for that the the reality is we have no such government at this time in this country we haven't had such a government in a long time you know if einstein were to send a letter to the white house um it would just be treated as a joke and would get lost in the mail room you could you know the new york times uh op-ed the day after hiroshima basically it was sort of like well the people who believe in the private sector i'm paraphrasing this part they have a lot of explaining to do because you know the army organizing and directing scientists was able to achieve something the private sector could not have done almost verbatim quote now would be um and the result question mark um an invention the nuclear bomb was given to the world in three short years that it would have perhaps taken prima donna scientists half a century left to their own um now that is the scientific pro-government uh perspective and that is one that uh no one believes in anymore um and so uh well i think it's an interesting theoretical question whether that can be reclaimed or how you would go about uh reclaiming it uh i think uh um you know if it simply is nowhere near the set of priorities you have today or if you were to say within the uh the john f kennedy school uh you know where kennedy pushed the space program in the early 60s but didn't really care about health care could you imagine anyone setting the opposite priorities where you say we're going to cut this much money from health care to revitalize the space program or any kind of trade-off of this sort from away from the welfare state and towards technological innovation everything is horizontal it's all global it's copying it's ma it's taking things that work and sort of giving them to people who don't have them and there's very little that's vertical um that involves doing new things and the uh the government biases um is incredibly powerful in that in that respect and this is both democrat and republican republicans want to basically cut the spending democrats want to do more but it's all it's all about the horizontal piece not about any horizontal versus vertical trade-off to go back to the the man after whom this institution is named uh you said earlier that it took a cold war just taken world war ii to produce the manhattan project it it took a cold war to produce the space race are you saying that without that kind of of conflict there just isn't a way for the federal government to be truly innovative to encourage technological innovation is it just that peace produces welfare and that you need warfare for innovation because that's a pretty pessimistic thought well that's that is a pessimistic thought and i i certainly hope that we can find a way to motivate technological progress uh where it does not require war in some ways you know given where technology is today um war has become so unthinkable that it may not um you know it may not really act as a motivator anymore you know can you build bigger nuclear bombs not clear this would still really motivate people but i do think i do think the question of how to how to motivate uh this is is a very uh is a very important question that's not been tackled because we do we do have friends they may not be threats from totalitarian states but you mentioned earlier the terrorist threat and there's also the threat of extreme climate change why do you think the federal government isn't able or indeed any major government isn't able to respond to those challenges with the kind of really extraordinary path-breaking innovations that governments produced in the face of nazism or or soviet communism is it government that's changed rather than the threats well the white white questions are always much harder to answer than what observe that they have not been able to my um my first cut on it would be that it's uh these are not seen as the priorities um it's not seen as a problem technology is seen as something that works on its own these problems will solve themselves you know if you look at the uh the uh the climate change and the clean energy investments which uh uh would seem like you know maybe there's a public goodness there's a role for government to subsidize cleantech um the approach has been that we simply invest in many different companies and don't pay too much attention to the details so it's been sort of very much of a financial portfolio theory approach and not one where you substantively think about what might actually work or what might not work and so when obama's been criticized for the cylindra disaster it seems to me that the response obama should give should be here are three clean tech companies that are doing great and let me tell you about them and this is and if you get if these because i think these will work um it makes it all worthwhile that response never gets made uh there's a bad reason for this uh which is that no such companies exist um and there's a worse reason which is that nobody in the government actually even thinks about what's going on it's not interested in substantive issues and this is not just a democratic thing you know the republican critique of solyndra was not that the technology didn't work it was that there were various ethics violations and how the money was apportioned and so again the substantive question of what worked is too hard a question to tangle with you know you're a lawyer if you're you know if you're your average congressman and so you're much you much prefer focusing on some procedural violation rather than um a substantive issue and you know the ethics problems well unpleasant wouldn't be decisive if the technology worked transcontinental railroad there were lots of ethical violations when that got built but at least got built all right let me take a let me take a question from this microphone here emanuel lopez um i have a question do you think this the slowdown you talk about taking the long run picture is that just a blip since um looking at from this point of view we know the true source of wealth i mean you mentioned in passing einstein you know one einstein uh uh uh pushes science and technology by such a leap in but leaps and bounds that outweighs almost any other consideration but we have so we know that einstein we know that intelligence is genetic we know more and more about that we have and we're starting to be at the very cost at the very beginning of the possibility of manipulating the genome in in whatever way we we want and if we imagine using that to boost iq generation after generation wouldn't that mean that over the long run a thousand years a thousand thousand years we're talking about a species where the the lowest level of intelligence would be someone like einstein or in fact that the lowest level of intelligence might be you know many levels higher than einstein and wouldn't that mean that we would be able to unlock you know all the wealth of the universe i mean we would have everything our disposal and when that no so don't we see ourselves at the very beginning of a huge boom looking at it from that point of view so can we genetically engineer a perfect human race why does that look unfamiliar i don't not for neil you'd be a big fan of that um i think that uh i i don't think that idea would be a very popular one um i think that uh i'm not sure it's a good one either but i think that uh i think that uh you know i would say that the history of most the world has not been a history of relentless progress you know most people in most times and places have lived in societies that were essentially static um you know when malthus wrote his his book in you know 1798 looking back um the reality was that he was more right than wrong and he was now he was wrong the next 170 years because you had this incredible and maybe it had already been wrong with the start of the industrial revolution 1750 but you know um but uh the uh the sort of exponential technological progress we've had in in recent centuries has been has been the real exception and so uh so if it is coming to an end or if it's decelerating this is a you know a serious problem to uh to think about it doesn't automatically uh default to something else well i was told to wrap all of this up at seven o'clock it's past seven o'clock now but i i i don't detect an enormous desire to flee to the nearest pub so i'm going to take a couple more uh questions this has been a fascinating discussion i want more of it if you agree with me stay in your seats yes sir hi i'm joe mccleary i'm the head of a large charter school here in boston uh you mentioned that uh there's been a lot of progress in the world of bits not much in the world of stuff i would i would add to that that there hasn't been much progress in the world of innovation in the provision of k-12 education 50 60 years what do you think of the current trend in terms of charter public schools school choice tax credits all the things all the ferment there to bring really to bring more of an entrepreneurial spirit i think a much needed entrepreneurial spirit to the world of k-12 the foundational education yeah well there's probably you'd have a whole discussion on education on you know all these you know college versions in the k through 12 version um you know just the narrow technological prism if you define education as if you define technology as doing more with less uh the um the educational direction would be how do we get a few talented teachers to teach a much larger number of students than than before um and that problem has not been solved you know if anything the direction has been towards smaller class sizes not not larger ones which maybe that's the right way to go but there's been there's been very little uh technological innovation in that area uh and it's it's definitely worth thinking very hard about what one can do do you think technology can be a part of the answer i mean there's clearly a massive discrepancy between what goes on in higher education where we have the world's best universities as well as some pretty bad ones and what goes on at the high school level where it seems to be the united states has a major problem right across the board in terms of the quality certainly measured in in terms of uh teenage educational achievement is there a technology solution to to teaching people in in public schools well there probably are a lot of areas of government which could be could run better so probably the lowest hanging fruit in the us is in general to get the government to be more efficient and the political debates we have in government are all do we do more with more or less with less and we don't ask very often how do we do more with less which is the technocratic version you know i think clinton at least paid some lip service to it with sort of the reinventing government idea we have no such idea at all so i think it's it's it definitely seems like a very worthwhile question asked there's a health care version of it there's an educational version there probably are you know questions in the military many other areas let me take this question up here i think this will be our last question with apologies to those who are at the microphones looking for lauren yes hello my name is vera lam i am an hbs alum i'm here for the alumni leadership conference i am from palo alto california and i also a co-founder of a small technology company based in sunnyvale and it seems to me that the most difficult part of being an entrepreneur is when to relinquish control and to decide to sell your company uh because this is something that you work with love passion you know for so many years and i would like you to share that experience at the point you sold paypal were you advised or recommended by vcs and why did you decide to sell at that point uh well we were up against a monopoly competitor in the form of ebay and a monopoly competitor in the form of visa and mastercard and there was a worry that they only needed to figure this technology out once and uh and we would be out of business and so there was there was a lot of debate debate around these these things um uh i i tend to think um i think it was the right decision in paypal's case to sell uh but i do think that whenever a decision gets made to sell a business uh you are often making the decision on to stop the innovation cycle in it um and one of the questions uh that i've spent a lot of time thinking about as a venture capitalist is um is how these companies get founded how long does the founding period last and i think the founding period is the period when you have uh you have innovation and once that's over it sort of becomes a normal business that runs in a bureaucratic mechanistic sort of a way and it's a very important question uh how long can one enable the founding in these companies uh to last uh the the the classic example um where people sort of cut the founding off too early i would argue would be would be apple where um the judgment call the board at apple in 1985 made was that computers were like pepsi it was just a marketing thing there's going to be no more innovation in the computer industry you could get rid of the founder and you could replace the founder with with sort of a some someone who'd run the business in a much more predictable mechanistic sort of a way um and that turned out to be a bit of a mistake so it's unusual for the founder ever to come back once these mistakes are made sort of miraculously jobs came back and uh and did uh and then you saw you know another um 14 years of innovation at least through 2011 in the case of apple and so i i do think the the businesses that are led by founders are the ones that are able to innovate the ones that are not led by founders are generally not able to innovate um and uh and if you are in favor of uh innovation you have to figure out ways for founders to stay in control as long as possible and to avoid selling a business or um or substituting someone um other than uh the founder and a ceo well founders need to know when to sell and moderators need to know when to wind up a conversation and although i could happily carry on uh talking to peter and i'm sure you could happily carry on asking questions i think he's uh he's done plenty of work tonight and i'd like you to join me in thanking peter thiel very much indeed thank you [Music] you

Channel: Harvard Kennedy School's Institute of Politics

Views: 33,479

Rating: 4.8130083 out of 5

Keywords: Technology & Innovation Business & Economics, Technology Science

Id: vyxqlJTPIJY

Length: 73min 21sec (4401 seconds)

Published: Mon Apr 05 2021