Peter Thiel: PayPal, politics & the importance of being individual

so good afternoon I'm Peter Tufano I'm the Dean of the school Peter was asking how many of you are from various places how many of you from the business goal okay for those of you are not from the business school shout out where you're from okay you can get a sense so we're thrilled to have up here to feel here today we're also thrilled to have you here today all of you I was trying to think of why you might be here you might be here because you think PayPal is really cool and you wanted to hear about how it was founded or maybe if you learned a little bit more about it about how you know putting a couple of rival firms together and then kind of trying to capture a new market was exciting or maybe some of you like big data and you think that the Palantir is a really fascinating firm and you want to learn more about that or maybe some of you are would-be investors and you think that well somebody who is able to get in on the ground floor of Facebook you know you can learn something from it and maybe some of you had the good sense to read Peter's book zero to one and you were found at provocative for example I particularly like the line that says you know I think I'm gonna paraphrase but it's not about entrepreneurs it's about founders and pick a big important hard problem and then try to solve that so for whatever reason you came I think we're all going to be benefitting today by having Peter join us for those of you who are kind of out there in the ether welcome to you as well peter is going to be in discussion today with my colleague tempo fleeing tempo joined us a few years ago and it says is a strategy expert he's for some of you you were professor studies networks and entrepreneurship and innovation he's also before becoming a professor was a venture capitalist so I think this is gonna be a great conversation Peter thank you for coming tap you thank you for hosting and everybody thank you for coming and on with the discussion thank you so much so beater welcome to Oxford fulfills the heavy so I was telling some students ahead of time they were asking me what books to read and and I hate to sort of pitch anything any best-selling popular press books because it feels like sort of selling snake oil and but the one exception and there's gonna be a little bit of love fest is zero to one so here's the pitch and so I love this book and that's the reason I lighted Peter to come to Oxford because I think this is sort of a great place for Peter both to see Oxford and us to learn from him and so we're absolutely thrilled to have you here and to talk about the book well thanks for thanks for thanks for yeah thank you having here absolutely in terms of the format so we we wanted to make this participatory in the sense that a few weeks ago we send out sort of an email started off to students and we told them we said what would you ask Peter teal he's coming to Oxford what questions would you ask him and we used all our ideas and people submitted questions and there was a ranking system and so I've got a set of questions that you've provided for me and so I'm actually sort of a channel here and oh you know filter a little bit but there's also a chance for you to live engage with this discussion and and it will try to be savvy about that by using the hashtag ask Peter teal on Twitter and so as you're listening to this to this discussion as you have questions will try to react to some of those and and pick them up and go into and all the nasty okay without any any further time here so one of the things I love about the book and it's right at the beginning and and it's the question that you asked every entrepreneur and and the reason I like the book is most books have solutions so yours yours has questions that people need to think about basically but can you sort of summarize what that question is and and why it why it's important for entrepreneurs to think about well there's a there's sort of it's actually sort of a ensemble of contrarian questions and I think you always wanted to be doing something that's both that has certain sort of fundamentally true but that other people are not doing I think that combination always very powerful so you know the business version of the question is what great company is nobody starting the investor version is what what great investment does nobody like the nonprofit version is what worthwhile but unpopular cause is not being funded and then the more intellectual version of it is tell me something that's true that nobody agrees with you on yeah and and this is always a this is one of those interview questions that's a shockingly hard question not because a people because it requires some incredible amount of genius to answer I think we all actually have answers to this question but because it's a very uncomfortable question to answer a good answer is not a conventional answer it's not that our education system is broken or that our politicians are clowns or things like this these are answers everybody already knows to be true the answers are ones that the interviewer is likely to powerfully disagree with and I think we live in a world in which courage is in much shorter supply than not than genius yeah so where do these types of questions come from I mean educational and other systems sort of reinforce you know they're sort of known facts out there that we can all agree on and that's what we sort of disseminate and in part and the question is how do you get stuff sort of contrary and things from left field and is there any way to is there any way to nurture that in some fashion yes always this is always the paradox of of teaching entrepreneurship or teaching innovation because on some level you know there's something paradoxical about trying to offer a formula for how to do to do new things on you know there's there's a sense in which science you can sort of say that science always starts with a number two it starts with experiments that you can repeat and do over and over again but I believe that every moment in the history of Technology perhaps in the history of business generally happens only once the next Bill Gates will not start an operating system the next de larry page will not start a search engine the next Mark Zuckerberg will not be starting a social network and so if you're if you're sort of a slavish ly copying these people there's some sense in which you're you're not learning from them and so I I do have a I don't necessarily have a precise formula for how to answer it but I want to I always like to maybe start by at least engaging with how how problematic it is and how how much we should just try to avoid these cliches of trying to find some some formula or mechanism for for innovation when that's that probably does not exist at all interesting fine line between it being delusion and maybe truth you know and so you know the question do you believe something that almost no one else believes that could be sort of the seeds of bias and delusion in some ways so it's an interesting balance and I don't know if you can at what point do you tell which is which when you're you know say talking to an entrepreneur yes always it's um it's a very fine it certainly is a very fine line and and I think you know if you have to sort of give a constellation of traits that make up a lot of the great entrepreneurs I think a lot of them have these nearly diametrically opposed qualities they're obviously not precisely a and not a that would be contradictory but they're you know so you have people who are very stubborn but still quite open-minded so you know there's sort of there's their way in which the people who are somehow you know very sort of both inside the system and outside the system at the same time so you have a lot of these n like paradoxes interesting yeah one thing that I was I was revisiting the book again yesterday and and one thing that struck me the the philosopher Kierkegaard has this essay that I absolutely love and I've had students read it it's called the crowd is untruth and as I read your book that you have that sense where there's something about the crowd where it's going after things that might already be overvalued it's going after things that might not be true and and you could sort of think about in different different ways but it's almost kind of links to that nice because you have this nice tension between individuals and society and and and so that how we sometimes move and herd like fashion in terms of how we value things yes yes so I'm I tend to be quite quite skeptical of sort of psychosocial crowd manias as as a I think it is you know it's done you don't necessarily want to simply go against the crowd seconds maybe a little bit too formulaic right but but certainly if we think about the history of recent decades or the last few centuries we've had you know crazy financial bubbles of one sort or another that were driven by by the insanity of crowds you've had you know dangerous and really bad totalitarian movements and politics that had the sort of this powerful crowd dynamic and and you know there's and so yeah perhaps the the antithesis of my book is the cliched version of Malcolm Gladwell the wisdom of crowds which and I think people always know if you had to give credit to Malcolm Gladwell the the way the argument actually works in the wisdom of crowds is that if you have a crowd of people and they independently make a judgement and they all independently think something through you can sort of average it out you'll get to a pretty good idea sort of you had like a bag of marbles and asked every single person how many marbles the word everyone thought about it independently of one another yeah the average answer would be pretty good but but the problem is that in most cases the decisions don't end up getting made individually people are influenced by one another as they make them and when you have a crowd dynamic in which people are out drawing conclusions because they're looking to one another that's where that's where the crowd is untruth right you know already in the time of Shakespeare the word primate meant both ate and to imitate and I think it was Aristotle who said that man differs from the other animals and his greater aptitude for imitation so this is a very very deep part of human nature it's how you know kids learn parents by copying kids willing language by copying their parents it's how culture is transmitted in our society but it's also how how very many things go wrong and dive on you know the you know slightly extreme formulation I have of this is that there's a strange phenomenon Silicon Valley which so many of the a successful entrepreneurs seem to be suffering from a mild form of Asperger's or something like this and I think I think we always we always need to flip this around and ask the question why is it that the people who are not suffering from Asperger's are at a disadvantage in our society where they are in fact there in fact talked out of their interesting original ideas before they're even fully formed and you sort of pick up on all these subtle cues from people oh that's a little bit too strange that's too weird I better just go ahead and open that restaurant or do something in a sort of super conventional which lots of other people are doing and probably is at the end of the day weirdly not going to be that effective you know and with my apologies to the audience here they've done these these you can often I often think of the business school demographic as the anti Asperger's demographic where it's sort of there's I'm not sure exactly what the word for who's the anti Asperger's but name is like a business school student or something and so the sort of people who are hyper socialized they are perhaps perhaps can be criticized for having being somewhat low on the conviction level and and and if you want and you put all these people in a in a hothouse environment for a few years and and and they sort of look to one another and try to figure out what to do with their lives you know it's not clear at all that sort of process gets you to the right answer they've done these studies at Harvard Business School where they found that the largest cohort of people ends up doing try they sort of all conclude after two years we're gonna try to catch the last wave and so you know in 89 they all wanted to work for Michael Milken one or two years before he went to jail for junk bonds and they never really interested in tech except 99 2000 when they timed the you know dot-com bubble ending perfectly and and so I think this is this is something to be aware I mean again I I think it's unfair to just criticize business school students because we're all and we're all subject to this and it's you know it's disturbing how powerful something like advertising is we always think of advertising who are all these stupid people who watch these TV ads and do these ads work and the disturbing answer is that it's it's all of us to a much larger degree than it should be yeah I think you just broke Twitter I think a few MBA students a about the some of those comments but that's okay at Oxford we're different right the UFL would be carefully be different exact same way that's right very good the question of sort of difference I mean there's this discussion about sort of how much kind of heterogeneity or how many different how much differences you know do you know diverse ideas are good having heterogeneity on a team founding team for example is important but it actually in your book you have this quote and you say just see if I can find it people should be personally as similar as possible you're talking about the founding team and you talk specifically about sort of PayPal and how they're sort of similar interests around certain domains that that you guys had on the team there can you talk about sort of on what dimensions do you want that similarity and when do you want the difference and when does it windows which Trump well I again I frame it as a as a paradox and I'm never quite sure where the difference is how constructive a metric it is but if we were to go with this is a metric I think you want to have sort of very big differences inside the team and but then from the outside you want to be seen as very different from the rest of the world and so okay so if you on so let me let me take sort of if you take a company like um Elon Musk's SpaceX business one of my PayPal colleagues I started a rocket company their mission is to go to Mars and so everybody at the company thinks we're the only place in the world where people are going to go to Mars and that one idea separates it and demarcates and that everyone there has in common separates it very sharply from the rest of the world so so you want to have this commonality that everybody intensely shares that differentiates you from the rest of the world and then I think within the company you want you want the roles to be as differentiated as possible and and one of the you know one of the challenges in an early stage business and a start-up is that there's a certain fluidity to it the roles tend to fluctuate a lot and and I think this is this is sort of a this is sort of the way I think conflicts tend to arise and things tend to go wrong you know the sort of a sort of a a conventional Marxist theory of conflict is that conflicts happen when people want different things and I tend to think it's more the other way around conflicts happen when people want the same thing and if you were if you were a sociopathic boss who wanted to just create conflicts among your employees for no reason at all the formula for creating conflicts is to tell two people to do the exact same thing so you say the two of you are going to work on the website I'm not going to figure out who has which responsibilities you figured out amongst yourselves but you have the exact same job it doesn't really matter what the history those people were that will be a that would be a recipe for conflict and so I think I think one of the key management things to always try to do is to differentiate as sharply as you possibly can and and I think that's and so you want to have roles differentiated sharply within companies you want to have the mission of the company differentiated sharply from the rest of the world so I'm gonna differentiate a sort of mission that the company has there it feels like there's sort of two sort of schools of thought kind of an entrepreneurship around us if you look at kind of entrepreneurship centers and other types of things in terms how people think about this one of one of them is is sort of listen to your customer kind of minimal viable you know lean that type of thing you seem to be suggesting kind of the antithesis of it basically you you argue in your book later on about you know sort of about secrets and things like that and so one is sort of ideas based on I'm caricature in care but ideas based on sort of customer survey in some way or consumer or user survey and and sort of that way will validate what we're doing and the other is is is is you're building something and so in in the book you have the quote about sort of you know Steve Jobs was about designed but he was about designing a great company and and and that was what was central and so can you talk about do you see those two sort of divergent approaches to thinking about startups it one is again sort of the the Minimum Viable type approach versus the other you briefly mention in their book but just if you could talk a little bit more about yes well there's obviously you know there's obviously versions of both approaches that work you know having a Minimum Viable Product by definition is probably the minimum what you need and and it's and and then it's probably on some level you don't need more than a Minimum Viable Product so there's almost a analytic sense in which that is that's tautologically true at the same time I do think I do think we we sort of tend to be dominated by a somewhat nihilistic bias where we we claim not to know anything and when you don't know anything you end up defaulting too much to this sort of experimental search a B testing approach what do we do a or B let's figure it out let's ask the customers and and in the abstract I would say the the problem with that is that the search space is simply way too big and you don't have enough time you know it's quite enough to enough time the history of the universe much less before your venture capital funding runs out to do a thorough AV testing and go through the full search space so so I think in in practice the problems are not as as sort of purely empirical as people like to make them I think it's often much better to have a good analytic framework this is an important problem that needs to be solved this is the set of things we have to combine in just this way to do it and then once you've done that there obviously are a lot of ways to sort of fine-tune that and that's where I think the the a/b testing approaches are very useful so I think that there's definitely room for both right I would say I would say we live in a world where it's it's part who skewed to to the to the first and not enough to the to the sort of vision driven mission driven vision driven company yeah so maybe practically have you have you invested in companies who had that big vision but then to use I hate the word but sort of pivoted and but then nonetheless were successful and so they had something that they went after and at some point there's a tweak I guess any company there's always sort of tweaks on the margin in terms of what they're doing but have you invested in companies where you've seen that sort of play out any examples come to mind or you know there definitely are come Bennie's where it's again it's a bit of a tremor our coat counts as a pivot what counts as a tweak you know so all these we sort of lost the terminology they're definitely on there definitely are points where things changed quite a bit right I think PayPal you know we have merged regional business plan was to have payments on on Palm Pilots then it was Wireless payments than it was payments linked to email so we had a few fairly fairly big pivots in the first year I'm not sure there's anything especially virtuous about that I think that you know if you if you if you have a dumb idea it's important to change it but but but it's not virtuous to have a really a bad idea in the first place right in the book you have this sort of sub section that talks about recruiting co-conspirators essentially into two to two what you're doing what and you actually have this interesting discussion about you know you've got all these Silicon Valley and other companies that are competing on perks basically competing on lots of you know will offer the foosball table and the ping pong and so forth and you say that's that's not the right way to think about it what's what's the right way to think about that recruitment and you have this interesting discussion also about the sort of thing about the 20th engineer right can you talk about that yes well well there's always this question about corporate culture and and if you define the culture of a company the way an HR person would that's probably evidence that you have no culture at all and that there's there's an S and so they're all they're all they're often are these sort of buzz words that indicate the opposite of what they say would be sort of interesting to list all the words that mean the opposite sort of like I'm joking or frankly honestly my friend so all sorts of things that when you say them they sort of the connote the opposite there's probably something like this with with with corporate culture in in general and so I think that you know you shouldn't think of a culture as having foosball tables or sort of lava lamps in an office or or any sort of generic things like that it's much better I think to always again define it around this common mission of the company you know I don't I don't think businesses I don't think they work best when they're just about making money at the same time I'm also somewhat skeptical of the sort of social entrepreneurship as a as a category and I differentiate that very sharply from mission oriented businesses a mission oriented business is one where you're working on a problem that if you don't work on it nobody else in the world will and I think that that sort of tends to imbue things with a very deep sense of purpose you know we have this novel approach for solving for curing cancer no one else believes it makes any sense if we don't do it nobody will that's yeah that's sort of there's something very powerful about that whereas I think um social entrepreneurship where you sort of have this idea that we will do well by doing good you often end up doing neither and it ends up on and I think one of the one of those sort of things people get tripped up on is that the word social is a very ambiguous word and it can mean Simon number one good for society which i think is a good is a good thing but it can also mean number two good as seen by society where we where we get back to the character guard thing the crowd is wrong and when it's a good as seen by society you end up with sort of copycat me too you know the you know the hundredth microlending company the tenth um no the tenth online pet food company you know and whenever you're in the enth company of a category that's not a place you want to be yeah I've wondered about your sort of calling for more Big Ideas less copying and I always wonder do we have sort of a counterfactual like is there another world where that could be happening I mean in some ways that your book is a call for like no think bigger but then in some ways there's always a worry that you know we have lots of entrepreneurs trying many things and entrepreneurship inherently give it's an uncertain environment inherently we're going to have lots of failure as well but I've always wondered so the counterfactual here what do you think well it's um counterfactual questions are hard they are hard to answer but you know certainly if we sort of telescoped out somewhat bigger picture it is you know it is my claim that over the last forty to fifty years the story of innovation has been this very true tracked story where we've had a lot of innovation in the world of bits computers software internet mobile internet that whole ensemble and we've had much less innovation in the world of atoms which would be everything from energy medical devices biotech you know supersonic aviation underwater cities all these sorts of things that people would have talked about in the 50s and 60s as the picture of the future and and I think this I think the sort of our many different reasons for these for these for these these parallel track for these different tracks but I think this sense in which the cone of progress has been a sort of narrow cone around IT where the word technology has a much narrower definition from what it had in the 50s and 60s and technology basically means information technology and not say nuclear power or supersonic aviation or any of the other things people would have used it to mean 40 or 50 years ago that does suggest to me that there has been this narrowing and it's been more of a cultural decision a political cultural social decision than a than a law of nature that we've simply run out of ideas and these other spaces did not make sense one of the sort of related to this one of the discussions that's quite interesting in in in your book is about luck and what's the role of luck in all of this there's sort of a school of thought the mathematician Emile Burrell has this thought experiment if you have enough people sort of flipping coins there's gonna be somebody who's gonna beat flip heads over and over and over and we can sort of talk to them and say well what was your strategy why did you win what are your thoughts on luck versus versus what is your thoughts on that sort of argument about success well it is probably the you know the most important philosophical question a business in a way is is how much one should attribute to luck or his skill I think we were honest about it it's a very hard question to answer because um again you don't get to actually do this experiment multiple times it's not like we don't get to one the history of 2004 a thousand times and see Facebook would have succeeded every time or just this one time and so it's actually we can't even we can't even run the the between cost point tossing experiment now what I what I what I always like to differentiate are these sort of two different ways that I think luck gets used one one is sort of as this deep metaphysical statement about reality where it's just in the nature of reality that luck or chance ultimately are the ultimate forces in our universe and sorry the soundbite version of you is that luck is just an atheistic word for God and and it's sort of this metaphysical statement about reality and then the other the other way to describe luck is that we use the word luck when we're just lazy and we don't want to think about things and so that the assertion of luck is not a statement about the nature of reality but about our personal laziness we don't want to don't really want to think things through and and and for that reason I always have a preference to push back on making a luck to all powerful and you know I found that as a venture capitalist you know one of the temptations you always have is to treat every investment as a lottery ticket which I I don't think is a great way to treat people it's not even a it's not a particularly good way to invest you know if you set up a table here at Oxford and said you know I have no idea what's gonna work I'm just gonna start writing checks to everybody who comes along it might work it might not work ups try small check to everybody once you think of it as a lottery ticket you've already I think psyched yourself into into losing money and when you multiply when you think that you're multiplying a very small probability by a big payoff the answers normally just zero and and so my preference is always to try to ask you more in the direction of higher conviction more concentration and against the sort of conventional bias that that it's all luck there's there is sort of interesting self-fulfilling almost prophecy in this like if you think it's luck you're not going to take action versus if you if you don't think it's like you're gonna you're gonna do something and so there's almost a self-fulfilling where the beliefs themselves sort of get reinforced in your actions and so forth yeah that a good language for it or the other probably are all these ways the the beliefs and the actions feed on one another I I would say I would say certainly one bias that happens if you if you think luck is very big is to is to treat everything as a portfolio so there's sort of this financialization bias people have where you end up having a portfolio of lots of different lottery tickets if you if you think that's less the case you would end up doing less of that you know we've looked at our venture investing over the last you know 10 10 12 years on it's it's it's it's generally been our higher conviction investments have done better and a lot of the smaller investments have done worse and I so when I look back on the on the thinking it was off and you know we weren't we didn't have that high conviction instead of really working and figuring things out we sort of compromised by saying well can't really figure it out let's just write a smaller check and I think often there was a sort of laziness that crept in that one should always resist yeah so a lot of the questions here on Twitter and some of them that were sort of voted in the system there as well did focus on on characters do you have any thoughts on as you're looking at startups say you've got to start up with three four people it's very early stage it sounds like you're looking for sort of you know well you're looking for a big idea basically but anything else that in conviction not extroverted that sound like introverted well you you want you know getting you don't it okay so let me just if I had to reduce it to a formula let's try to yeah people are in contradiction everything I've said so far okay I reduce it to a formula I say the the three-part formula would be that you have a great team number two you have a you have some great technologies I'm focused on technology investing and I'm number three you have a good business strategy the business strategy in my book is always that you have a story of how to get to monopoly yeah so you can have a great team and a great technology and no business at all and most most technologies in the history of the world didn't make money you know you make money when you create X dollars of value you capture y % of X in most cases of people forget that x and y are independent variables and that in most cases y equals 0 percent that the Wright brothers didn't make a fortune aviation there were lots of other people who built airplanes the cumulative profits in the history of the airline industry have been approximately zero even though the world is much better off with airplanes they were a very big innovation and you might have had some great teams so I do think we want to keep these three things very separate the team the the technology and the business strategy I I tend to put a lot of focus in recent years on the business strategy the monopoly question because I think this is a taboo question people are not allowed to talk about you know I think the from the inside the goal of every company should be to achieve a monopoly we can debate when when this is good or bad for society on the outside but on the inside this is always the goal this is not the goal that's discussed so if you're the CEO of Google you don't go around saying we have the greatest monopoly in the world much more robust than anything Microsoft ever had in the 1990s you instead say we have this fantastic technology and we have these really really smart people so you focus on the talent and the technology you downplay the business strategy because that's the strategy not to talk about the strategy itself because the context where we're in because if you talk too much about what what's really working some people from the government will show up very quickly and so I'm not gonna I'm not even gonna say that it's it's morally bad what they're doing we should at least be aware that that's simply what's what's going on so I I do think the business strategy part of it is one that often gets downplayed to the extent to the extent we focus on the team question I would say the you know one critical variable is that it is in fact 18 and it's it's very you know there are there are many there are many kinds of things that one can do very well as an individual you can be you can be a great writer a great university professor where it's sort of a very much of a solo kind of an effort most of these business startups are things where you know it's it's a little bit too much for just one person to do and and so you want very talented people who can work very well together and this is actually not a skill that's generally taught in our society you learn in sort of these weird you know team sports context which I think have nothing to do with with life whatsoever and outside of that you never you know group projects normally things that don't really matter in in academia and so so this is something I think tends to get very underdeveloped a good prehistory question I like to always ask is when did people need how long have they been working together you know a bad answer the question is we met at a business networking event a week ago and we decided to start a company because we all wanted to be entrepreneurs that's sort of you know a good answer is you know we've been friends at university for a number of years one of us is more on the business side ones more on the technical side and so I think the prehistory question you don't want to get married to the first person you meet at the slot machines in Las Vegas okay one of the questions account is both here on Twitter and it came up in the set of questions that were submitted was around so you wrote this piece in The Wall Street Journal titled competition is for losers and and and one of the you know what you're engaging in in terms of investing in companies money is a relatively sort of homogeneous sort of resource and and the question is can you have a monopoly in investing in terms of so say you find a good team is this something that's visible to other investors out there as well or is it somehow the there's some way of sort of developing some unique insights about what it is about that team that will then you know make you savvy or sort of venture capitalist because there's others that are you know you know I have the trough also sort of looking to invest in these companies than there's competition in there yeah so this um this is a question I always I always do push us on internally you know we're always preaching you shouldn't compete and do we practice what we preach we're you know and or is it just endemic to to venture capital or finance that it's it's structurally quite competitive I think that I think the the questions I always try to fix it so again I'm a contrarian investor question is is this a great company and is there a reason other people don't see it and so so I I'm always very interested in pushing variants of that of that second question like what is it that we understand that other people don't and if you don't have a good answer to that then then it's um maybe it's an okay investment I think it's unlikely to be to be a really great investment certainly are there some cases where you can be sort of contrarian in a bullish way you understand anybody else and there's something about you know the exponential compounding of the growth that's gonna keep going for for longer than anyone thinks one can certainly wonder how much about that people no longer understand today's since we've had that's been sort of a something that's that's worked really well for for the last decade or so I think there always are variations like this and I I do think I do think there are some some consistent systemic blind spots that people have on a on a surprisingly recurring basis so I don't think it's I don't think it's just this super unusual thing and I think capital ends up getting deployed in in surprisingly inefficient ways because you again have the sort of madness of crowds dynamics in the background you know one one sort of simplistic way of describe this is that there's a very big difference between investing your own money and investing other people's money when you invest your own money you're simply trying to generate good returns when you invest other people's money you have to typically have two objectives number one is to get good returns number two is to look like you're going to get good returns and and the the the disconnect between those two is much greater than people think well I want to make sure I take a question from Twitter and this came up in a few other questions as well there's lots of these incubators around in various forms in terms of how involved they get and how large they are and what gets sort of offered in terms of coaching and things like that what do you think about incubators well it's it's it's always it's always sort of a very very fact-specific question you know what do they help you that you can't do on your own that there certainly are you know I'm I'm fairly bullish on Y Combinator in Silicon Valley I think they have succeeded at this point you know powerfully differentiating themselves from all the others so it sort of they've sort of been able to pull off the sort of elite unit it's like an elite University where it doesn't really matter whether you learn anything the fact you've gotten in is enough of a signal and so if you get into a place like Oxford you should go even if you're not gonna learn anything here because you know so it's hopefully one the way but but but you know so so I think I think so I think if it's a selective incubator like Y Combinator you can get that on the other hand if it's one of you know the 50 other incubators in the UK you have to always worry whether the signalling is the opposite that maybe there was something wrong with your company you couldn't have done it anyway and so these things these things can sort of cut very much very much the the opposite direction I I think that the the temptation one has is an entrepreneur is always that there are a lot of things as a founders there are a lot of things you don't know the answers to you don't know how to fix and the temptation is always someone else will fix and solve these problems for you and I think I think this is this is a bit misleading you know and you know an acquaintance of mine in Silicon Valley very careful I can tell a story as long as I'm very careful not to name any names said that you know his comparative advantage over other venture capitalists was that he was better at lying to people and he was better at telling people how much he'd be able to help them and everyone's life feels I need help if you can get help if you're if you're someone who's unusually good at doing this to people that's that's that's some sort of advantage and I think and I think the the disturbing reality is that you know there are some places where people can incubate as venture capitalists accelerators can help you there are a lot of places where you have to figure this out on your own and there's you know if you're counting on someone to show up with who's seven feet tall and is wearing a large capital esse blazoned on their chest to help you out you're not gonna get Superman you're gonna get an impostor very good are you sure you don't want to make news and tell us through that venture capitalist is no you know it's it's IIIi don't think that's all right you mentioned education early so year here at the University of Oxford you got a degree in philosophy at Stanford you went to Stanford Law School did that influence you know and of course I learned I learned a fair bit I made a lot of really good friends at both undergrad in law school I think I I think you know I think that if I had to do it over again I probably would still do the same thing I would I would ask more questions why did it you know I was on I was just on this sort of super tracked career trajectory and ready my eighth grade junior high school yearbook when my friends wrote in you know I know you're gonna get into Stanford four years from now I got it to Stanford four years later I went to Stanford Law School sort of you saw when all these track things I ended up at a at a elite law firm in Manhattan it was one of these place places were on the outside everybody tried to get in on the inside everybody tried to get out when I when I when I left after I sort of had this rolling quarter life crisis my I never had a midlife crisis but I got a rolling quarter life crisis when he left after seven months and three days you know one of the people down the hall from me said you know it's it's really reassuring to see that you're able to escape from Alcatraz and all you had to do is go out the front door and not come back but but psychologically this was this was very hard for people to do because so much of our identity gets wrapped up in these these academic competitions that we win and so I think I think learning is a good thing I think I think the education system becomes problematic to the extent that it becomes a substitute for us thinking about our future if we say you know we're gonna get a degree then we will have options we have no idea what those options are that feels to me again like a sort of a luck related cop-out that we should be trying to avoid this is this is completely unfair here but you know you've mentioned that the university system is broken is there is there any way to fix it from your perspective well any any thoughts on on that I mean you're famous for the teal fellowship but in general is there is there a way to fix the system well I um you know I think it's it's sort of a I think the extent there's something broken about it it is the it is the is the one-size-fits-all approach and so if I were to you know if I were to come up with some alternative system I'm not sure that would that would make things any better I you know there's sort of a lot of education related startups that have gotten pitched on over the last few years and and one of the things that I think many of them systematically get wrong is there's always a question what education and what are people actually trying to get with education is it about learning is like an investment in the future which is the way people often talk about it in education a consumption decision which sort of like a four-year party to go to college and or is it maybe it's an insurance product where you're getting education to avoid falling through the cracks in our in our society I think that's actually the way a lot of parents and young people think about it today is an insurance product or is it in reality a zero-sum tournament in which it's it's fundamentally not a positive I'm learning where I know something and I can teach it to you and then the body of knowledge is increased but is it sort of this this crazy zero-sum tournament dynamic and I think it has a disturb that it's a disturbing amount of it fits fits the the latter category and some of the the the thought experiment that I always suggest to people is that you know if you were the president of a university of an elite University and you want it to get lynched for some strange reason the very easy way that you could get all these students and alumni and faculty to come after you say president hartley use a u.s. contact one talk about oxford say president of harvard university and you want to get lynched you would you would say you know we have a great education everyone benefits from it tremendously so we're just gonna triple enrollment in the next decade you know obviously the world is much bigger than it was you know fifty years ago so three times as many people shouldn't be shouldn't be remotely controversial and and and it's a very strange question what sort of an economic good is it where you don't grow the business it's sort of like maybe it's like a studio 54 night club where you have a you know big velvet rope long line outside very few people on the inside and and i think and again it's not a critique of the people who go to these places if you if you get into an elite University you know I don't I don't I'm not criticizing people for going I think it in many cases make sense to go but but we have to realize that something you know something very different is it work from from from what's advertised right one of the things that's that's great here at Oxford it's almost taking the opposite of so you've got these MOOCs that are doing things on a massive scale and here we have things like tutoring which is on a one-on-one basis which is almost sort of completely different it's going the opposite direction and so it's it's a refreshing sort of model here and it has been for you know four thousand years for a long time anyway okay so one of the other questions that popped up here your libertarian but what if anything can government's do about sort of start up activities so is there any role for government in sort of enabling technology related things in yeah what's the role of government in in innovation basically well I mean I'll give sort of both a libertarian and a non libertarian answer although the second one will be libertarian in the sky so I'll give so I I certainly think the sort of the sort of limited government critique is always that that less regulation is is sort of critical and that you know and if I had to give one explanation for why we've had a lot of innovation in bits and not much in atoms is that we live in a world in which bits are unregulated and atoms are heavily regulated and so if the Food and Drug Administration in the u.s. got to regulate video games and you only got to manufacture a video game if we determined that it wasn't bad for your brain didn't do brain damage and we had to do double-blind 10-year long double-blind tests and drug studies like for a pharmaceutical drug you'd have a lot less innovation in video games so I do think I do think there's been this very heavy regulation of many sectors of technology to the point where there's very little happening in them to the point that they're no longer even defined as technology anymore at all and so I do think I do think less heavy regulation would be would be a good thing obviously people will disagree about this for all sorts of things but I think if you want to have more innovation that seems to me to be a very straightforward way to go bring it about now if I had to make sort of a a pro-government for more government being more active case it is that there are you know there are certain aspects of Science and Technology that that don't quite fit into a for-profit business model and we already alluded to this with the you create X dollars of value you capture Y percent of X there are many kinds of things there's basic research there many other areas where it doesn't naturally fit into a business and so it has it which seemingly has the characters of a public good where you want government funding nonprofit funding of one sort or another to really drive to really drive the the innovation and I think the the the challenge for that at this point is that I think our governments have become much less good at doing this than they used to be you know we did have a Manhattan Project the Apollo space program in the US you know if you if you had a letter from Einstein to the White House I mean get lost in the mail room today and it would be inconceivable to do to do anything up anything like this and so I think if you want a government to have a more proactive role in science or technology I would say the starting point has to be that the government has to be made up of people who actually understand science and technology and are able to use their insights in this and this is this is a world away from the government dominated by law and Finance type people that we have today and so they Gabe sort of a case in point with something like the the clean tech debacle in the u.s. of the last decade where you know the goods have innovation energy maybe the business models don't quite work and then the others question you know how do you fund it how do you decide which which technologies support there was this it was a very high-profile bankruptcy of us the company called Solyndra and you had and because of governments dominated by finance and law it was sort of rationalized in financial or legal terms so the the the Republican critics of the Obama administration said well there were it was corrupt campaign spending there were all these processes that were violated the defense was all the processes were followed we had a portfolio approach it was a financial portfolio versus sort of a corrupt process and the question that I think needs to be asked much more is a substantive question do you actually think the science would work and and there's a very straightforward case that it would never have worked because if you have a cylindrical shaped solar panel it's it's one over pi as efficient as a flat panel you know the surface area is two PI R times the height versus versus two for a flat-panel get the same amount of sunlight so setting side even the complexities of 3d manufacturing you know it's high school geometry tells you this would have been 1 over PI's efficient the the person who ran the energy department Steve Chu in the Obama administration had a Nobel Prize in Physics is not allowed to use high school geometry to veto spending and so as long as we have a government in which in which you're not allowed to use high school math to make judgments on what to do it's probably not going to be one that we'll be able to really foster a science and technology in a meaningful way just briefly on you mentioned the importance of basic research and I still wonder about so how do you evaluate the kind of the importance of that there's this Oxford mathematician G H Hardy he well he's here at Oxford also Cambridge to that other school but he had this sort of he was famous for saying I don't want to work on anything practical I only want to work on beautiful things and he had this Apollo you know he apology of a mathematician or something like that it ends up that his mathematics in number theory became central for cryptography and so it's very hard to sort of anticipate sort of the the uses that might come out of basic research which is very hard to evaluate you sort of have to I guess just fund it and have people working at it and so you know and I guess you already mentioned there's some role for it the question is how big is that role and and how does that then feed into technology and startups let's see well it's it's it's it's you know I think there's some role I think the the the concern I would have is that that it somehow works less well than it used to and so and so you know in a you know there was another mathematician Hilbert I'm not sure whether who's Oxford or Cambridge I think he was one of those two places who in 1900 set out these uh this a series of math problems for the 20th century that were sort of unsolved and it sort of set the agenda for for mathematics and and and so I think if you have a you know in the in the nineteenth early twentieth century we still had a world in which on the the really great mathematicians or great scientists understood the whole of their fields and one of the really deep challenges we have in the early 21st century is these fields have become vastly more specialized and so the people who are we who were counting on to evaluate and make these political funding decisions are much more narrowly self-interested and and the the worries that we've had sort of this aggressions law at work where people who are nimble in the art of applying for government grants have a somehow replaced the interdisciplinary polymath type people who've pushed a lot of the progress and I think the specialization is very tricky in and this is when we look at a lot of these science areas if you look at super string theory you have sort of a community of people doing super string research they claim it as the be-all and end-all no one can question them you know as a matter of the science math super hard for an outsider to evaluate as a matter of the the politics of it I end up being somewhat suspicious and something's gone very wrong and and you can sort of replicate that across many different fields I think I think I don't have a great answer to this problem of specialization but I think this is uh this is a very deep problem in the 21st century that's a that sort of resulted in a much greater degree of politicization than would have had 100 or 200 years ago great so we've got a lot of students from the developing world here at the University and lots of folks working on trying to solve problems in the developing world as well you've provocatively said that we need to develop the developed world what what what of your insights here might be applicable in the developing world specifically well um you know might i let me Frank let me just sort of give a little general my book I I sort of um differentiate these two different modalities of progress I saw that on the x-axis I draw a globalization copying things that work on the y-axis I draw technology doing new things and I do think that in a successful 21st century we need both Global's a and and and technological progress so this certainly part of it is for the developing world to continue copying the developed world and to make to make to progress and another part of it is also for us to have a future in Western Europe and Japan and the United States where we can say that the younger generation will actually be better off than the current generation will actually continue to progress from where we are so I think the question of technology is is clearly a problem for the developed world without technological progress it's hard to imagine how things will will will not get better with respect to the developing world I think it's a bit more of an open question is globalization alone going to be enough or do you hit some sort of limits and I think of China as the as the paradigm case of globalization where the you know for for many decades it's simply been just copy the West copy what's work we can skip a few steps so we can do it really really quickly and and there is probably some limit to it and I I suspect that China cannot even catch up to the West based on globalization alone I think you will run into environmental constraints you'll run into resource constraints if you know everybody in China if every second person in China had a car like in the United States there probably is not enough oil or not enough conventional resources in the world to power that and so I think for living standards in China to simply catch up with the Western world globalization alone is probably not enough and you probably also also need technological innovation so I think it's it's a more complicated question in the developing world in the developed world but I end up coming down on the I on the side that we need some of both in both context and I think if you if you telescope out and serve as the history we've had periods of both globalization and technology in recent centuries the 20th century you know the 19th century I think you had sort of both from 1815 to 1914 you know 1913 was sort of a high point of globalization with World War one you know I'm Yoon ISM etcetera it went very much in Reverse for many decades and in 1913 14 to 71 where was a period of technology but no globalization and sort of date 71 Kissinger reopening China as the date when globalization starts in earnest and we've had sort of more limited technological progress in recent decades mostly focused on computers and and my my suspicion ELISA probably this is hard to approve or or say that I sort of wonder with whether in retrospect the year 2007 will be seen as a high watermark for globalization much like the Year 1913 where we pushed globalization too hard we'd not push technology enough and the system sort of just had had some natural limits and certainly the hope is that it doesn't end as catastrophic ly as it did in 1913 but I think pushing the accelerator on globalization without without anything on technology I suspect will not work that well in the decades ahead fantastic is there any sense in which its might not be as much these developing countries catching up as potentially doing things differently where it might actually lead to new innovation and so it might not be that you'll have as many cars but you'll have new modes of transportation that might then diffuse in fact back to the developed world certainly that's certainly that's that's possible in in in theory there's no reason this you know shouldn't be happening couldn't be happening in practice I think there's still fairly limited amount that if you look at most of the venture capital firms that are investing in China or India they're heavily focused on these sort of clone companies these copycat business models they're they're generally not focused on a sort of technological innovations where you do something that's maybe a little bit worse but much cheaper which would be the the kind of innovation we'd like to see more of well Peter thanks for coming to the University of Oxford this has been a fantastic discussion you've you've provoked a lot of people in here I think and so we'll continue discussion online but appreciate your time thank you Thanks I'll just briefly mention Peter teal will be at the Oxford Union giving a talk at 6:00 6:00 p.m. tonight which you can attend and he'll also do a book signing right after and so please feel free to join us there so thank you that's great you

Channel: Saïd Business School, University of Oxford

Views: 15,016

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Keywords: Peter Thiel (Organization Leader), PayPal (Venture Funded Company), Facebook (Award-Winning Work), University Of Oxford (College/University), Saïd Business School (College/University), Start-ups, Small Busienss, Entrepreneur (Profession), Entrepreneurship (Field Of Study), Investor (Profession), Investment (Industry)

Id: l5jMbJmkGrY

Length: 60min 10sec (3610 seconds)

Published: Fri May 01 2015