Peter Thiel Presents: "Developing the Developed World"

good evening and welcome to the Kings College for those of you that are visitors for the first time welcome I know that some of you are just taking your seat come on and if you are have a seat to take take it others you will be like that passage in the book of Acts where you may need to stand or sit on the window just hope none of you fall out the window now if I don't miss my guess the reason why this room is so full is to put it mildly most of you know a thing or two about Peter Thiel author of The New York Times bestseller zero to one so for those of you students who are reading that for class I hope you brought your copies tonight he will be doing a you will be signing books afterwards and there are a few for sale out there as well I would like to introduce him to you Peter Thiel is an entrepreneur and investor he started PayPal in 1998 led as its CEO and took it public in 2002 defining a new era of fast and secure online commerce in 2004 he made the first outside investment in Facebook where he serves as a director the same year he launched Palantir technologies a software company that harnesses computers to empower humanly analysts in fields like national security and global finance he has provided early funding for LinkedIn Yelp and dozens of successful technology startups many run by former colleagues who have been dubbed the PayPal mafia he is a partner at the founders fund a Silicon Valley venture capital firm that has funded companies like SpaceX and Airbnb he started the teal fellowship which ignited a national debate by encouraging young people to put learning before schooling and he leads the teal foundation which works to advance technological process and long progress and long-term thinking about the future what I have found most inspiring about Peter and my conversations with them as he is someone who is put his roots down deep in the Western tradition he is philosophically very well-read the best conversations available surrounding the work of Rene Girard are to be found with this man who will be our lecturer tonight he is familiar with the ideas including the the biblical ones that have shaped and our position to reshape the world he is a friend of this College and we hope he will be a frequent lecturer here and visitor his topic for tonight is developing the developed world would you please join me in welcoming Peter Thiel James college president Thornberry thank you very much for that incredibly flattering introduction I always worried sort of goes downhill from there and so it's always really tough to live up to this one of the you know one of the very big challenges in talking about entrepreneurship or teaching entrepreneurship writing about entrepreneurship is that there's something about it that's that's very unscientific there's a certain conception of science that starts with a number two science is involves things that you can repeat experimentally verify that are in some sense at least two of a kind and yet there's a sense in which the the great moments and business certainly the great moments in the history of science the history of technology happen only once you know the next the next Larry Page won't be starting a search engine company the next Mark Zuckerberg won't start a social networking site the next Bill Gates will not be starting an operating system and so if you're copying these people you're in some sense not learning from them at all and so one of the challenges then is if the if the really on valuable business is the really great business the great ideas have this sort of not miraculous at least a sort of a singular character to them what can you say about it at all and and so instead of trying to come up with some kind of formula where it's like oh you follow these steps and this is how you will succeed because I don't think such a formula exists I try and zero to one to proceed in this much more indirect path and to sort of try to get people to think by asking certain kinds of contrarian types of questions and the you know the contrarian business question be something like what great company is nobody starting the you know the the contrarian nonprofit question would be something like you know what great causes are what unpopular causes is nobody for what good causes are unpopular nobody's funding and then on the intellectual version of this that I think is always a incredibly hard interview question is something like tell me something that's true that very few people agree with you on and this is it's one of those questions which there are a lot of interview questions where you can sort of prepare for them you can just memorize answers so they're sort of our you know we can give you a math test and you can you can figure out okay these are the kinds of math questions that get asked this is actually one of the those questions where even if you know the question advance it doesn't actually get that much easier because and the challenge comes because it's not about some sort of correct answer it's always a little bit uncomfortable one of the things that's uncomfortable about it is that is that a good answer is one that the person asking you will probably not agree with and and so and so you know you didn't come up with all sorts of banal answers like our educational system or a political system screwed up all kinds of very banal answers but good answers are ones that are by their nature somewhat uncomfortable and so what I'd like to do tonight is offer a few of my answers to this question what are some things that I think are true that very few people agree with me on and then perhaps use this as a as a starting point for a discussion that we can get all of you involved later tonight one of the you know one of the one of the first parts and this is sort of comes from this this idea that all great companies are singular is that the standard account of capitalism is that competition and capitalism are synonyms and and my um my somewhat provocative thesis is that capitalism and competition are actually antonyms that that in a world of perfect competition you know all the profits are competed away can a capital somebody's in the business of accumulating capital and and that you know what you're aiming for as a capitalist if you're starting a business as an entrepreneur or as an early investor as an early employee now you always want to be in a monopoly and and this is um and you know we can debate at what points this is good or bad for society at large but on the inside you want to be doing something that's so differentiated so unique that you have some some real pricing power you know and so the example I always give is if you uh if you want to compete like I like crazy you should just open a restaurant in Manhattan you know you will get you will get Darwinian competition you'll get nature Baird read and tooth and claw you're not gonna make any money doing it for the most part it's an incredibly bad idea and then the sort of the poster the poster child on the on the other side in my book for for a great monopoly business is something like Google where they've had no serious competition in search since about 2002 and it's sort of just printing money money like crazy and yet this this very basic idea is I think incredibly poorly understood and there's sort of a there's so I think both the intellectual reason and then it's more of a psychological reason I want to say little bit about both of those the the intellectual reason is that the people um who are inside these monopoly businesses or if you know inside a super competitive business often understate either how competitive or ha monopolies like it is so if you were to leave my talk tonight and say you know I'm I'm gonna prove Peter wrong I'm not gonna listen anything he said I'm gonna go ahead and open that restaurant in Manhattan you'd very quickly run into you know a lot of ask investors to give you some money and they say well it's kind of a bad business you know 90% of all restaurants go out of business after two years or three years or something like that I don't really want to invest and then and then you'd come up with some fictional narrative on how it is an unusually unique restaurant and so this will be the only you know British Nepalese fusion cuisine within within a ten-block radius of downtown lower Manhattan or something like that so you come up with a fictional II narrow account of the market and then I'm and then conversely if you were the CEO of a company like like Google you would not go around giving speech you'd be well advised not to go around giving speeches saying something like we have an even greater monopoly than Microsoft ever had in the 1990s our profits are much greater than theirs we have this incredible lock on the search market and what you will say instead are things like you would say you won't even talk to and talk about the search as the business there and it's only makes only about 98 percent of the revenues after all and so what they the way the way you talk about instead is we're in this vast space called technology and and we have incredible competition with you know Android versus the Apple iPhone and there's competition with the social networking sites and with Amazon and we're building a self-driving car and so we're gonna be competing with all the car companies and this is there's ferocious competition everywhere and it's sort of like the scene in Star Wars it's not the monopoly the government's looking for so you can move along move along it's not what you're looking for and so and so there is this incredible distortion where if the people have monopolies pretend not to have them and the people who are in crazy competition pretend not to be in that grade of competition the apparent difference is much smaller than the real difference and I think this this distortion always exists I I've done you know I've been investing in a lot of companies when when you see people come out of these incredibly powerful monopoly businesses they typically don't understand what actually drives the business and so when you and so you know my thesis is that what I've just articulated is perhaps understood by the top five or ten people at Google and then if you talk to the other 30,000 or so and ask them you know why does this business really work it would be well you know um it's the first company that ever really appreciated really smart people and rewarded them properly it's the free sushi it's it's it's the bean bags in the office the lava lamps this is what's really made this company successful and then when when people try to take those lessons and apply them in businesses they they start it tends to go extraordinarily poorly and there's there's there's an extremely uh there's a sort of a shockingly bad track record of people coming out of Microsoft and Google starting companies I I think part of it is that they've been almost intentionally misled by their management's in terms of what really made those businesses work and what and and so then when they try to emulate the fictional account of the distorted fictional account they were told in practice doesn't doesn't quite works I think I think this idea is is is very poorly understood in all these practical contexts but I think there's also I think there's also a psychological reason that a call to psychological reason we don't quite understand this monopoly idea and I think we are in some ways a very powerfully attracted to competition and in all these sorts of ways and the you know the the autobiographical version is that I always recount is that you know I grew up in I grew up in Northern California it was it was sort of everything sort of super tracked competitively tracked and in one way after another remember my eighth grade junior highschool yearbook you know when my friends I wrote in I know you're gonna go to Stanford in four years time and four years later I got into Stanford University and then I got into Stanford Law School and you sort of win one competition after another if you win a competition you're told okay now you're at the next level you get to compete again try to win the next one and then you know I sort of ended up after law school ended up at at a one of the top law firms here in Manhattan it was actually just a few blocks from this from this building and it was one of these really strange places where from the outside everybody wanted to get in on the inside everybody wanted to get out when I am you know when I left after seven months and three days one of the one of the one of the people one of the people down the hall from he said you know I I had no idea it was possible to escape from Alcatraz and and of course you know on one level all you had to actually do was go out the front door and not come back but but psychologically this was actually a really a strangely difficult thing to do because so much of on the sense of identity of our identity ends up getting wrapped up in the competition's we win and we identify ourselves by the competition's we've won and what's what's what I think is good about competition is you do actually get better at the things you are competing on so if you're competing to get a really high SAT test score and you spend a lot of time trying to get a good SAT test score you will get better at that or if you're on some athletic context where you're competing like crazy you will get better at that activity but I think it always comes at this very high price of losing on losing sight of the broader context and often forgetting whether things are you know are whether things are really meaningful important valuable and and just beating the people around you doesn't necessarily make something great there's in one of these one of the sort of ideas in Silicon Valley all these sort of buzzwords I'm a little bit skeptical but one of them is always that you want to be in a business that's disruptive and and I think um and I think that while disruption is something big companies rightly should should worry about it's uh it's not the sort of thing you should be aiming at when you start a business you know it says your goal is not to compete with and destroy large existing companies your goal should be to create a valuable company in its own right and so the you know the one of my friends I started an apps during the late nights which the music the music site so the name sort of echoed disruptions you know you nap some music you not the child you're a kidnapper and and you know so disruptive people sort of look for trouble they typically find it they get noticed but it and it did actually disrupt the music industry in a lot of ways but it did not at all work as a business and so I think I think when we when we're too focused on competition where we're end up being very focused on destroying the other side much less focused on creating value one on our own now this is the sort of monopoly perspective of business gives me a lot of different perspectives on the kinds of things to stress or or not stress I'll just mention one or two others one is that you know perhaps the the standard on the standard business school advice is always that if you're starting a business you want to go after big markets the monopoly perspective says you want to go after a big market share which if you're starting often means that you want to go after a very small market and because you want to get that's how you get to a big market share quickly if you go after a market that's too big it's a it's extremely hard to ever get to something that's that's really successful Facebook started at at Harvard the initial market was 10,000 or so students you went from 0 to 60 percent market share in 10 days that was an incredibly promising start if you had pitched this as a business plan it would have been just about unfunded people have said that's a ridiculous idea it's way too small a market you can never actually do this and so on and then and then sort of conversely if you look at the cleantech phenomenon in Silicon Valley it was a sort of bit of a bubble in clean tech in the years 2005 to 2008 almost all the businesses started as being pitched in terms of very large markets and so all pitch decks are you know the first 1 or 2 pages would be something like we're in this vast market called energy it's measured in the hundreds of billions or trillions of dollars and if we get a fraction of a fraction of a fraction of the pie we'll still have a very big business but the challenges that it actually would be would be a very competitive business and you know if you're a thin-film solar panel you have to beat nine other thin-film solar panel companies then you have to build the 90 other solar panel companies with some other technology then it turned out there was you know wind power there was fracking that came out of right field there was a Chinese copycat manufacturing that came out of left field and if you're sort of a small minnow in a vast ocean this is just never the sort of a place that you want to be one of the other one of the other perspectives other questions I always get asked in these contexts is what are some trends that I believe happening that are happening in technology you know what what do I see happening the next five years ten years it's a I'm always very uncomfortable answering this sort of a question because I'm not a prophet I can't you know for tell you what's gonna happen I can give you sort of incredibly banal answers like and maybe there'll be more people using smartphones in five years this this doesn't it doesn't really um tell you anything at all but but if there is sort of a general perspective I've come to it is that every trend that is articulated or described just about every trend is overrated so um you know in Silicon Valley today there'd be a trend around a lot of people trying to do things with educational software healthcare IT software these things are probably somewhat overrated SAS enterprise software you know all else being quill very overrated if you hear the words Big Data cloud computing you need to think fraud and run away as fast as you possibly can and and the reason is that the the buzzwords are there a tell like in poker that the person is bluffing and that the businesses is undifferentiated and so if you sort of imagine a pitch that's a concatenation of a series of buzzwords like we're building a mobile platform for SAS businesses to bring big data to the cloud that's what we're doing you know my instinctive reaction is to is to just not even pay any more attention to it because when you're in sort of the buzzwords mean that you're in this category where there are many other people in a virtually indistinguishable category and so it's just telling you that you're already in this place of insane undifferentiated competition where where things are probably going to be very challenging in all sorts of ways and I think that it's often actually a challenge in evaluating these businesses because a lot of the you know it's we often the really good businesses we often don't even have the language for the words to to precisely describe what they're doing and so there's often a mistake gets made where they actually get described in terms of existing categories even though that's somewhat mistaken so google would have been described as a search engine in the late 90s even though I would argue it was it was actually machine powered search and was very different from human-powered search or a Facebook would be described as a social networking site was certainly not not the first one my friend Reid Hoffman and him starting LinkedIn had started a site called social net in 1997 seven years before Facebook's he already figured out social networking in the name of the company seven years before Facebook and they had all sorts of theories about how to do it and you know you had these up you to have these avatars in cyberspace and some people would be fictional da virtual dogs and virtual cats and yet have rules for how the virtual dogs and virtual cats interacted and people weren't really interested in that and what what actually worked about with what made Facebook both so powerful and perhaps also so you know controversial in some ways was that it was the first company to in some sense crack real identity and so people are not not interested in networking in the abstract with virtual cats and dogs people were interested in real identity and but that category did not exist it's in some ways it's still not the way people described even today eleven years later because we're always so so inclined to simply default to these existing categories of one sort or another you know if I had to give a somewhat deeper version of this of this of this question of why we are so psychologically attracted to competition I think that you know I think the I think the word already in the time of Shakespeare the word eight meant both primate and to imitate and everything was aristotle who said that man differs from the other animals and a greater aptitude for imitation so when you're a kid you learn language by copying your parents it's how culture gets transmitted is through imitation but then there also are many cases where runaway imitation goes very badly wrong this is how we get you know crazed mob behavior it's how we get runaway market bubbles of one sort or another and and so there is all it's always quite hard not to imitate and so the one of the flip answers I have this question people ask me it will tell us something you believe to be sure that other people don't agree with you so the super flip answer is well I think most people think it's an easy question it's actually a hard question people think it's an easy question because they think creativity or non imitative behavior is easy but it's actually super hard there's this you know there's this very strange phenomenon in Silicon Valley where so many of the very successful companies seem to have been started by people with a mild form of Asperger's or something like this and and I think we need to always turn this fact around into a critique of our society and the question we need to ask is why are those of us who are not suffering from Asperger's at such a disadvantage where we are in effect in effect all of our interesting original creative ideas would talk out of them before they're even fully formed before and we sort of pick up on all these very subtle social cues we sort of sense oh that's a little bit too weird that's a little bit too strange better not go there I think I'm better just it's probably safer just to go back and open that restaurant yeah I know it's I know it's competitive but it can't be that bad and it's much more comfortable they've done these on you sort think of the anti Asperger's crowd that people are sort of not sure what the word precise word is for like a the anti Asperger group and it's probably like MBA students going to business school or sort of reasonably a good description so they're people who tend to be extremely well socialized they have the perhaps knows no very great convictions of their own and we sort of do these experiments we put them in a hothouse environment for two years to sort of talk to one another and try to figure out what to do even though none of them have any ideas at all they've done these they've done these very interesting Studies at Harvard Business School where they found that the largest cohort of people tends to always go into the wrong thing so it's sort of like you know 1989 the old one to work for Mike Milken just as the junk bond market was about to blow up they were never of that interested in tech except for 99 2000 when the HBS graduate sort of descended on Silicon Valley on mass and sort of in a sense timed the peak of the dot-com bubble perfectly know very just in real estate things like that oh five OH six oh seven and so I think this is a very deep problem and well it's sort of easy to make fun of business school students you know people in general I think I think this is a this is an extremely broad deep sort of a challenge that we have in in all sorts of different contexts let me um let me uh let me sort of end by going one other somewhat broader direction of something that I believe to be true that most people do not agree with me and we often describe ourselves as living in a scientific and technological age and I well I think that you know the Western world is still at least for the time being in a financial or capitalist age I think we are very far from a scientific or technological age I think we live in a society that is dominated by by sort of hostility or dislike of all things scientific and technological the easy way to sort of culturally see that this is true is you can just look at on the holly almost all Hollywood science fiction films that get made basically portray technology as destructive dystopian it kills people it's going to destroy the world and the technological future is some some set of choices between you know the the Terminator movies with robots killing people or its maybe avatar some sort of dystopian environmental context it is Elysium it is the gravity film I saw a year or two ago where you know you sort of would never want to go into outer space you're really happy to be back on some muddy tropical island somewhere and this is sort of this is sort of I think the the very the very dominant ethos in our society and I I always like to contrast technology with with globalization where I think of technology as I think global and I will often use these terms almost interchangeably but I think of globalization as it was draw it on me on an x-axis a sort of horizontal extensive progress it's copying things that work it's going from 1 to M I think of technology as vertical intensive progress drawing on y-axis going from from 0 to 1 and there very different kinds of activities and while I think on that in a in a 21st century where the world doesn't come to an end we hopefully will have both good globalization and good technology I think if we were honest about it we'd have to acknowledge that we're living in a place where the balance is skewed incredibly far towards the globalization end of the debate and extremely little towards the the technological side and you know the the sort of the the the geopolitical way you can describe this is that you know we've had eras of globalization years of technological progress the 19th century was a period when you had both then after 1914 World War one starts globalization goes into reverse the world gets more divided there's less trade you know 1949 China becomes communist yes or 1/4 humanity effectively secedes from the rest but technological progress continues at a very rapid clip and then I'd say since maybe if you want to date maybe 1971 the Year Kissinger goes to China is the year globalization starts again at a ferocious pace and that's the world we've been living in for the last 40-plus years but it also is an era in which I think on there's been sort of a lot less technological progress than advertised I think we've had you know some progress in the world of computers software internet the world of bits we've had much less in the world of atoms in the last 40 years and and this is um this you can sort of you know easily see this in most careers that involved engineering were terrible careers to go into in the last 40 years when you know when I was just in undergraduate in the late 80s you know it was you know there was mechanical engineering Industrial Engineering Chemical Engineering biotech engineering these all turn out to be very bad fields you know and I'm not even saying anything about aero-astro engineering nuclear engineering you I mean your parents would try to really talk you out of that if you if you're if you're trying to do this and and these things have generally not been working for for a long time and there's you know this one exception with software and there all sorts of different reasons for the you know if you whenever you ask the question why do we live in a time when technological progress has stalled like this I always think it's a hard question to answer and the answers are probably very over determined but certainly in certainly one one simple political cut is that we live in a world in which which bits have been unregulated atoms have been generally regulated and over time it's resulted in a in a context where we've had this narrow cone of progress around computers and software but much less in a lot of other fields that's that then has led to this sort of general sense of stagnation and if you if you want to describe it in in a geopolitical terms it's it's sort of in the late 1960s you would have divided the world into the first world and the third world and this was sort of the first world was the part that was rapidly progressing the third world was the part that sort of permanently stuck there's a you know a book I always like to cite these sort of past books about the future I think are often very interesting to look at because they tell you what was the perspective people the time had on the future there's a book in 1967 written by Servan Shriver the French writer called the American challenge that sort of said yeah the United States is technologically accelerating civilization and if we extrapolate that a few decades into the future it's gonna basically be leaving the rest of the world in the dust the difference between Europe and the US will grow from a difference of degree into a difference of kind and as a result people in the US will have to compete much less because there'll be so much further ahead and you know by by the year 2000 the average person in the US will be working seven hours a day four days a week have thirteen weeks a year of paid vacation time and you know well it's easy for us to sort of dismiss and say well that's ridiculous he was a French person you know we I do think I do think it's it's not an entirely irrational prediction of what would happen if you had if you had seen all this sort of technological progress that was embedded in this first world third world lots of technology not much convergence but instead what's happened has been incredible convergence through globalization which of course has made our world more flat more intensely competitive and so today we don't talk about first world and third world we talk about the developed in the developing world the developing world is that part that's copying the developed world it's the epitome of this is China and you have a 20-year plan in China it's very straightforward it's it's a mechanical it's copying things that work maybe you can skip a few steps you can go straight to don't need you don't need to go with landlines and go straight to wireless connectivity you skip a few steps but it's a it's sort of a very straightforward development trajectory but when we say that we're living in the developed world we are implicitly saying it's not just serve a globalization Pro globalization convergence dichotomy couldn't urgence it's also an anti technological statement we're sort of saying that we're living in that part of the world where we're nothing new is going to happen things are developed done finished the younger generation should resign itself to reduced expectations for the future and I think this is a conception you know that we must very powerfully resist and and that's why I think you know we have to we have to sort of find a way back to the future and we have to realize that we've not been sort of an enchanted forest we've been a little bit more of a desert the last forty years the first step to get out of the desert is to realize that we've been in a time of relative stagnation but I think the question of how do we go about developing our so-called developed world will remain a very important one for for many years to come thank you very much I'm not sure I'd recommend people going to show business in general I think the numbers are there's something like 20,000 people a year who moved to Los Angeles to become movie stars and by sort of a generous count maybe twenty a year make it and so so you you and it's of course this hyper competitive thing where everyone tries to be differentiated and but everyone plays the same games to be different from everybody else and then they paradoxically become more and more alike as they try to be more and more different and and so it's there's something about that that's that's incredibly incredibly tough you know when I when I was a remember when I was a freshman in college we had a my econ one class that was sort of the description of a world of perfect competition and you know nobody made any money and so somebody asked professor well then how do businesses work why do they actually start and and you know so it's a little bit more complicating this but but to a first cut the the successful businesses you don't want to find yourself in that sort of in that sort of really intense competition and there's you know there's a there's a perspective you can have on this from the system as a whole or from a more more individual perspective and so from the system as a whole we can say that you know if we're in a world where there is no innovation if we were living in a static world then then probably you would not want to have any monopolies because in a static world a monopoly becomes like a troll collecting a toll at a bridge and bad monopolies you know if you sorta say what's a good monopoly versus a bad monopoly a bad monopoly is something that sort of in storm note when you see it but something weird sort of static or fixed by the cable companies at this point sort of veering towards being bad monopolies you know the post office a lot of governmental institutions have this quality of being bad monopolies because there's sort of they have the restricting supply in a fundamentally static world but in a dynamic world where you invent new things if you you know we the invention doesn't create scarcity so when Apple created the first smartphone that worked this was not creating artificial scarcity because it didn't act there was no smartphone that worked before that and and so so um so I think monopoly as I describe them are good in a dynamic world that would be bad in a static world and and and then and then from the point of view our society as a whole yes the sort of perfect competition would be the right answer if we were living in a totally static society you know I think that itself would be a very bad thing because that would be a society that wasn't was not progressing in any sense and that ultimately I think would run in some very serious problems of one sort or another and so it's reflecting our laws with antitrust laws to to stop bad monopolies on the other hand we have copyright patent intellectual property laws to encourage people to invent new things and I think they're sort of analogues like that that you want to be doing and in any successful undertaking but certainly if you sort of think that's on a personal level there is sort of a way in which there are there are lessons that I think are probably competing for grades in high school is is a reasonably sane thing to do I think probably if you weren't competing for grades you probably would be competing on all sorts of other metrics that would be much worse so so if you have to compete in high school competing for grades it's probably a pretty pretty healthy kind of a thing to be doing but there is there is some point at which this is probably not the best way to think of the rest of your life because everyone can play can learn the same games the same tracks and and if if you think of it as just competing for another line item on that resume that's going to be very tough to succeed I want to I want to come back to this issue of the of the fear that comes in from I want to go to the technology versus globalization narrative because that that's another jarring juxtaposition in in 0 to 1 and we're here in the same neighborhood and some of you young alums will remember when Occupy Wall Street first got underway here at Zuccotti Park just a couple of blocks away from from us here and that very much was a a protest movement that was rooted in this perception that technology and globalization are precisely the same thing and one of the galvanizing moments that I remember I wasn't here at the time was when the apoplectic Slovenian philosopher Slava got up on a picnic table and said to the crowd you know the problem with with this group is that you have this anti technology you know fear and he talked about the disaster movies that Armageddon movies and and we can all see them I mean this past summer the big movies were ex machina and age of Ultron or a continuation of this and and his critique was we can't think of the problem for you is you're protesting global capitalism but you can't think of any alternative to global global worldwide competition and capitalism what you're saying the alternative is is actual technological process and are we hearing you am i hearing you kind of generalize a little bit from this um certainly um in an alternative to the present is a future that looks different from the present and so and so and and one of the things that's that's become strangely dominant our time is that the idea of the future has collapsed and I think there's a it's a Christian version of this there's a technological scientific version but the idea of the future as a time in a place that looks very different from from the present and that that can be a very powerful motivator for for changing things for organizing things and in in ways and and for some reason when we think of the future today we no longer think of the future in definite forms I spend a lot of time I booked a squat on contrasting this an indefinite from a definite future and it's sort of a long digression but but I think there is something about our ideas of the future used to be much more definite early modernity had even in sort of most atheistic form was had this very definite idea of the future and at this point it somehow becomes statistical random probabilistic and so the future is like it's like white noise on a TV set you can't you can only maybe you can describe the probabilities you can say nothing in particular and then it does become you know very hard to to coordinate things and well and while politically I'm not you know on the Left I do think there is something very different say between the left all our Karl Marx and what passes for the left today and so if you were you know um if you you have the Conservatives off describe Obama's for the communists it's very left-wing person but I think if you said what would Mark's angles or Lenin think of something like a bomb on what the left today represents they would be utterly appalled you know Vladimir Lenin would say where is your five-year plan you know socialism requires a plan socialism with a random throwing the money around doesn't work angles would have said you know dialectical materialism talks about a world of never-ending progress and he would be very dubious about a politician who substituted the word change for the word progress he would ask does not the substitution the word change for the word progress represents some sort of objective decline we're just it's it's sort of there's there's no directionality to this anymore and and Marx there was you know there were all these things where he was sort of haunted by the specter that the future would collapse was after all was the idea of the workers paradise they would organize and motivate people and that the alternative to it would sort of was sort of this epicurean hedonism where epicurean physics that the world is a domestic materialist but random at the end of the day the atoms move at random you can't know your future therefore you should eat drink and be merry and not worry about the future and you should and then this would be very demotivating to the revolutionaries because you know why should you work on the revolution instead of just having a fun time in some ways the epicurean strain has dominated the Marxist strain and I think but but that's that's like a left-wing version and then I think there are I think there are sort of all sorts of you know all sorts of different versions on this thing you know there's a history of the United States I think one could tell where nineteenth and twentieth century America you had all these sort of engineer schemer type people these people with these complicated plans they tried to implement something a plan to build a Transcontinental Railroad or Panama Canal yet all these sort of very large projects and and at this point that's just seen as as ridiculous and utterly incoherent in New York City there's this very interesting history of New York where who's his character guy Robert Moses who was this uh you know was this sort of all these he's sort of on and from the 1930 to 1950 was probably the most powerful person in the city or state of New York I think he held seventeen simultaneous government positions bhagavata mengapa started as the parking commissioner sort of show up with his bulldozer they bulldoze various neighborhoods and build highways and then as you built more highways you got more traffic and you had to build those more neighborhoods and sort of this this crazy cycle dimension sort of rebuild much of the state and then in the early 1960s he was sort of proposing building a highway from Brooklyn to New Jersey through southern Manhattan there were no sort of sort of a tear down everything in Greenwich Village build skyscrapers over the highway at that point people started protesting in Greenwich Village he got removed and while that might have been a bad idea for the future that was the last time people build anything in New York at that point everything stopped and so and so it is I think I think I think it is a very strange it is very strange that we're living in a society where there is no idea of the future and and it makes it creates big problems in politics and then and then on even on the business side and even something as as future orientated as Silicon Valley people are actually deeply uncomfortable about trying to talk about the future in concrete terms and then building towards it towards making that happen that that was fantastic thank you okay I'm going to we're we're coming into the home stretch here Peter and I think I'm going to I think we're gonna go out on this one which is a very business oriented question which there will be a sigh of relief for those that feel like wow this guy very esoteric too but this question is is from one of our business students about how you have developed this keen sense of what companies are good to invest in versus you know maybe ones that are not good to invest in and you know how do you decide what goes into your Nexus of deciding what's worthy of investing in versus what you think is a failure well um let's see so there's so again I don't want to don't I'm always uncomfortable reducing any of this stuff to formulas because in the formulas tend to get misleading but if I had to come up with a formula for startups it's it's the three parts would be people technology and business strategy we spend a lot of time tonight talking about the business strategy part which is that you have that you're operating in a context where there's an account of what you're doing that's very unique the the technology product question is does it actually work what you're trying to build so you could tell a story about how you're building a great monopoly but it might not actually work so there's a sort of technology piece and then there's also there's also a people piece that's a extremely critical especially in in a lot of these early businesses where you know it's it's and where the most you know one of the most common modes of failure is internal you know long before you get destroyed externally it gets destroyed internally where the relationships break down people don't get along and so you try to make some judgment calls as to whether the team of people are gonna work well together I like I often ask like asking a prehistory question where you know if you two co-founders when did you meet when did you get started you know if sort of a bad answer is something like we met a week ago at a business networking function we both we both wanted to start companies one of my friends actually did start a company just like that and you know it turned out the two people didn't get along and you have sort of a lot of ups and downs and these things and that tends to be very tricky sort of a much better answer is something like you know we've been friends for a long time one of us more focused on the tech side one is more on the business side and that's sort of where that's sort of where were these things kind of work it's um what's very different about startups from certain professional careers or a cadet careers academic careers professional careers tend to be purely individualistic it's like you just have to get good grades you know if you have to be just a good banker a good lawyer and it's sort of like you as an individual something against the whole world or it's just you your performance is measured on a purely individual basis and you know most companies are involved more than one person and so the internal dynamics end up being very critical you know it's it's we and because they involve doing things that are more more than one person can do it you know we can't you can't do everything in a start-up so you have to get people to to work together and so you know we can sort of you can sort of imagine you can imagine a world in which everybody is an independent contractor you could imagine a world on the other end of the spectrum where everybody works for the government these would be like to two extremes and the and there's sort of are these very tricky coordination problems maybe what was a contractor if everyone worked for the government I suspect you'd run to horrific political constraints even big corporations often resemble the government and tend to be hyper political and one of the reasons you start new companies is because you're in a place which is less political and where you can actually do new things in theory you know nobody should ever start a company in theory it should all be done by big existing companies they have more money they have more time they have a lot of talented people they can take more risks in practice you know things don't happen in big companies because the politics destroy them when I started PayPal one of the questions was always why can't a big bank do this and you know there were a lot of the answer but you couldn't quite give at the time of the answer was really on the politics were horrific and if you had a new idea people would think you they sort of figure out ways to maneuver against you and it was very hard to actually do anything new in most big existing institutions that's why you need to start new companies they typically require more than one person that require a small number of people and so the dynamics among those people end up being incredibly important just as a quick follow-up on that could you just speak a little bit by a graphically on in zero to one you talk about your original team at PayPal and how community oriented it was versus the law firm that you served in here a couple blocks from here where it was very much every you know everyone in their Lane doing their own thing how important is community to the the success of so I would again I I'm always not sure it's at frame his community versus individual I would say the the professional law firm context was one of ferocious interchangeability I started with eighty associates every year everybody was fungible you could be interchanged it was sort of this crazed eight year long competition become partner and then didn't change much after that either and where's a you know a successful startup there's some sort of complementarity people are good at different things and it's more like a it's more like a team that's I think sort of an athletic team context the closest analog even though you know the rules aren't quite set and so it's a little bit you're not quite sure what the game is that you're playing it's just it's a lot more complicated in athletics but that's the those are the kinds of dynamics that that you want to want to have work one have work internally I think um you know I think it's uh they always are yeah it's it's very hard it's extremely hard to generalize from individual cases so you know i i've there's sort of all sorts of talks i could give where we just described what we did at paypal and it's not clear you know you'd you'd learn that much from it because you know there was sort of a moment in 1999 when you could combine email with money it was not possible in 1985 when almost nobody used email it would not be possible in 2015 because it's already been done and so it'd be super hard to get this sort of thing started and and so there are there all sorts of things like that i could describe that would be would be would be a strangely unhelpful i think i think one of the one of the reasons a lot of the speculate now i think one of the reasons a lot of people came out of paypal ended up being quite successful was that the the the general lesson that was within the PayPal business was it was it was not a business that worked automatically there was sort of a lot of tricky challenges there's some businesses do work almost automatically from day one I think this was actually two of Google you know Microsoft was very very fast to getting to success and so from inside that context you learned the lesson that it's hard to build a great business and that's probably a fairly good mindset to have when you set out to start a new business and not all businesses are like that but that's probably the good mindset to have on that happy note an inspirational note we're going to take a pause and have two questions as we end first of all you're ready to sign some books sure out front and are you ready to come back to the Kings College in the future and sure we would love to have you back you

Channel: The King's College

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Keywords: Peter Theil, The King's College, TKC

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Length: 52min 2sec (3122 seconds)

Published: Mon Oct 16 2017