The 43-year-old co-founder of PayPal and billionaire backer of Facebook, Peter Thiel, dons many hats – he is a venture capitalist, entrepreneur, philanthropist, visionary and advocate of free will. In this riveting interview with BBC’s Mike Williams, he talks about big ideas behind his two blockbuster successes, innovation, the need to focus on futuristic technologies rather than politics and conquering death. We bring you interesting excerpts of the 26-minute podcast, which you can listen to .
On the creation of online payment company PayPal which he co-founded and the ideological foundation behind the business idea, Thiel said, “I think all successful companies have some sense of transcendence and purpose beyond just making money. Google’s model was to organise the
world’s information. Facebook is to help people connect with one another and share. When you are starting a company it cannot be just about making money.”
Paypal burnt through $180 million between 1999 and 2001. “Paypal was launched in December 1998, the product in October 1999 and grew very quickly but was a massive money losing operation for quite a while. It burnt through about $180 million breaking even in September 2001, so clearly a lot of people were motivated by trying to create a new kind of money.” Paypal was sold to Ebay for $1.5 billion in October 2002 and it’s up to 90 million active users and is probably the third biggest payment company in the world after VISA and Mastercard. Thiel’s share of the exit was reportedly $55 million; he was 35 years old at that time.
Some of that money went into Facebook with which he is still involved. He describes it as, “At a simplistic level, you could say Facebook is creating an advanced phone directory and email and photo sharing site for everybody in the world and I think it is one of the great internet and media companies in the last decade.” He uses Facebook “some”.
He shared a flashback on the idea: “One of my friends from my undergraduate days at Stanford Reid Hoffman had been thinking about social networking for probably a decade. He ended up starting Linkedin, a business networking site, in 2003. So Reid and I had been looking at it for sometime. As a libertarian, I had some idealogical skepticism about it. Still I thought it should all be about individuals and Reids’ argument was it’s all about society and people exist in society not as individuals.”
Economics & The Bet Against The Recovery
Thiel continues to run a hedge fund and a VC fund that are focused on future technologies. He believes that questions about the future are very important. “They were critical in the 90s and early 2000s with the technology boom and bust cycle, which on the one hand was a micro story about technologies but, on the other hand, a macro story on economics. I think both these things are very important to think about. With respect to the current situation we have in the world, we
have this question whether it is going to be a solid, robust recovery in the developed countries or is it not going to happen,” he said.
The hedge fund lost a lot of money betting against America’s economic recovery, a reported $8 billion a year. Thiel said, “We were more pessimistic than we should have been in 2009 at points we were more optimistic than we should’ve been. I think it was’nt simply against the recovery at
all. What is still a very open question is how much of a recovery there will be over a longer time frame. And so when people talk about economics one of the basic mistakes they make is they are always talking about 6-12 months, what happens in a very short time.
The real question is 20 years – will people be better off than they are today in 20 years – not just in China or India or emerging markets which is a very straightforward story. They will be better off as long as they just copy the West but, in the West, the question whether people will be better off is not being asked. And that’s where the macroeconomic question in my mind intersects back with the micro technology question because we need to have technological innovation without that people will not be better off. In my judgment, there’s not enough innovation going on which is why I am mildly pessimistic about where the West is today.”
Education Versus Innovation
The plans to give young entrepreneurs $100,000 in cash to drop out of school and start a business. He explains why he does not believe education is helping. “I think education has become a bigger challenge for technology than it was in the past. At this point, a four year college in the US costs people a quarter of a million dollars…the amount of debt students are taking on stops them from doing anything more rewarding but less remunerative – that includes
something entrepreneurial, something that’s non-profit, it can even include things that are just interesting. Education has paradoxically reached a point where it is in deep tension with tech innovation,” Thiel said.
Collapse of Science Fiction Literature
Thiel says people no longer seem to have a sense of how our civilisation will be different 20 years from now and the collapse of science fiction as a literary genre is an indicator of this mentality.
“In the 50s and 60s, there was a great deal of literature about the future and about what the world will be like and the future history of the world – that has really dissipated. Most of the stories about the future these days in a literary context are stories about technology that does’nt work or
works and does bad things – like the Terminator movies, or the various dystopian futuristic movies. The only positive ones are the old Star Trek rerun episodes – that’s like the Utopian future of the 1960s,” he said.
Tech Story Not Going Well
He agrees that technology delivered less than it promised. “There’s something about the tech story that’s not being going as well as people think. It has done well – there’s computers and the Internet. Everything else has been badly solved,” he said. People believed hovercars, personal jetpacks and holidays in space were awaiting them in the future in the 1960s but in the 1970s, issues such as the oil shocks or the lack of energy changed things. He is funding futuristic technologies – artifical intelligence, research into expanding the lifespan of humans, private space flight – technologies he views as intensive, as opposed to extensive.
“Extensive is where you take things that are the best and you extend them to other places such as extending cures for diseases to emerging market countries. The other is to take the things that are best and make them better – which is intensive. I don’t have the categorical view on what the precise balance between intensive and extensive should be – I think we need some of both. Almost all the existing stuff being done is extensive – you can’t have progress if it’s a 100% extensive,” he said.
Another project he has is The Seasteading Institute which is setting up ocean-based communities. “The Seasteading project, when we started, Patrick Friedman, the grandson of Milton Friedman got involved in it. I think the fundamental right is that people should have a right to emigrate – whatever country you are in, you should be free to leave. If people have the freedom to leave where they live, that probably creates a lot of incentives against bad governments. East Germany collapsed when people finally figured out how to get out via taking vacations in Hungary and then fleeing from there to the west. If people have the freedom to leave, that would be the single biggest driver for reform, I can imagine.
He is also funding research on life extension, an issue he says people “don’t even want to think about”. “Seeing death as a problem that needs to be conquered and that can be conquered is very contrarian because our entire culture is one where people have become complacent about it and they talk themselves into saying “this has to happen anyway” and avoid thinking about it. It is something we should start thinking about and instead of rationalising it or avoiding it, we should fight it,” he said.
He warns that a world in which there’s no technological progress will result in a Malthusian catastrophe, with population growth and increasing demands for a limited supply of goods. And, that’s not the kind of future that Thiel would like to have.