Tariffs, DOGE & Fixing America: Peter Thiel's Skeptic Solutions

I'm into winning and into ideas. I like both. This is where you can do new things. This is where you can build new companies. How you decide what to focus on, what to work on in our society. People tend to over-index on these sociological factors, what's popular. I would tell people to go into the place where I quibble with the name of your show is that at the extreme, optimism and pessimism are the same thing. When we started Palantir, the idea of trying to do a... military-related software startup. People thought we were insane. Yeah. We had to sue the army. All our consultants quit. Can't sue your customer. If Austin can be fixed, you'll be the one to fix it. If it can't be fixed, I'll be the one to...

I've told you so. This is Peter trolling me.

Go on, Dale. Yeah. Go on, Dale.

Peter Thiel is truly one of the great minds of Western civilization. He's been an important mentor to me, someone I've been lucky to get to learn from and partner with in business since I first came into the business world 20 years ago. He's constantly reinventing himself. He's constantly exploring and looking at the world from totally new angles. He's been successful again and again and again in a variety of different areas and it's always a delight to get to talk to Peter, to get to hear about what he's thinking about, what he's pondering, and to hear what's next for our civilization. You get to hear some unique views he always has. He always has an orthogonal take on things, and he's always working on the cutting edge of what's going to happen next in the world.

Let's hear from Peter Thiel. Welcome to American Optimist. Really excited to have my old friend and mentor and American legend, Peter Thiel, here with us today. Thanks for having me on the show. Yeah. Peter, I got to describe you as founder of PayPal and Palantir and Founders Fund. How else would you describe yourself? Founder, investor.

I don't know. I like figuring things out where the world's going. I'm into winning and into ideas. I like both, winning and ideas.

I always think of you as kind of an applied philosopher, but you don't like the term philosopher.

It sounds really lame, actually.

Well, you're in Austin for a special lecture series at UATX. Let's start there just briefly. What's been your impression of our new university and the students? It is surprisingly strong.

But Joe, I've told you before that if you don't pull off University of Austin, if you're not able to create a successful university at this time when they're all committing suicide, engaged in self-destruct, it's like an absolutely hopeless thing to do. But I think the caliber of the people is really high. And I've done a decent amount of lecturing, speaking at different universities in the last few years. And it's just striking how it's very unclear what people are doing. It was a big achievement in a way for students to get into elite colleges like Yale or Harvard or Stanford, but they're completely lost once they're there. High school still has an organizing function for it where the point of high school is to get into college.

And then college, elite universities, I think the organizing function 50 plus years ago was you were supposed to get into the elite in our society. And that has completely broken down. There was an Allan Bloom speech at Harvard in the 1980s where he started with this obnoxious frame as my fellow elitists because everyone at Harvard pretended to be egalitarian, but they were secretly elitist. And I think you couldn't give that speech at Harvard today because there's nothing elite about it, nothing about forming an elite. You can't even pretend it behind closed doors or anything like that. And so for the next generation of people going into these places, they're just really lost.

This is unclear what to do. It's interesting. A lot of our elite institutions are broken down, or they're not. Yeah, but they're not elite institutions. They're not anymore. A lot of the institutions that run our society are kind of broken, so they're not elite. And of course, the institutions they feed into are probably also much less elite.

So, I don't know, 1950s and '60s, the CIA was elite, and people at Harvard and Yale would get in there. At this point, probably—I don't know, they probably didn't have too many illegal drugs to get into the CIA. You probably wouldn't want to get into the CIA. It's not elite anymore. Yeah. But there are no real elite institutions it tracks into.

There were all these things around it that were the best things in our society that aren't anymore. So, stepping back a second, then, this is the question. We have a lot of builders and investors in our audience, and we have these kids at these top colleges. Some of them are pretty smart. Assume you're talking to a smart, ambitious person. How do you decide what to focus on, what to work on in our society? What should their goals be at this point?

I'm always so bad at the sort of how-to-help advice, but I would say that for the last 25, 30 years, tech—meaning broadly computer science, software, internet, mobile internet, now crypto and AI in the last few years—this has been this one vector of progress in our society. This is where you can do new things; this is where you can build new companies. We can debate whether it's big enough to take our civilization to a new level or whether it's just big enough to build companies that are worth billions or hundreds of billions or trillions of dollars. But it's been sort of the one place you can meaningfully do things. And then almost everything else is somehow stale, sclerotic. It's extremely Malthusian in practice.

I studied philosophy as an undergraduate and then went to law school, which I didn't realize, but when you major in philosophy as a sophomore, you're actually deciding to go to law school. And then you sort of get narrowed. In theory, law school gets advertised as this broad form of graduate education, but you just get narrowed into being a corporate lawyer. And it's probably—of law, banking, medicine, consulting, those are like the four big tracks people had at Stanford. Probably in the late '80s when I was there, probably also in the early 2000s when you were there, maybe two-thirds of the undergraduates were on one of those four tracks. Law is the one that's held up the best, I would say, and it's still pretty unhappy.

I would tell people to go into tech. Yeah. And that's broadly what you're supposed to do. And it doesn't necessarily mean you should start a company, but there's sort of a range of these companies you can work for. And it's surprising how much that's still not the narrative. Especially if you're at the—I don't know, at the—at a place like Harvard, my impression is they don't even know that Zuckerberg created Meta, Facebook at Harvard. It's like, "This is..." They're disconnected from reality. They're disconnected from that. They have not even caught up to 2005.

So at the time I was working for you, working on the hedge fund, you were invested in Facebook, you were doing other investing, and we decided to really go all in and spend a lot of time on Palantir. Why was that the right choice then as tech? But go more specifically: what was your high-level around that at that time? How were you thinking about it? What gap were we going after?

It was very broadly government, and then it was within that, it was defense. More narrowly, it was sort of the, the intelligence community that was sort of, you know, defense-adjacent. I—you know, it was a couple of years after 9/11. We were sort of starting it in 2003, 2004. And there were all these ways that I felt that we didn't, you know, that we had these very low-tech and very privacy-violating solutions for the terrorism problem. It was annoying that you had to take off your shoes at every airport, which was like just not security, but it was this incredibly intrusive security theater. And then, yeah, the question was, could you do something where you'd have way more security with way fewer technologies doing more with less?

And so the terrorism context was, could we have more security against terrorists with less intrusive civil liberties violations? And then there was broadly this question: was there some way to reset all these things in the government? And it was a black box. And we did not know whether places like the CIA and NSA and places like that had some super-duper computer working in the background that was catching all the terrorists. We sort of suspected they didn't, and then it took a while to figure that out. But I think our suspicions were probably correct.

Yeah, we saw them doing a lot of things that made us suspect that they actually had gotten way behind Silicon Valley.

I mean, there were details that it was hard to say. I remember our first trip to Langley in 2005. We'd gotten in to invest, and you and I were there. I think it took us about a day or two to process. But at the end of the trip, it was like, 'Do you want to buy some stuff from the CIA gift shop?' And it was like, 'You can get a windbreaker and a CIA cap. There's these coins.' They were kind of cool. I think they were—half of them were made in China, which was, you know. But—and then, of course, there was probably some, you know, there's some steelman version where it was just a decoy and there was really a lot of stuff going on in the background.

Do you remember the doors all had these eye detectors on each of the doors that you're supposed to scan your eye to get in, but none of them worked? So wherever you'd go around, there'd be like the eye detector, but they were broken. They turned them all off, which I thought was kind of like, kind of typical.

I don't know. There were all these... And so in that context, you would think, okay, there's some very big problem that can be solved. In some ways, it turned out to be more difficult than one would have thought. There obviously are all these sectors we have that are very, very broken, where education, healthcare—all these sort of deeply broken sectors where the solution... There's some obvious solutions, and the fact they have not been implemented tells you there's some big barriers to implementation.

The Palantir version is, there was this—I forget what the acronym stands for—there was this software program. This was once we moved from the intelligence community into the broader military, called DCGS, which was sort of this—in theory, it was a system where you're supposed to figure out ways to integrate the data across all these units in the field and headquarters and integrate what was going on, which is an incredibly important thing to do. In practice, it was sort of a kludge, consultant, billion-dollar boondoggle that didn't work. And we naturally thought we would replace it in six months, and it took something like 10 years. We finally replaced it in 2019, and we had to sue the Army, and we had all our consultants quit and said, 'This is just the most ridiculous thing.'

You can't sue your customer, and you definitely can't sue the Army. And not only will you not get them as a customer, you will not get anybody else in D.C. You'll just be blackballed by everybody. But then it was in 2016 that we sued them. It was under a 1994 law where the military was supposed to have an open procurement process. And then what you can do when you sue somebody is you get discovery, and you discover what's going on in the sausage-making factory that no one's investigated for 22 years, and there's a lot of stuff. There were internal reports that Palantir worked better, which didn't matter because obviously nobody can assess the software. But then, more scandalously, there were orders to suppress the reports, there were emails that people had to hide the findings, and there was a cover-up.

And this did not sound like the open procurement process. Then you won at the court level, then you won at the D.C. Circuit level, and they were forced to reopen the process. Then after a decade, we got the contract. Yeah.

So there was something that was doable, but it was not as straightforward as it sounded. And SpaceX had to sue as well, of course. It feels like there's these parts of our society that are set up to just maintain their broken nature, and you have to just punch really, really, really hard through them. And it's very rare people do that. Yeah.

SpaceX was the first successful template to do it. And there's obviously something like this. The university system seems as broken or more than the military procurement process, especially with the accrediting agencies and all these things where they just are designed to prevent newcomers. It's like if you actually had a newcomer, they would just... eat the field or whatever.

They tried to crush you. It took us thousands of pages of regulation.

I think there was an Elon metaphor he told me once. I don't remember when. It was maybe 2010, 2011. There were these three or four aerospace companies in the U.S. that were really badly managed and badly run. And it was sort of, they were these very fat cows on this grassy, enclosed field. And if you ever got in there, there was just going to be a bloodbath. Oh, yeah.

So it was kind of a dramatic metaphor. It's like there's this carnivore and there's a big fence, and you got to climb this really big fence. Yes, eventually you get in there, it's gonna be... Yeah, it's... But so, so this is a very optimistic thing, though, because both Elon and—and what we built together, uh, with Palantir—were able to be great enough and persistent enough to overcome unnatural barriers and do something very optimistic and fix things. Is—should we also be trying to do that in healthcare and education and universities, in some sense? Is it because it was almost impossible, but it turned out, after like years of work, that we did it, shouldn't we also do that now in other areas?

It is worth trying in a lot of areas. Look, I always think it's better to be optimistic than pessimistic. The place where I quibble with the name of your show is that I don't think it's good to be pessimistic—insanely optimistic or insanely pessimistic. At the extreme, optimism and pessimism are the same thing because if you are extremely pessimistic, there's nothing you can do. If you're extremely optimistic, there's nothing you need to do. The Singularity Is Near—it's the Kurzweil book title, a very optimistic title—and all you need to do is sit back and eat some popcorn and watch the movie of the future unfold. So both extreme optimism and extreme pessimism converge on laziness and on people not doing anything.

So I think moderate optimism is the correct thing. And then I think you have to always pick your battles. The part that's—the part that's, I think, more difficult about education and healthcare, or historically was more difficult, was that these were areas that lots of people were trying to reform and there were lots of different attempts people had. Whereas, let's say in 2004, 2003, 2004, 2005, when we started Palantir, the idea of trying to do a military-related software startup, there was nobody who even wanted to give you money as a venture capitalist. People thought we were insane, yeah. And so there was sort of an element where if you could get through, you would have no competition. And then a decade later, we still had no competition.

There's probably a lot more going on in the defense space now than there was in the mid-2000s. And again, having zero competition, it's good if it works. Maybe it just tells you you're insane. So even that's an ambiguous thing. But then the place where I've had—probably the two areas where I've had the—we've tried to invest. I mean, I've had this venture capital thing. We started Founders Fund in 2005. So in different ways, I've been at this and I've done some angel investing before that, but I've been doing this for 20-plus years. And the area where we've probably had the least success from a returns basis in software, the two worst areas are educational software-related companies and healthcare IT companies.

Education, we felt, was so hard, we did very little. Healthcare, we tried a few more things. And the rough version of what's gone wrong in the healthcare sector—we've done so little in education, I feel I can't even comment on it—but healthcare, what's roughly gone wrong is you have all sorts of things that sound like a pretty good plan for reforming the system and it's, okay, it's this one angle on the pricing model that you need to change, but then there are 10 different ways you can do it and it's these complicated ways you have to get the payments to shift from the insurance companies or the government or the hospitals, which are very kludgy. If you can just get consumers or doctors to change, that might be easier, but they typically are not the people who pay.

There's this very kludgy, messed-up system, lots of people try to do it. My sociological model is always that I'm deeply skeptical of investments where a lot of VCs would go to some silly VC networking event and want to brag about it. And I feel there's a lot of that with the healthcare-education startups.

There's, like, the greentech stuff, too. It's too popular, basically.

The green tech stuff. I mean, at some point it loses money and then it's not popular anymore. But while it lasts, it's very popular because there's no fast term accountability in venture capital. Sometimes you have momentum and the valuations go up and that does give you a feel whether things are working. But in practice, it's five, 10 years later, you get liquidity on these businesses or even longer. It takes incredibly long. And so people tend to over-index on these sociological factors and what's popular. And so there's a way that... the healthcare education sectors, even though they're very broken, people have these often too conventional ideas on how to fix them. Another trend where I've tried investing some over the last decade is all these marijuana related businesses.

And it's like, yes, it's obviously a big trend, um, but it's—it's an obvious trend. And then it turned out to be extremely hard to figure out what—what to do with. Yeah.

So some of the things that are too popular and too obvious is just, you have to have a totally different take on them or it's not going to work.

Yeah. If you have an unpopular take on it, that might work.

That's interesting. I want to pivot to macro for a little bit. We're a few months into the new administration. Donald Trump hired a lot of people. A lot of people we know are working in different parts of the administration. I'm going to maybe ask the obligatory question on trade, but first, what are you most excited about that's going on in the administration right now? Are there things that you think are really cool or things they're doing well?

I'm the most hopeful I've been about things in a long time. I think there are some very deep problems that need to be fixed. I think the opposition is completely exhausted and out of ideas. And so it's maybe the first time since early Reagan that there's really an opportunity to change some things in this country. And it's not the sort of lame Bush Republican thing we had for a long time in between. And I don't think it's the completely sabotaged first Trump administration where you had... I don't know. It got blocked on every level outside and inside the administration. And it's very unusual. Normally, the second term does less than the first term. This is going to be, I think, will be the real first term.

Yeah, I have a lot of really bold friends in HHS and DoD and Department of Education and all these places.

And then there also are extremely big things that are very broken. You have a 6% current account, 6% budget deficit, 5% or 6% of GDP budget deficit. And that's basically, there's probably no fun way to fix that. You raise taxes, you cut, you cut spending. There probably are some efficiency gains you can make.

What do you think of DOGE, speaking of efficiency gains? Can they get half a trillion dollars with DOGE? What can they do?

I think there's a lot you can get. There's going to be a lot of resistance to getting it. The correct answer is just you need... It's always my answer on tax policy. What should tax rates be? Just always a little bit lower. I'm not going to tell you the number. They should always be a little bit lower. And the government should be more efficient. And then once you've made it more efficient, you should make it more efficient. And there's a lot of room for that.

There's a lot of shocking stuff they're finding. I wouldn't want to limit it to half.

It's a $4 trillion annual spend budget. I think it's higher now.

And of course, a lot of that's entitlements.

I think it's six and a half now, actually. I think four is what we're taking in. We're spending six and a half because 3.8 is entitlements. That's a lot.

But even the non-entitlement piece is incredibly off.

No, and entitlements have lots of fraud, too, probably. But I've been a little bit shocked. Like, I knew there was waste, but there seems like a lot of scams they're finding. I guess, like, a lot more scams, I guess, than I even knew. I think there were scams. I think the nonprofit stuff is... The NGO stuff's out of control.

...is really out of control. It's sort of like... I don't know. It's... It's sort of like virtue signaling is a sign that you're doing something evil. And so much of this left-wing philanthropy nonprofit world, I think, was just a cover for borderline criminal activity.

And there's all this stuff you have to really go into the weeds of how this stuff works. But the way it was explained to me, there's sort of a level five description, which is a line item description of what the actual dollars are going to. And then there are ways these things get summarized. And the way they got summarized for a lot of the political appointees was a level four description. We summarize a bunch of level five descriptions as an alternate in a level four way. And then obviously there are ways you can have, I don't know, you can have... 20 groups that are providing food to different African countries. And to summarize that as food to Africa, that's maybe an accurate description.

And then if they're actually all working on the Biden reelection, that's an inaccurate description. At some point, the descriptions are so inaccurate that the people in the government could be prosecuted for fraud. And one of the people who looked at this a lot thinks you could just prosecute these people for fraud. Something like this is what Oliver North was prosecuted for in the Iran-Contra scandal in the '80s was he mischaracterized the money and he mislabeled it, and it was like he was accused of defrauding the government. And I think you could prosecute thousands of these people for fraud criminally for the thing that they wanted to prosecute Oliver North for in the '80s.

Well, I hope they do. I think a lot of people need to be punished not to do it again, otherwise it's going to get turned back on. I want to ask you, we've been talking about China on and off for over 20 years and their imbalances. I think this week, the president declared trade war on them effectively with 125% tariffs. As of now, it'll probably change in the next few days because these things keep changing. But what do you think of the trade and tariff policy? What's going to happen? Bond yields sold off more than I expected. The yields went higher than I expected so far. What's going on?

Well, it's... Yeah, I'm hesitant to comment since obviously it's a very fluid situation, but something like the sort of reset that they're talking about now seems where we're going, where you need a very drastic reset with China. In theory, you need a reset with other people, but what we really need to get them to do is also reset things with China. I think the rough numbers are that about a quarter of the U.S. trade deficit is bilaterally with China, but another quarter is indirectly with China. So China is sort of half the problem, and so it's selling components that then get reassembled elsewhere. And then China is the geopolitical rival. So there's a way in which if people in Mercedes in Germany are selling cars to the U.S., we might want to have those pretty well-paying jobs in the U.S. and not in Germany.

And there are all kinds of mercantilist policies at the margins Germany engages in. But it's probably not going to repurpose the Mercedes factory to build tanks to invade the US or something like this. Whereas this dual-use problem is the problem with China. And so there's our—there are ways the economic relationship with China is fairly efficient. If people working for a dollar and a half an hour in a Foxconn factory, we don't really want to get those jobs in Wisconsin. But it is this geopolitical rivalry that's in the background that you have to somehow factor in that the economists never are able to factor in properly with China. I'm not sure I would call this the optimistic plan, but the reset in trade that seems desirable to me would be that

we radically change the relationship with China and we sort of induce a lot of other countries to radically change their relationship with China. And maybe that's how we build a stronger Western alliance of the free world.

There's going to be some interesting negotiations in the next few months. Do you think that we could bring, maybe using AI, some more advanced manufacturing here that wasn't in China? Is that a real thing the next decade to do a bunch more of it here thanks to our more efficiencies and productivity?

There's probably always a decent amount of things like that. You have to always be extremely granular on how expensive the robots are, how expensive the equipment is. Because in some sense, manufacturing has been getting steadily more automated for 250 years. And you've had the machines that make the machines; the machines that make the machines are getting smarter and more complicated. And there are ways in which AI is a quantum leap. There's a way in which it's just a natural continuation of this two-century-long process. But yeah, I think there are some parts that can be moved to the US with AI. Maybe also if you change some of the environmental rules and some of the other anti-industrial policies we have in the US.

But then if parts of this are moved to other emerging market countries—Vietnam is a communist country. It has bad mercantilist policies, but it's not planning to take over the world. And so at the margins, if we can move things from China to Vietnam, that's a big win.

I want to ask you about a theory I have. It's based on how you see things. So one of the things you've been talking a lot about lately is how our culture—I don't want to put words in your mouth, but things are broken to such an extent that we're not advancing as quickly as we were in the Industrial Revolution, right? Something's wrong with our culture. Something's wrong with science. It's not advancing.

Yeah. It's generally been stagnant in the world of atoms, not the world of bits, for something like 50 years. And then why it's happened is overdetermined, but there are cultural factors. Maybe we just ran out of ideas, which is a very pessimistic version. Maybe there's something wrong in our culture. Maybe we're too risk-averse. Maybe we're scared about how apocalyptic some of the science and tech are. But for a range of different reasons, it's slowed down since the 1970s.

And I tend to think of things, and I'm not sure if this is how you see it, but I take some of maybe your interest in Girard and mimetic theory, and I say people tend to all think of things the same way, even when it's incorrect, because it's natural to be mimetic and to think of things the wrong way together. That's kind of why cultures move in the wrong way. And so I tend to see that there's a lot of opportunities right now, thanks to the fact that you do have this kind of broken cultural situation where people are thinking of it wrong. So for example, I'm particularly bullish, I know it's random, but on Elon's Boring Company, I'm excited. I was working on it with some of the guys yesterday on tunnels, because I think it's just obvious we could create trillions of dollars of value by building tunnels and getting rid of traffic around our cities.

And the reason that opportunity exists is because of this thing that's really broken, because it's an obvious thing, but it's so broken that no one's doing it. Are there things like that where there's opportunities tied to the fact that things are broken? Do you see it that way? Yeah.

Well, anything that fits that pattern is a great opportunity. If it's broken, not because of the science or tech, so it doesn't require a miraculous... You don't have to have a dozen miracles in terms of tech breakthroughs. You have to just do something in this... in this non-mafia-controlled drilling way or whatever, where I think so much of the tunneling is this super corrupt contracting. It's mafia-adjacent, super corrupt labor-union-adjacent. And so, I don't know, it costs to build a subway in Manhattan, it's like a billion dollars a mile.

Billions, yeah, a billion a mile.

I think it's 10 times as much as Paris or something like that, which we don't think of as exactly capitalist efficiency. It's insane.

But then the place where I always think it's non-trivial is there's some non-tech reason we're not even at the Pareto level.

Yep. But if you could push through, then you could do something big.

You could do something big even if you could get to the Pareto level. And so you have to think really hard about what that political blocker is and how to overcome that.

And so there's all these things that are dysfunctional and broken and not working. And right now, I think you're more optimistic than you have. And you said, should we be trying to use our voice and fix things more? I know a lot of friends who've just decided to exit, right? And a lot of friends are in Singapore or in Switzerland. They gave up. They think it's going to be too hard to fix it. I feel like you're in between this, where you've done a lot of things to fight for our society and to fix a lot of things, but then you're skeptical you should be pushing too hard in a bunch of areas. How do you think about that trade-off with voice and exit on these things? I think it's very important to try.

It's very important to pick the right battles, is what I would always say. I don't know. Yeah, the in-between answer is, you know, I don't think you can just be, I don't know, shooting at bad guys when they're two miles away and firing your guns at random.

And it's like, yeah, you get credit for some kind of, you know, Marxist labor theory of value. You're trying hard. But we're not, Joe, we're not Marxists.

It's not about trying. It's about actually winning. We're not measuring input, we're measuring where you can actually get output. I keep trying in a lot of these areas. We've made a number of investments over the years in nuclear technology and it always—when you look at the science, there are all these much better ways that in theory you could do it. You can build small modular fission reactors. Maybe the fusion technology is not that far away. There are different verticals within the industry where things are extremely broken and in theory you should find a way to build a successful company that overcomes some of these problems. And then there's a sobering reality that the Nuclear Regulatory Commission basically hasn't approved a new reactor design in 50-plus years.

And so, it's always these things that you're trading off. Probably one place where I'm structurally a little bit more pessimistic is that there's something about the cities that I think is very hard to reform. And I'm in Los Angeles. We just had these catastrophic fires. And what's, I think, just depressing about it is that there are half a dozen reasons we can give for the fires. It can be the California Coastal Commission that didn't allow people to build modern houses that were fireproof. It can be the fire department that didn't have—where there was no water in the reservoir. It can be the three Christian women running the fire department who maybe will be now replaced by three Karen women or something like this.

Or it can be the homeless people with blow torches running around. Or it can be the mayor who is out to lunch in Africa or whatever. And somehow the pessimistic thing is that maybe the mayor gets turned into a scapegoat and doesn't get reelected or something like this. But that's about the limit. And then this just looks like a structurally hard-to-reform thing. It's very hard to—then this is where I would be deeply skeptical even of a place like Austin, Texas. I mean, it's a government town. It's a bad university college town—it's a pretty good university town. Well, University of Texas, not University of Austin.

We're doing well, but even UT has some great students too. It's not too bad.

Yeah, the whole structure.

The professors are going to be more progressive. They're going to break the politics. The whole economic structure. But there is an answer here. There is an answer here, right? So what's fascinating is in the Texas Constitution, cities only exist at the behest of the state. And so if you actually got the city to be a little more, if it became a little more broken—and you get the legislators and the governor to step up, you can create a capital district and you actually run it, like, in a competent way. So I think the very first governor to actually fix a blue city will be like a hero and then you'll do it in a bunch of other red states. So I think it's possible, right? Am I just totally naive here?

You've had 20 years of Republican governors. Why have they not pushed for this in Texas?

You've had a bunch of Bush Republicans, as you would call them. And I like Greg Abbott. I think he's a good guy. But there's just not the energy to go in and be like, we are just going to focus and fix it. And it's unacceptable. And we're getting rid of this nonsense. There has not been that energy yet in the party. So if I, for example, were to take over in 10 years and do that, I would just fix the city. I'd say, this is unacceptable. It's broken. Here's what we're going to do instead. The fact there's more people dying from not having enough police, it's just insane. We just got to fix it. That's what I would do.

Okay. Anyway, this is where I would push back where, you know, just walking around Austin the last few days, it seems like there are a lot of homeless people.

Right now, the progressives are in charge. Yeah, that's in the city. You're right. You're right. It's a problem.

And then somehow it doesn't bother, you know, it doesn't bother the Republican governor because, you know, Republicans, well, they don't have to live in Austin.

They live elsewhere and maybe—I think it bothers him when they've talked about making a capital district. I think they need to. Yeah, there's a lot they're trying to do well right now. It's not a top 10 issue. Yeah, it's not yet. And I think it should be. So just going back to the question then, like, so do you, I think, so we talked a lot about—

So, yes, I—there's, there's some, there's some point where it's, you know, it's, it's the right battle to, to pick, but—

You can't, you can't do all of them, obviously.

You can't. I don't know. I know this is probably not the best analogy, but it's, if you go surfing, you know, it's, yeah, you have, you want to paddle just in front of a wave and you have to, you have, but the wave has to be there. And if you're, if you're paddling like crazy on a still day where there are no waves, it doesn't work.

Yeah. So we live in these complex systems and, like a lot of people, they, they basically are maybe too pessimistic or too optimistic. Like you said, they just think system's going to happen no matter what. I guess for the Great Man Theory of history, you say it's not just that a great man comes and does something. You have to understand the system. You have to understand what's possible, but you do believe people can then make a big difference if you, if you understand it well enough.

Yeah, there's probably some sense of timing. There's some point where these things can break through. Yeah, if Austin can be fixed, you'll be the one to fix it. If it can't be fixed, I'll be the one to have told you so, and maybe that's a lesser achievement.

We will see what we could do.

The optimistic thing is, I think there are some other things you could do that might be bigger than fixing Austin. I am working on many big things that are important. So if you get too distracted by Austin, this could be a very, very costly mistake.

You're selling yourself short.

You're just thinking fixing Austin is this really big thing you can do.

This is Peter trolling me. For an average person, this would be a big thing. I think studying SF and studying Austin led me to understand the NGO thing, which I then was very helpful with D.C. We actually are working with people running a lot of agencies in D.C. to go after the NGOs based on things we've learned the last seven or eight years. I think sometimes studying the problem around you kind of—you follow the trail and you do find useful things to fight for. And, um, that's, you know, speaking of timing, there's a big vibe shift going on in Silicon Valley right now. I think, I think it's very different than it was two years ago in a positive direction. Some people say there's a—even a spiritual revival component to it.

Like, do you think it's real? And what's, what's, what's, what's, what's changed in the, in the vibe in Silicon Valley? What's possible now based on that?

I, I think, I think it has, uh, I think it's shifted a lot. And then of course, you have to sort of think about why was it so monolithically center-left left before. And you can analyze it on the level... I was on the Meta board for 17 years from 2005 to 2022. There's sort of one version where it was people like Zuckerberg or Sheryl Sandberg were just these sort of communist billionaires. And then there was sort of a bottom-up theory where it was kind of this woke millennial workforce that was sort of this mob that was ruling the company or something like this. But then there's also sort of a top-down theory that it was basically incredible pressure from this left-wing regulatory state that pushed these companies.

And I think that was a... a big dimension of it. There was sort of a lot of surface area where these things could be regulated. And as long as you sort of tilted them to the left, you thought you were appeasing the beast. You protected yourself. There's some way in which the founders, again, cite someone like Zuckerberg, I don't think were deeply political. He didn't want to spend his time building products, thinking about that. He didn't want to spend his time at congressional hearings in D.C. Which is easiest to do something. It was easiest to do something. And it often seemed like it was sort of a moderate amount you had to do. We had to do, okay, we do some DEI. We'll get credit for this and then it won't hurt us that much.

And and then basically at some point, and then if you do something and it doesn't work, so let's say we're doing DEI, but our workforce is not getting better. It's always ambiguous and you can say that you haven't done enough of the thing or you can say we have to stop it altogether. And so, the way I would tell the arc was for many years, the answer was just we have to do more and we have to do more. And then at some point, it completely collapsed and that collapse happened in some way over the last four or five years.

But it wasn't really safe to admit it until like the last several months, right?

In some ways? I think it felt very unsafe to admit it in the first Trump administration because in some ways all these things went into overdrive and they were sort of polarized around these sort of tribal politics or the tribal politics were used to push these things into overdrive. I think by the time Biden came in, it was safe for people behind closed doors to say, this stuff is really not working. And then certainly by the time Trump came back, even if people did not support President Trump in 2024, didn't support him publicly, there was an incredible felt sense among all the top CEOs I know in Silicon Valley that there's all the stuff you can't talk about. There are things they tell me behind closed doors that are very different from what they feel they can say in public.

And the gap, the gap felt really, really big for a number of years. I know there was one of the bigger tech companies. Again, it's overdetermined as a bottom-up, top-down, middle-level management layer. There are all sorts of layers of the stuff that got messed up. But their version was, yeah, you had the most woke workforce in San Francisco. And so it was just, they were going to move a certain percentage of their people out of San Francisco every year. And that was the plan. And then it was not what they could talk about. So it was sort of a conversation they'd have with me and not inside the company. And so I think the delta between what people said behind closed doors and what they thought they could say in public was extremely big.

I guess this is always a problem with these speech codes, these restrictions on free speech, is that they eventually backfire very badly on the left, which is pushing them, because at some point it sets up this thing where people don't flip at the margins. At some point, it sets up this thing where they flip radically. At some point, it only takes one little child to say, 'The Emperor has no clothes,' and you get a cascade.

That's right. That's scary about woke AI as well, I guess, the same way. You don't want to make too many rules to try to protect it from saying things because all of a sudden, it could go the other way. It's interesting.

But, but, well, yeah, there's other reasons you want to do that, too. But, but, but I think something like this is what happened. It was, you know, I think there's sort of this, the setup for, I think it's the Timur Kuran, 'Private Truths, Public Lies'. It's a sort of economics theory of when you have a revolution, and it's when everybody is lying and everybody knows that everybody is lying. And then you can get this, at some point, you can get this very, very fast preference cascade, and something like this happened in Silicon Valley in the last few years. It was a buildup that took a few years for people to realize that things were very different, and then eventually they realized that everybody realized it, and then it can break.

Probably this is, by the way, also the more hopeful thing on DOGE, where the pessimistic view is, man, the government always grows and no departments ever get shut down and nothing ever changes. I think Milton Friedman's line on it was, there's not a single government program that's ever gotten defunded once it gets started. So it's always just a one-way racket. But then in 2019, maybe people like the two of us had our suspicions that the people in government weren't working very hard. But after five years of remote work—and what we know from our companies is that remote work is not working—and five years of people, 90% or whatever of the federal workforce, not working and not making a difference, you sort of realize that these people weren't working before and it doesn't matter.

And maybe you can replace them with AI, or maybe you can replace them without AI, and just use—the AI can be completely fake, and we can improve things tremendously.

Well, that's a very optimistic note from you, Peter, to end it on. So thank you very much for being here today. All right. Thanks for having me.