Venture Capitalist Peter Thiel Studio 1.0

He's been called the king of Techtopia. Peter Thiel is one of Silicon Valley's most audacious and contrarian investors. He made his name founding PayPal, then funding Facebook. He's now backing rocket ships, DNA manipulation, meat grown in labs, and a startup island off the coast. He's paid kids to skip college and start companies instead in hopes of reaching a better future faster, and building flying cars along the way. Joining me today on Studio 1.0, the bold and controversial venture capitalist and now author of a new book, Zero to One, Peter Thiel. Thank you so much for joining us.

Zero to One, what does that mean?

It means doing something new, going to the first typewriter, the first word processor, the first car, the first airplane, doing something that's never been done before. If we're going to take our civilization to the next level, it will require us to do new things, to invent new things.

What companies have taken us from zero to one?

Facebook with social networking, Google and search.

And yet you argue that for the last few decades, we've actually been in a tech slowdown where Facebook and Apple and Google—have they not been innovative enough?

I think, as a society, I would argue that we've not done as much as we could have. You've had less innovation in areas like energy, biotechnology—there's been some, but not as much as one might like. Transportation, we're not moving any faster.

One thing you tell aspiring entrepreneurs is don't copy Mark Zuckerberg, don't copy Larry and Sergey, don't copy Steve Jobs. Why not?

You know, the next Mark Zuckerberg will not be starting a social networking site. The next Larry Page will not be starting a search engine. The next Bill Gates won't start an operating system. And so, in some sense, you can't copy them because they didn't copy somebody else.

You also suggest they come up with one very important truth that very few people agree with you on. Why is finding something that nobody agrees with you on the best way to get everyone to believe in you?

You know, I think great companies have a sense of mission. There's a sense that if we weren't doing this, nobody else would be doing this. And you will be a monopoly, not in the bad sense of a rent collector, but in the good sense of an inventor who's gotten a patent, has intellectual property, has done something new. And that's the best kind of business to have.

You say that Google is a monopoly.

It obviously is. They don't talk about the 98% of the revenues that come from search, which is where they have the monopoly. They tend to focus on all these other areas. eBay has a monopoly in the auction space. Amazon has a monopoly of scale in e-commerce at this point.

Is Facebook a monopoly?

I would argue it's not as robust a monopoly as Google at this point because there still are emerging competitors in the social networking space that come up every year. So you see a Twitter, you see a Snapchat, you see all these companies emerge on a continual basis.

Do you have any concern that companies like Google, Facebook, Apple, Amazon could ever become too powerful that they stifle innovation?

I tend to think this has not happened a lot in the technology area because there has always been enough innovation to keep things flowing.

Does that mean you think that someday Google, Facebook, Apple, Amazon will not be as dominant as they are?

I think they will be dominant for a while, so I think they are all great businesses, but I don't think they will be dominant forever.

Do you see any one or the other becoming more dominant than the rest?

It's always difficult to judge this, but if I had to pick one, I do tend to think of Google as the one that's on an incredible arc at this point.

Why?

I think the core search monopoly is very powerful, and they are trying to extend it into all these other areas.

Their monopoly is in search, but they're exploring so many different things, you know, robotics, Google Glass, self-driving cars.

Do you applaud that? Absolutely. As a business matter, these are all attempts to extend the search monopoly.

Which of the Google projects are you most excited about?

I think self-driving cars would change transportation maybe as much as the development of the car itself.

You compare compelling startups to cults. Should startups be more like cults?

They should not be like cults in the sense of believing something that's wrong. But it is always a good sign if there's an intense understanding of something that's true that very few other people do. My PayPal friend Elon Musk's SpaceX company is motivated by the idea that they're going to build rockets that will get human beings to Mars in the next 15 years or so. It's not a cult in that it's a wrong belief, but it is unusual. It's this unique set of ideas that motivate the people there and distinguish them from the rest of the world.

Something else you say is that a messed up startup can't be fixed. Why not?

Well, the foundations are incredibly important, and so if you get some of the first things wrong, it's extremely hard to recover.

I'm guessing you don't think messed up tech companies that are larger than startups can be fixed either. Can Yahoo, can HP, can they be fixed?

I would argue that HP and Yahoo are not really technology companies at all. They were technology companies in the '70s and '80s with HP, and, you know, and even the '90s, and the '90s with Yahoo. Even though these companies were technology companies in the '80s or '90s, today they're fundamentally bets against technology, bets against innovation.

Even though they're not technology companies, can Yahoo and HP be fixed?

There are all sorts of things one can do to streamline them. It's probably a mistake for them to radically try to reinvent themselves and become technology companies once again.

You do mention Marissa Mayer. What do you think her chances are of really turning Yahoo around?

I think she is by far the best CEO Yahoo has had in at least a decade. I think she should not be evaluated on whether she comes and invents something new. That's setting her up for failure. The existing businesses are really big and if you can improve those incrementally and make those work, that's fantastic.

Other than what you've written in this book, what are some things that you believe that very few people agree with you on?

Certainly an issue in which I've been quite outspoken is this idea that college education has become something of a bubble. With a trillion dollars in student debt, we're not getting what we're paying for and it needs to be rethought in a really fundamental way.

If you could start education over again, what would you do?

Get rid of the word education to start with.

Would there be no schools?

I think you would still have schools, but they might look very different. I mean, they're stuck in the 19th century. I think you'd try to figure out ways to make them more individuated, where different students learn at their own pace.

You do have the Thiel Fellowship. Basically, you give aspiring entrepreneurs some money to not go to school and start companies instead. I know some of those entrepreneurs have gone back to school.

Why do you think that is? Most of them have not. It was designed as a two-year program in which people could take a break from college. I think they have, across the board, found it to be an incredibly valuable learning experience. I went to Stanford. I went to law school. I might even do that again. I was going to ask, would you do it over? If I did it again, I'd ask a lot more tough questions why I was doing it.

Would you be where you are if you didn't go to Stanford undergrad, law school, and where you met the PayPal Mafia?

You can never run these experiments twice. I do think having gone to Stanford, having met a lot of the people there, was quite valuable. I would worry that if I'd gone to any of a number of other universities, that might have actually discouraged me from going into tech.

If you weren't in tech, what's something else you might want to do?

I would be tempted to be a teacher.

The guy who wants to get rid of education wants to be a teacher.

Well, it's not against learning. I'm against education.

Of the six people who built PayPal, four had built bombs in high school.

I was not one of those four.

Who built the bombs if it wasn't you? Something that you talk about is the danger of founders becoming captive to their own myth. What is the myth of Peter Thiel and what is the reality?

The myth of all these founders is that it's somehow singular and they're somehow these divine omnipotent beings. Any of these things that I'm doing are not solo efforts. I have friends who I talk to a lot. There are people who work with me closely.

I'm curious about your background and what has shaped your views along the way. I know you were born in Germany, you moved around a lot, South Africa, Namibia. Tell me about your upbringing.

I lived in a lot of different places. I went to seven different elementary schools as a kid. I think of myself as always having been both in some ways a little bit of an outsider and a little bit of an insider. So it was some sort of combination of that insider-outsider perspective that I think shaped things a lot.

What did your parents do? What were they like?

My dad was an engineer. My mom ended up being a homemaker after I was born. They were very focused on education.

You were also raised an evangelical Christian. Yes. And you question things like evolution.

I still consider myself Christian. I think there is actually something quite valuable in having a very different perspective on things because it pushes you to either defend your ideas really well or to have a much deeper understanding of why they're wrong.

On paper, you worked at a New York law firm, you worked on Wall Street. It sounds pretty standard. Where was the contrarian in you?

You could sort of see ahead at what people were going to be doing a decade from now, two decades from now. And there was a sense that I couldn't see myself as being that happy doing this.

Was there any event in your life or something that triggered you to start down a different path?

It was a bit of an evolution. You know, I can certainly point to late nights at the law firm where you're sort of thinking, 'What are you doing here?'

You know, from the PayPal Mafia to the people you've met since, who do you call for what?

There's something about the set of us, the set of my friends from PayPal, where this was just an intense, intense experience. And I think that those bonds can probably

never quite be, quite be matched in their intensity. The first line of Chapter 14: of the six people who built PayPal, four had built bombs in high school.

I was not, I was not one of those four. But you know, I think there is something that's always quite extreme about the personalities that go into starting a company. So building a bomb is a good thing? It's not a good thing. Having some extreme personalities, I think, is a somewhat good thing. Who built the bombs if it wasn't you? And I'm not going to. You have to choose four of the remaining five.

As successful as PayPal was, as successful as so many members of the PayPal Mafia have been, you have said you think PayPal was a failure. Why?

It was a failure in that we did not achieve our original vision of a completely new currency system for the world.

What about Bitcoin? Does that get closer to what you had imagined?

I'm probably psychologically biased against it since if we couldn't succeed at PayPal, I'd be tempted to come up with reasons why nobody would succeed at it at this point.

But you think chances of it succeeding are unlikely?

My sense is that it's still slightly too cumbersome to work at the end of the day as a new payment system.

You were the first outside investor in Facebook. Did Mark convince you to invest or did you convince Mark to let you invest?

I suppose some combination of both. At the time, it really felt like a no-brainer to do it. The company was growing very fast. They only needed more money for computers. I convinced them that I would be a relatively hands-off investor.

Do you worry Facebook could get distracted? You know, Internet.org, drone companies, virtual reality.

Well, it's always a challenge. You have to do some new things because you're not in a static world, and then you don't want to do too many. So you want to do just the right number of new things.

Palantir. This is a company, customers include the CIA, the FBI, the Army, the Marines, the Air Force, yet there's so much mystery around it. As I understand it, it's using data on a massive scale to solve major problems from disease to terrorism.

Right. And it's always an interactive problem where part of the data can be processed by computers and then part of it can best be analyzed by humans. One reporter who looked into it concluded that its software had been used in the Bin Laden raid, was critical in connecting all the dots to finding him at the end of the day.

Do you think that Palantir could stop the next 9/11, or has it already?

Something like Palantir is the key to stopping major terrorist attacks. I don't think we're going to do it by projecting military force throughout the world. I think we will do it by sort of very cleverly uncovering these conspiracies before they come together.

Some have expressed concern that your clients could actually use Palantir to do evil things. Do you worry about that?

There's always a two-edged part to these technologies. Technologies are never intrinsically good. There's always a question how they can be used or abused. I do think there are a lot of checks in place in Palantir.

Someone described it as, "It's kind of like plugging into the Matrix."

One government agency that gave us a bunch of data—and during the demo, we discovered a terrorist plot that they had not even suspected existed. And it led them to conclude they had to reclassify all sorts of data as classified.

So would you say that Palantir has helped thwart multiple terrorist plots?

I suspect that's true.

With Founders Fund, for example, what's the craziest sector that you might enter that we wouldn't expect?

One that we've started to look at, at the margins, that's wildly out of fashion is the nuclear power industry. And is it possible to build safer, cheaper, better reactors with all these new technologies? And when you look at the technologies, it actually looks like the answer is definitely yes. I'm very worried about the regulatory issues with it, but I think it's worth tackling that some more.

I want to talk to you a little bit about your vision of the future in man versus machine. You're not so worried that computers are going to take our jobs?

Not anytime soon. I think technology has generally freed people up to do other things.

At some point, though—and you actually say the 22nd century—computers could become smarter.

This is always a very interesting sort of debate. What will happen? Will artificial intelligence actually get smarter than humans? And how would that change things? I don't think it will happen for a long time, but I think if and when it happens, the primary questions are not economic, but they're political or cultural. It would be like extraterrestrials landing on this planet. And if we had aliens land on this planet, we wouldn't ask as a first question, "What does this mean for my job?" We'd ask, "Are they friendly? Are they not friendly?"

What's the most audacious idea you've pondered about how humans could potentially survive in the future?

We should give nuclear power very serious consideration since it doesn't emit greenhouse gases.

Is it about colonizing other planets, other solar systems?

I'd put the date for that second half of the 21st century. So that's a little bit further in the future.

Is Mars going to be first?

There are a lot of things about Mars that make it the natural other planet in the system, yes.

You ponder several different futures, including human extinction. What are the possibilities of that?

You want to just think about what are the right things for us to be doing, what are the technologies we need to develop. If we stay focused on that, I think our prospects are very good.

So one of the things you're investing in, or you have invested in, is a startup island off the coast. What is the vision there?

This is sort of a very small side project. And the question is, is it possible to create some new communities? If we could start a new society, we'd have very different rules, very different ways of governing it. Again, this is also still very far in the future. But it has pulled in a lot of people.

It would be like another country. It would cost probably in the tens of billions to build, which is more capital than I have. But there's nothing that makes it impossible.

Think that you may live to 120?

I certainly hope to, yes.

You've been portrayed on the HBO show Silicon Valley. This island has been portrayed on the HBO show Silicon Valley. Have you watched it?

I've seen a few of the episodes. They would dispute that they were really portraying me on that show.

He's called Peter Gregory.

Well, they would still dispute whether they're portraying me.

They would still dispute that. But I think the character gives a compelling portrayal of someone who's passionate about the future, determined to make things happen. People are driven. They're slightly crazy in different ways. But I think it's, on the whole, a very positive show.

Can you really grow meat and leather in labs?

Yes, you can. It's not yet clear whether people will eat it.

Failure in Silicon Valley is okay, right?

I think this idea that failure is okay is one of the more destructive memes that's out there in Silicon Valley. I think that failure is always a problem. When a company fails, it's always a tragedy. It's often quite damaging for the people who go through it.

What do you consider your biggest failure?

Well, there definitely are some things that work better than others. There are investments that have failed, but on the whole, I don't think, you know, I've always been resilient, always have come back. I know you've thought a lot about the extension of human life, and you think that you may live to 120. I certainly hope to, yes. What are you doing differently? Are you taking immortality pills, some super exercise regimen? I'm investing in a lot of biotechnology companies. I think on the nutrition side, there are some very basic things, I think, that can be done. You should not eat sugar. That's probably the one nutritional rule.

Do you not eat sugar?

I still eat some, but not as much as I used to.

So what do you eat more of?

I'm on a paleo-type diet. I don't think paleo gets you to 120. That's—like, the caveman diet doesn't get you to 120. But I think you actually will need new technology, new innovation, for us to really have both longer and healthier lives.

New technology like what?

We need to find cures for cancer, cures for Alzheimer's. We need to figure out ways to restore organs when they're falling apart. You can go through all the different ways people's bodies break down. We need to figure out ways to reverse all of them. The main drastic thing that I'm doing is I'm on HGH, the human growth hormone stuff. On a daily basis? On a daily basis. Really?

Well, it helps maintain muscle mass, so you're much less likely to... to get, like, bone injuries, arthritis, stuff like that as you get older. And there's always a worry: does it increase your cancer risk? But that's the...

But you're not concerned about that?

I'm hopeful that we'll get cancer cured in the next decade. The other big nutrition thing that's happening is all the stuff on the biome where you basically have about... as many bacteria inside of you as you have cells. And so I think one of the things that's going to happen in the next few years is people will figure out ways to reset your bacterial ecosystem. You can look at people who are super healthy, and you can figure out what ecosystem they have, and you can replace yours with theirs.

Peter Thiel, thank you so much for joining us today on Studio 1.0. It's been great to have you.