Peter Thiel Presents: "Developing the Developed World"

Good evening and welcome to The King's 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 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 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 human 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 Thiel Fellowship, which ignited a national debate by encouraging young people to put learning before schooling. And he leads the Thiel Foundation, which works to advance technological progress and long-term thinking about the future. What I have found most inspiring about Peter and my conversations with him is he is someone who has put his roots down deep in the Western tradition. He is philosophically very well read. The best conversations available surrounding the work of René Girard are to be found with this man who will be our lecturer tonight. He is familiar with the ideas, including the biblical ones that have shaped and are positioned 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 to The King's College.

President Thornberry, thank you very much for that incredibly flattering introduction. I always worry it sort of goes downhill from there, and so it's always really tough to live up to this. 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 very unscientific. There's a certain conception of science that starts with the number two. Science 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 great moments in business, certainly the great moments in the history of science, the history of technology, happen only once.

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 really valuable businesses, the really great businesses, the great ideas, have this sort of, not miraculous, at least this sort of a singular character to them. What can you say about it at all? 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 in 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 contrarian business question would be something like, what great company is nobody starting? The contrarian nonprofit question would be something like, you know, what great causes are, what unpopular causes is nobody—what good causes are unpopular if nobody's funding? And then the intellectual version of this that I think is always an 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—or, you know, we can give you a math test and you can figure out, okay, these are the kinds of math questions that get asked.

This is actually one of those questions where, even if you know the question in advance, it doesn't actually get that much easier because—and then 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 a good answer is one that the person asking you will probably not agree with. And so you can come up with all sorts of banal answers, like our educational system or our political system is screwed up. There are 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 starting point for a discussion that we can get all of you involved later tonight.

One of the first parts, and this sort of comes from this idea that all great companies are singular, is that the standard account of capitalism is that competition and capitalism are synonyms. And my somewhat provocative thesis is that capitalism and competition are actually antonyms; that in a world of perfect competition, all the profits are competed away. You're a capitalist, someone who's in the business of accumulating capital, and that what you're aiming for as a capitalist, if you're starting a business as an entrepreneur, as an early investor, as an early employee, you always want to be in a monopoly. And 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 real pricing power.

And so the example I always give is if you want to compete like crazy, you should just open a restaurant in Manhattan. You will get Darwinian competition. You'll get nature, red in tooth and claw. You're not going to make any money doing it for the most part. It's an incredibly bad idea. And then the poster child on the other side in my book 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 like crazy. And yet this very basic idea is, I think, incredibly poorly understood. And there's sort of a—there's, I think, both an intellectual reason and then there's more of a psychological reason.

I want to say a little bit about both of those. The intellectual reason is that the people who are inside these monopoly businesses or inside a super competitive business often understate either how competitive or how monopoly-like it is. So if you were to leave my talk tonight and say, 'I'm going to prove Peter wrong. I'm not going to listen to anything he said. I'm going to go ahead and open that restaurant in Manhattan,' you'd very quickly run into a lot of—ask investors to give you some money. And they say, 'Well, it's kind of a bad business. 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 you'd come up with some fictional narrative

on how it is an unusually unique restaurant. And so this will be the only British-Nepalese fusion cuisine within a 10-block radius of downtown lower Manhattan or something like that. So you can come up with a fictionally narrow account of the market. And then conversely, if you were the CEO of a company like Google, you would not go around giving spe—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 know, you will say, you won't even talk—they don't even talk about the search as the business they're in.

It's only—makes only about 98% of the revenues, after all. And so what they—the way you talk about it instead is, 'We're in this vast space called technology. 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 going to be competing with all the car companies. And 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 there is this incredible distortion where if the people who have monopolies pretend not to have them, and the people who are in crazy competition pretend not to be in that great a competition, the apparent difference is much smaller than the real difference.

And I think this distortion always exists. I've been investing in a lot of companies. When you see people come out of these incredibly powerful monopoly businesses, they typically don't understand what actually drives the business. And so my thesis is that what I've just articulated is perhaps understood by the top five or 10 people at Google. And then if you talk to the other 30,000 or so and ask them, 'Why does this business really work?' it would be, 'Well, it's the first company that ever really appreciated really smart people and rewarded them properly. It's the free sushi. It's the bean bags in the office, the lava lamps—this is what's really made this company successful.' And then when people try to take those lessons and apply them in businesses they start, it tends to go extraordinarily poorly.

There's a sort of shockingly bad track record of people coming out of Microsoft and Google starting companies. And I think part of it is that they've been almost intentionally misled by their managements in terms of what really made those businesses work and what—and so then when they try to emulate the fictional account of—the distorted fictional account they were told, it in practice doesn't quite work. So I think this idea is very poorly understood in all these practical contexts. But I think there's also—I think there's also a psychological reason. I'll call it a psychological reason: we don't quite understand this monopoly idea. And I think we are, in some ways, very powerfully attracted to competition in all these sorts of ways.

And the autobiographical version that I always recount is that I grew up in Northern California. It was sort of—everything was sort of super-tracked, competitively tracked in one way after another. I remember my eighth-grade junior high school yearbook, you know, one of my friends wrote in, you know, "I know you're going to 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, "OK, 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, I ended up at one of the top law firms here in Manhattan.

It was actually just a few blocks 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 left after seven months and three days, one of the people down the hall from me said, "I had no idea it was possible to escape from Alcatraz." And of course, on one level, all you had to actually do was go out the front door and not come back. But psychologically, this was actually a really strangely difficult thing to do because so much of the sense of identity, of our identity, ends up getting wrapped up in the competitions we win. And we identify ourselves by the competitions we've won. And 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 in some athletic contest where you're competing like crazy, you'll get better at that activity. But I think it always comes at this very high price of losing sight of the broader context and often forgetting whether things are, whether things are really meaningful, important, valuable, and just beating the people around you doesn't necessarily make something great. One of the sort of ideas in Silicon Valley—all these sort of, I'm a little bit skeptical, but one of them is always that you want to be in a business that's disruptive.

And I think that while disruption is something big companies rightly should worry about, it's not the sort of thing you should be aiming at when you start a business. You know, 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... One of my friends started Napster during the late '90s, which is the music site. The name sort of echoed disruption. You "nap" some music, you "nap" a child, you're a kidnapper. So disruptive people sort of look for trouble; they typically find it. They get noticed. But 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 when we're too focused on competition, we end up being very focused on destroying the other side, much less focused on creating value on our own.

Now, this sort of monopoly perspective of business gives me a lot of different perspectives on the kinds of things to stress or not stress. I'll just mention one or two others. One of them is—perhaps 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, because that's how you get to a big market share quickly. If you go after a market that's too big, it's extremely hard to ever get to something that's really successful. Facebook started at Harvard. The initial market was 10,000 or so students.

You went from zero to 60% 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 unfundable. People would have said, 'That's a ridiculous idea. It's way too small a market. You can never actually do this.' And then sort of conversely, if you look at the clean tech phenomenon in Silicon Valley, where there's sort of a 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 the pitch decks, the first one or two 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 challenge is that it actually would be a very competitive business. And if you're a thin-film solar panel, you have to beat nine other thin-film solar panel companies. Then you have to beat 90 other solar panel companies with some other technology. Then it turned out there was wind power. There was fracking that came out of right field. There was 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 perspectives, one of the other questions I always get asked in these contexts is, what are some trends that I believe happening, that are happening in technology?

What do I see happening in the next five years, 10 years? I'm always very uncomfortable answering this sort of a question because I'm not a prophet. I can't foretell you what's going to happen. I can give you sort of incredibly banal answers like, 'Maybe there'll be more people using smartphones in five years.' This doesn't really tell you anything at all. 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, 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.

SaaS enterprise software, you know, all else being equal, 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 the reason is that the buzzwords are—they're a tell, like in poker, that the person is bluffing and that the business 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 SaaS businesses to bring big data to the cloud. That's what we're doing.' You know, my instinctive reaction is to just not even pay any more attention to it, because when you're in sort of—when 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, we often, the really good businesses, we often don't even have the language or the words to precisely describe what they're doing. And so there's often the 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 actually machine-powered search. And this was very different from human-powered search. Or Facebook would be described as a social networking site. It was certainly not the first one. My friend Reid Hoffman, who ended up starting LinkedIn, had started a site called SocialNet in 1997, seven years before Facebook.

So he already had 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'd have these avatars in cyberspace. And some people would be fictional virtual dogs and virtual cats. And you'd have rules for how the virtual dogs and virtual cats interacted. And people weren't really interested in that. And what actually worked, what made Facebook both so powerful and perhaps also so controversial in some ways, was that it was the first company to, in some sense, crack real identity. And so people are not interested in networking in the abstract with virtual cats and dogs. People were interested in real identity.

But that category did not exist. In some ways, it's still not the way people describe it even today, 11 years later, because we're always so inclined to simply default to these existing categories of one sort or another. If I had to give a somewhat deeper version of this question of why we are so psychologically attracted to competition, I think the word, already in the time of Shakespeare, the word ape meant both primate and to imitate. I think it was Aristotle who said that man differs from the other animals in a greater aptitude for imitation. So when you're a kid, you learn language by copying your parents. It's how culture gets transmitted; it's through imitation. But then there also are many cases where runaway imitation goes very badly wrong.

This is how we get crazed mob behavior. It's how we get runaway market bubbles of one sort or another. And so it's always quite hard not to imitate. And so one of the flip answers I have to this question people ask me, 'Well, tell us something you believe to be true that other people don't agree with you'—so a 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 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 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, all of our interesting, original, creative ideas are talked out of us 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 better just... It probably is safer just to go back and open that restaurant. Yeah, I know it's competitive, but it can't be that bad, and it's much more comfortable.' You sort of think of the anti-Asperger's crowd.

I'm not sure what the precise word is for the anti-Asperger's group, but it's probably like MBA students going to business school—sort of a reasonably good description. They're people who tend to be extremely well-socialized. They have, perhaps, no very great convictions of their own. And we sort of do these experiments where you 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. And 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 in 1989, they all wanted to work for Mike Milken just as the junk bond market was about to blow up.

They were never that interested in tech, except for '99, 2000, when the HBS graduates sort of descended on Silicon Valley en masse and sort of, in a sense, timed the peak of the dot-com bubble perfectly. Very interested in real estate, things like that, '05, '06, '07. And so I think this is a very deep problem. And while it's sort of easy to make fun of business school students or people in general, I think this is an extremely broad, deep sort of a challenge that we have in all sorts of different contexts. Let me sort of end by going in one other somewhat broader direction of something that I believe to be true that most people do not agree with me. We often describe ourselves as living in a scientific and technological age, and while I think that 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 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 almost all the 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 set of choices between the Terminator movies with robots killing people, or it's 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 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 very dominant ethos in our society. And I always like to contrast technology with globalization, where I think of technology as... I think of global—and people often use these terms almost interchangeably—globalization as, I always draw it on the, on an x-axis. It's sort of horizontal, extensive progress. It's copying things that work. It's going from one to n. I think of technology as vertical, intensive progress, drawn on y-axis, going from, from zero to one. And they're very different kinds of activities, and while I think that 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 technological side. The geopolitical way you can describe this is that we've had eras of globalization, eras of technological progress. The 19th century was a period when you had both. Then sort of after 1914, World War I starts. Globalization goes into reverse. The world gets more divided. There's less trade. You know, 1949, China becomes communist. You have sort of a quarter of humanity effectively secede 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 there's been sort of a lot less technological progress than advertised. I think we've had 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 this is, you can sort of easily see this. Most careers that involved engineering were terrible careers to go into in the last 40 years. When I was an undergraduate in the late '80s, there was mechanical engineering, industrial engineering, chemical engineering, biotech engineering. These all turned out to be very bad fields. I'm not even saying anything about aero-astro engineering, nuclear engineering. I mean, your parents would try to really talk you out of that if you're trying to do this.

And these things have generally not been working for a long time. And there's, you know, this one exception with software. And there are all sorts of different reasons for this. You know, 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 overdetermined. But certainly one simple political cut is that we live in a world in which bits have been unregulated, atoms have been generally regulated, and over time it's resulted 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 then has led to this sort of general sense of stagnation.

And if you want to describe it in geopolitical terms, 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 was sort of permanently stuck. There's 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 at the time had on the future. In 1967, written by Servan-Schreiber, the French writer, called The American Challenge. And it sort of said, yeah, the United States is this technologically accelerating civilization.

And if we extrapolate that a few decades into the future, it's going to 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. As a result, people in the US will have to compete much less because they'll be so much further ahead. And by the year 2000, the average person in the US will be working seven hours a day, four days a week, have 13 weeks a year of paid vacation time. And while it's easy for us to dismiss it and say, 'Well, that's ridiculous. He was a French person,' I do think it's not an entirely irrational prediction of what would happen 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, much more intensely competitive. And so today, we don't talk about First World and Third World; we talk about the developed and the developing world. The developing world is that part that's copying the developed world. The epitome of this is China, and the 20-year plan in China is very straightforward. It's mechanical; it's copying things that work. Maybe you can skip a few steps. You can go straight to—you don't need to go with landlines. You go straight to wireless connectivity. You skip a few steps. But 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 sort of a globalization, pro-globalization, convergence dichotomy, convergence. It's also an anti-technological statement. We're sort of saying that we're living in that part of the world where, where 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 that we must very powerfully resist. And that's why I think we have to sort of find a way back to the future. We have to realize that we've not been sort of in an enchanted forest. We've been in a little bit more of a desert the last 40 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 many years to come. Thank you very much. I'm not sure I'd recommend people going into show business in general. I think the numbers are—there's something like 20,000 people a year who move to Los Angeles to become movie stars. And by sort of a generous count, maybe 20 a year make it. And it's, of course, this hyper-competitive thing where everyone tries to be differentiated. 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 so there's something about that that's incredibly, incredibly tough. I remember when I was a freshman in college, we had my Econ 1 class. There was sort of this description of a world of perfect competition, and nobody made any money in it. So somebody asked the professor, "Well, then, how do businesses work? Why do they actually start?" And it's a little bit more complicated than this, but to a first cut, the successful businesses—you don't want to find yourself in that sort of really intense competition. And there's a perspective you can have on this from the system as a whole or from a more individual perspective. And so from the system as a whole, we can say that if we're in a world where there is no innovation, if we were living in a static world,

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 sort of say, "What's a good monopoly versus a bad monopoly?"—a bad monopoly is something that's sort of—you sort of know it when you see it, but it's something where it's sort of static or fixed. Cable companies at this point are sort of veering towards being bad monopolies. The Post Office, a lot of governmental institutions have this quality of being bad monopolies because they're restricting supply in a fundamentally static world. But in a dynamic world where you invent new things, 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 so I think monopolies, as I describe them, are good in a dynamic world. They would be bad in a static world. And then, from the point of view of 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. I think that itself would be a very bad thing, because that would be a society that was not progressing in any sense, and that ultimately, I think, would run into some very serious problems of one sort or another. And it's reflected in our laws.

We have antitrust laws 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 there's analogs like that that you want to be doing in any successful undertaking. But certainly, if you think of this on a personal level, there is a way in which there are lessons that, I think... It's like, probably competing for grades in high school 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 if you have to compete in high school, competing for grades is probably a pretty healthy kind of a thing to be doing.

But 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 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 come back to this issue of the fear that comes in from—I want to go to the technology versus globalization narrative. Because that's another jarring juxtaposition in Zero to One, 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 us here. And that very much was 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 Slavoj Žižek got up on a picnic table and said to the crowd, 'The problem with this group is that you have this anti-technology fear.'

And he talked about the disaster movies, the 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 some 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, worldwide competition in capitalism. What you're saying the alternative is, is actual technological progress. Are we hearing you? Am I hearing you correctly on that?

Well, if I had to generalize a little bit from this, certainly an alternative to the present is a future that looks different from the present. And one of the things that's become strangely dominant in our time is that the idea of the future has collapsed. And I think there's a Christian version of this, there's a technological, scientific version. But the idea of the future as a time and a place that looks very different from the present. And that can be a very powerful motivator for changing things, for organizing things in ways. And for some reason, when we think of the future today, we no longer think of the future in definite forms. And I spend a lot of time in my book contrasting this, an indefinite from a definite future.

And this will be a long digression. 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, had this very definite idea of the future. And at this point, it somehow becomes statistical, random, probabilistic. And so the future is like white noise on a TV set. Maybe you can describe the probabilities. You can say nothing in particular. And then it does become very hard to coordinate things. And while politically I'm not on the left, I do think there is something very different, say, between the left à la Karl Marx and what passes for the left today. The conservatives often describe Obama as sort of a communist, this very left-wing person.

But I think if you said, what would Marx, Engels, or Lenin think of something like Obama and what the left today represents, they would be utterly appalled. 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. Engels would have said, 'You know, dialectical materialism talks about a world of never-ending progress.' And he would have been very dubious about a politician who substituted the word 'change' for the word 'progress.' And he would ask, 'Does not the substitution of the word 'change' for the word 'progress' represent some sort of objective decline, where it's just, it's sort of, there's no directionality to this anymore?'

And Marx, there were all these things where he was sort of haunted by the specter that the future would collapse. After all, it was the idea of the workers' paradise that would organize and motivate people. And the alternative to it was sort of this Epicurean hedonism, where Epicurean physics—that the world is atomistic, 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 then this would be very demotivating to the revolutionaries, because 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.

But that's like a left-wing version. And then I think there are sort of all sorts of different versions on this. There's a history of the United States, I think one could tell, where 19th- and 20th-century America, you had all these sort of engineer, schemer-type people, these people with these complicated plans they tried to implement. So you plan to build a transcontinental railroad or Panama Canal, you had all these sort of very large projects. And at this point, that's just seen as ridiculous and utterly incoherent. In New York City, there's this very interesting history of New York where there was this character, a guy, Robert Moses, who—was this, from the 1930s to 1950s—was probably the most powerful person in the city or state of New York.

I think he held 17 simultaneous government positions. Talk about a monopoly. Started as the parks commissioner, sort of show up with his bulldozer. They'd bulldoze various neighborhoods and build highways. As you built more highways, you got more traffic, and then you had to bulldoze more neighborhoods, and it was sort of this crazy cycle. But he managed to 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. They were going to sort of 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 built anything in New York. At that point, everything stopped. And so it is... I think it is very strange that we're living in a society where there is no idea of the future, and it creates big problems in politics, and then even on the business side, even something as future-oriented as Silicon Valley, people are actually deeply uncomfortable about trying to talk about the future in concrete terms and then building towards making that happen.

That was fantastic. Thank you. Okay, I'm going to—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 got very esoteric, too.' But this question is from one of our business students about how you have developed this keen sense of what companies are good to invest in versus maybe ones that are not good to invest in, and 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, let's see. So there's—so, again, I don't want to—I'm always uncomfortable reducing any of this stuff to formulas because I think the formulas tend to get misleading. But if I had to come up with a formula for startups, it's—you know, the three parts would be people, technology, and business strategy. We spent 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 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 sort of a technology piece.

And then there's also a people piece that's extremely critical, especially in a lot of these early businesses, where one of the most common modes of failure is internal. 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 going to work well together. I often like asking a prehistory question. If you have two co-founders, when did you meet? When did you get started? Sort of a bad answer is something like, 'We met a week ago at a business networking function. We both wanted to start companies.' One of my friends actually did start a company just like that, and it turned out the two people didn't get along, and you have sort of a lot of ups and downs in these things, and that tends to be very tricky.

A much better answer is something like, 'We've been friends for a long time, one of us is more focused on the tech side, one is more on the business side,' and that's sort of where these things kind of work. What's very different about startups from certain professional careers or academic 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, standing against the whole world, or just your performance is measured on a purely individual basis. And, you know, most companies involve more than one person, and so the internal dynamics end up being very critical.

And because they involve doing things that are more than one person can do. You can't do everything in a startup, so you have to get people to work together. And so we can sort of 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. So these would be like two extremes. And there sort of are these... very tricky coordination problems. If you were a contractor, if everyone worked for the government, I suspect you'd run into 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, 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 risk. In practice, 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? There were a lot of—the answer, which you couldn't quite give at the time, but the answer was really, the politics were horrific, and if you had a new idea, people would thwart you, they'd 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, they typically 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 biographically 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 everyone in their lane doing their own thing. How important is community to the success of PayPal?

I'm not sure I'd frame it as community versus individual. I would say the professional law firm context was one of ferocious interchangeability. You started with 80 associates every year. Everybody was fungible. You could be interchanged. It was sort of this crazed eight-year-long competition to become partner, and then it didn't change much after that either. And whereas a successful startup, there's some sort of complementarity. People are good at different things, and it's more like a team. I think sort of an athletic team context is the closest analog, even though 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 a lot more complicated than athletics.

But those are the kinds of dynamics that you want to have work internally. I think there always are—yeah, it's extremely hard to generalize from individual cases. There's sort of all sorts of talks I could give where I would just describe what we did at PayPal. And it's not clear you'd learn that much from it because 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 would be super hard to get this sort of thing started. And so there are all sorts of things like that I could describe that would be strangely unhelpful. I think one of the reasons a lot of the...

Speculating now, I think one of the reasons a lot of people came out of PayPal ended up being quite successful was that the general lesson that was learned within the PayPal business was it was not a business that worked automatically. There were sort of a lot of tricky challenges. Some businesses do work almost automatically from day one. I think this was actually true of Google. Microsoft was very, very fast to getting to success. And so from inside that context, you learn 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 a 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, are you ready to sign some books out front? And are you ready to come back to The King's College in the future? And we would love to have you back.