PayPal co-founder, early Facebook investor and Founders Fund partner Peter Thiel today took the stage at the DLD conference in Munich for a very wide-ranging discussion about the future of education education, how we can sustain growth in the developed world and why Facebook won out over MySpace.
According to Thiel, the 21st Century will be about globalization and technology. These, he argued, are two different things. Technology is about creating something new and rapid growth, while globalization is about copying things that already work. In the next century, says Thiel, “we have to do both.”
In Thiel’s view, four things are likely to happen to the current group of developed countries. Growth and innovation can continue at a decelerating rate, they can enter a cyclical pattern of growth and collapse, completely collapse, or continue to accelerate. In the end, of course, the only acceptable option in his view is accelerated growth.
The problem today, however, is that there are many xyz in the developing world where we are stagnating and haven’t seen major innovation in recent years. We are, he argued, not traveling any faster today than 50 years ago, we still haven’t cured cancer and the 1960s version of science-fiction space travel remains science fiction.
The one area where we are doing well, however, is in computers, mostly thanks to Moore’s Law and the rapid progress in software. So if we want to continue to see accelerated growth in all of the areas where innovation has slowed, he argued, we will have to look to technology. The examples he cited for this that are already at the cusp of becoming reality are Google’s self-driving cars that could solve some transportation problems and the bioinformatics revolution that could drive healthcare forward in the coming years.
Asked about the harmful effects of growth and acceleration, Thiel noted that he was talking about “good technological innovation,” including improved economic well being and sustainability. The only way forward, however, he believes is through technological progress because the alternative is to condemn millions of people to poverty.
As an investor, Thiel argued, this means he is most interested in companies that connect the virtual and the physical world. PayPal, he argued, did this for money. While a lot of virtual currency startups tried to create new and completely virtual money in the 1990s, for example, PayPal realized the best solution was to combine existing currency systems with the Internet. The same, he said, goes for Facebook. MySpace, he noted, was founded at a time when people still believed the future of identity on the Internet would be avatars and alternate identities. Facebook’s key insight, he said, “was to focus on real people and real identity. “We are not trying to escape the world and create a fictional alternate world.”
Thiel’s “20 under 20″ program that provides students who bypass college with million-dollar scholarships, which created quite a stir when he first announced it about two years ago. According to Thiel, education is still stuck in the 19th Century, including basic details like the way our schools look. “Education is almost the opposite of technology,” he argued. “We are now doing the same or less with more and more resources.” Education is a trillion-dollar business, and “what it has gone to pay for is about a trillion dollars worth of lies about how great the education was that people got.”
When he first started looking at education in 2007, he said, his “idea was to put more money into universities and maybe even start a new university.” When he and his team looked at recently founded universities, however, they noticed that most of them didn’t work. Putting more money into education wasn’t the solution. Asked about how the program can scale, Thiel freely admitted he doesn’t “have a great answer to that question” He does believe however, that just like scaling entrepreneurship, if you mentor a few students and be a role model, others will inevitably copy it.
Peter is Clarium Capital’s President and the Chairman of the firm’s investment committee, which oversees the firm’s research, investment, and trading strategies. He is also a managing partner at The Founders Fund. Before starting Clarium, Peter served as Chairman and CEO of PayPal, an Internet company he co-founded in December 1998 and was acquired by eBay for $1.5 billion in October 2002. Prior to founding PayPal, Peter ran Thiel Capital Management , the predecessor to Clarium, which started with...