Why Peter Thiel’s Founder Rules Keep Paying Off

26:28Whereas if you come out of a company that's completely blown up and failed, you often learn to set your sights lower and your expectations lower. So I think failure is also somewhat overrated in our society because it actually does damage people. So I think PayPal was this intermediate case where people learned that it was hard but possible to build a great business. And then a lot of great friendships were forged and these were the bases for starting these new companies. One of the questions I always like asking people when they come in to start a business is what was the prehistory? How did they meet?

27:00How long have they known each other? How long have they worked together? Because I think a lot of these great companies are not just solo efforts of a single godlike person who does everything. But there are small teams that really work together well. And so the prehistory is important. If you met your co-founder, it's like if you get married to someone you meet at the slot machines in Las Vegas, you might hit the jackpot, but it's probably a bad idea. These things work often better when there's a reasonably long prehistory. You're roommates in college. You spend years talking about how to build a company.

27:36You know each other's strengths and weaknesses. You understand the proper division of labor when you're starting the business. You're able to speak to one another honestly about what's going on. And I think PayPal provided that sort of a prehistory for all the people who went on to start these companies. And you point out, like, for employees and for co-founders and so on, everyone should know what they're doing. Like, it should be clearly defined what is your one thing that you're in charge of. And I think a lot of startups don't have that, and it gets very ugly fast. Well, the way I describe this is if you're a psychopathic boss and you'd like the people working for you to fight each other for nothing at all, the formula for getting people to fight each other is to tell two people to do the exact same thing.

28:22I do think you get maximal cooperation when people's roles are defined in very differentiated ways so that people don't see their success as contingent on someone else's failure. You will succeed if you do your job. Someone else will succeed if they do their job and their job is different from your job. So you can both succeed and it's not negatively correlated from one person to the other. In a startup, the roles are very fluid. And so there is a tendency for the roles to change. There's always a risk that they shift in ways where they tend to overlap more. And so one of the critical things one needs to do as a founder or manager in an early stage startup is to continuously readjust the org chart, continuously redefine people's roles so that they remain differentiated all the way through.

29:12In large companies, the roles are normally differentiated, but it's normally just a sort of chronic bureaucracy where there's always sort of this low-level unhappiness that's endemic to the organization. Startups tend to be much more acute and manic, and the ups are very high, the lows are very low, and you need to make sure that at the low points, it doesn't blow up like it might in a primitive, archaic tribe. Well, and part of that is because you mentioned in the book, you're also hiring people you like and you want to spend time with. So to some extent, there's a family or friend component to recruiting that happens in a startup that doesn't happen in a large corporation.

29:49Yes, I'm in favor of working with your friends. And I know a lot of people to find people with whom it's an intense period. And so it matters a lot who you're working with and you want the people to be fundamentally aligned and on the same page. And hopefully you can structure it in a way where people will be even better friends at the end than they were at the beginning. And of course, this is where startups mirror kind of the outside world of startups. Like basically you should always spend time with people who are your friends as opposed to people you don't like. It's funny how big corporations forget this idea.

30:24And I think that's why, as you say, it's endemic to corporations, that people are kind of unhappy in general at larger corporations because they forget that people just like to spend time with people they legitimately like. One of the rules I was told once, one of the observations was that you could predict employee turnover. If someone had three really good friends at a company, they would almost never leave. If they had no good friends, much more likely to turn over. So I think one of the highest predictors of losing talented people is whether or not they have great friends. So I don't think you need to just hire people you're friends with or anything like that.

31:02But I think hiring people that you'd like to become friends with or could become friends with is certainly a good question to ask. So let me ask you this. When Mark Zuckerberg first walked through your door with the idea of Facebook, and Facebook was obviously a small company at the time. He was a Harvard student. What did you see? What lit up your eyes? It was already scaling pretty fast. They were already at 20 colleges. They had 100 ,000 people. All they needed was money to buy more computers to get to more users. So it's generally a rule that when all you need is computers, you need money just for computers because you have so much demand.

31:40That's a pretty good investment. It was certainly a group of people that had been friends at Harvard for quite a while. So you did have that part of the prehistory. It was technically talented, which is not true of a lot of the social networking sites at the time. They succeeded in building it in a way that was scalable, which had been a problem with some of the earlier companies like Friendster. And so there was a number of different things that checked out. As an investor, I always like to ask the contrarian question. So the contrarian question for investors, you know, why is it that this is a great company?

32:11And what do other people not see in this? Why do other people not see this? Certainly, Facebook was a great company since it was growing like crazy. The valuation was reasonable, and they only needed money to buy more computers because there was so much demand. I think people were missing it in the 2004 to 2006 period. One of the biases investors have is always to just invest in things they themselves use. And so since Facebook at the time was a college site and there were basically no investors who were attending college, It was systematically underestimated, and how intense the use case was was not appreciated by investors probably really until 2007 when Facebook was opened beyond college students to the larger public.

32:54And did Zuckerberg already have a plan in place? Like he knew eventually he was going to extend this to businesses and then to everybody? It was, you know, I wouldn't say it was fully worked out in all detail, but there was certainly this extremely expansive plan from very early on. And so, you know, people always talk about these companies like it was random, it was unpredictable, we had no idea what happened. and that's the politically correct way to talk about it. But I do think there was sort of a sense all the way through that Facebook with the potential to be this incredibly big and incredibly important medium.

33:33Most critical decision, I believe, still in the history of Facebook was in July of 2006 when Yahoo offered us a billion dollars. At the time, the company had maybe still just college students. We had maybe$35 million in revenues, $40 million in revenues in 07, in 06, and no profits. we had this board meeting on a Monday morning. There were three of us on the board, myself, Jim Bryan, another investor, and Mark Zuckerberg. Both Jim and I probably thought we should just take the billion dollars, to be fair. Zuckerberg was 22 years old at the time. He owned a quarter of the company. I started the meeting by saying, this is gonna be a 10-minute meeting.

34:10We were obviously just gonna turn it down. The two of us then said, well, we should actually talk about this a little bit more. Billion dollars is a lot of money. If you make 250 million, there's a lot you can do with the money. At the age of 22? at the age of 22, there's a lot you can do with the money. You can invest it. You can do other things. There's a lot that can go wrong with this company. Zuckerberg said, well, you know, I don't really know what I do with the money. I'd probably just start another social networking site, but I kind of like the one I have, so why would I sell it? And, you know, at the end of the day, he convinced us that there were a whole set of products that he wanted to build, which were not being valued in the market, and that we should at least try to build those.

34:48And so if he did not have, had he not had this plan or this vision for the future, you would have just taken the money. Money is pure optionality. And money is always, in a world where you have no ideas, money is always more valuable than anything you can do with it. And you'll always take the money. I see. But you're saying his ideas were enough to convince you that, hey, at the very least, I'm going to be higher than a billion here at some point. Or it's at least not a no-brainer. We can give it another six months, see how it goes. And I think, And I think – so I think if you don't have that conviction about the future, you will always sell when you get offered that billion dollars.

35:27Sometimes it's right to sell. Sometimes it's wrong. But certainly the feedback at the time – and this is again – this part of the history gets obscured. But in 2006, it was – when we did not sell to Yahoo, it was uniformly negative. It was – this is really crazy. This is what happens when you have a 22-year-old running a company. We're looking forward to this company blowing up. It will serve him right. I mean, you had just articles seething with resentment. The articles still are seething with resentment. It's funny how outrage porn sort of grows with the internet, as great as the internet is.

36:03But let me put the numbers in perspective a little bit because you sold PayPal to eBay for$1.5 billion. You made about 55 or 60 million on that. And then if you had sold Facebook to Yahoo at that time, you would have made$100 million, so more than you would have made on the PayPal deal. How were you personally feeling? Were you scared that this was a risk you weren't willing to take? I was somewhat scared, but I had this bias that we had named our venture fund Founders Fund. We decided we were going to back founders in what they wanted to do. And I thought that maybe at the end of the day, the right thing was to try to back the founder.

36:45The statistical way I got some reassurance on it was there had been two other companies that had turned down$1 billion offers from Yahoo in the previous decade. eBay had been offered a billion and had turned Yahoo down, and Google had been offered a billion and had turned Yahoo down. Those were the only two that had turned it down for a billion. And so in both cases, those seemed like really dangerous decisions. They worked out. And so I concluded that probably the upside was a lot more than the downside risk, given that history. You know, and also, again, hindsight, of course, is great. In your book, I like how you lay out very cleanly, you know, proprietary technology, network effect, economies of scale, and branding.

37:24And it seems like Facebook had all of those at the time. And plus, I'm assuming Mark Zuckerberg's ideas for the future had all of those. So it made the decision easy using kind of these metrics. Yes, but you don't need all four of those. I think if you just have one of those, you can have a great business. Branding alone is always a difficult one. It's a real thing. It's something I don't claim to understand. So I don't like investing in companies that are nothing but a brand, even though sometimes those things do work. But I think the ones I tend to focus on are network effects, proprietary technology, or economies of scale.

37:57And certainly, I like proprietary technology the most because that's the kind of thing you can really understand from a science or technology perspective. Let's talk about the network effect for a second because this seems, in some sense, the most difficult because even if you have a great technology, people don't really know if something's going to go viral or not until after it's gone viral. Yes. So I think network effects and virality are a little bit different. Virality is a growth mechanism where customers just bring in more customers. Network effects are where the value is driven by the fact that you have a number of other people inside the network at a given time.

38:35Network effect businesses are extremely valuable. The paradox is that they're very hard to start because if you have something where you have a network, there's always a question, why is it valuable to the first person? If it's really valuable once you have a million people, how will you ever get the first person, the first 10, the first 100, and get to a million? And so a lot of great network effect businesses end up starting with a new kind of service that can emerge in a fairly small context. So Facebook, the initial market was Harvard University with 10 ,000 people, and you went from zero to 60 % market share in 10 days.

39:15And then you had a network among just that tiny community. And so you started really small, and then you replicated at other colleges and then gradually expanded from there. And because a lot of these network effects start very small, they're not the kinds of businesses people with MBAs are inclined to try because they look too small at the beginning to be any good. If you go for a super big network effect on day one, you'll never get it started because you can never get the critical mass of all the people on board. If you go for one that's really small, that's what actually works, although it doesn't fit sort of a conventional business metrics.

39:55If you'd pitched Facebook pre-launch, it would have been, well, it's just for Harveston, this is way too small. It's never going to be a real business. And so they often get started by people who are really inspired by certain ideas rather than ones who are financially driven or want to make a lot of money. Well, it's interesting because you could say Facebook had as this umbrella, this bigger vision of let's connect everybody via identity. It's almost like Facebook replaced personal web pages with people's Facebook pages. And in a similar way, you created the network effect with PayPal using, I think, two ideas.

40:36One is this vision that transactions can happen online through email or initially Pomp Pods. But the other is you simply paid$10 to everybody who joined. Well, certainly the PayPal version of this was that we had to sort of accelerate the growth. And you had a viral growth driver. You had to pay$10 for everybody who signed up. But then it turned out there was this network effect among power sellers and power buyers on eBay, which in late 99, early 2000 was still a tiny group. There were maybe 20 ,000 major sellers, and you could get to 25%, 30 % market share in three or four months. And so again, if you're trying to create a monopoly, you can define a monopoly as having a large market share.

41:20And so how do you get a large market share as a startup? Because every startup necessarily starts very small. The answer is that you have to start with a small market. You know, Facebook started with Harvard. PayPal started with eBay power sellers. These are themselves quite small markets. Amazon started with books, so not that big a market either. And then ideally, you can build the market out in concentric circles. When I see a PowerPoint presentation in a pitch where it starts with, this is a market that's measured in hundreds of billions or trillions of dollars, that's very bad because it means you will never get to a large share of the market.

42:00You will always be this tiny fish in this vast ocean. And that's in some sense, I think there was a lot that went wrong with clean technology in the last decade. But from a business strategy perspective, one thing that went wrong with almost all the companies was the markets were way too big. Every PowerPoint, every clean tech presentation was the opposite of Facebook. It started with a market that was enormously big and we were getting a fraction of a fraction of a fraction of this pie. And you ended up just having enormous, unpredictable competition that wiped you out. I always call this the Chinese refrigerator rule.

42:34Somebody comes in and pitches and says, look, we've got this brand new kind of refrigerator and if just 1 % of China buys it, we're gonna be billionaires. and I've never seen anyone succeed with that kind of argument. Because if 1 % of China buys it, then there will be 99 other Chinese companies with the other 99 % of China and they will drive the marginal profits to zero. What about something like Uber where they start in San Francisco, so it's a small market where they're going to try to get large market share, but you can look at regionally, other companies could start up in different regions.

43:10How do you deal with a pitch like that? Uber is a complicated case. It's certainly one that we missed. My bias is always not to invest in companies that venture capitalists themselves are prone to use. And so I suspect that the venture capitalists are overvaluing Uber and undervaluing something like Airbnb, because Uber is sort of a town car service. Airbnb is still largely a cheap way to stay in a hotel. And so the investor class is likely to overvalue, undervalue something like Airbnb. But yeah, Uber is a complicated one to analyze on this, but it certainly has some elements of this monopoly business in place.

43:55I think it's fully priced into the market at this point. Yeah, I think the last valuation on the private transactions was about 19 billion. So that's pretty high. I don't think that number itself tells you that it's overvalued or undervalued. And people often, the bigger the numbers are, sometimes the more undervalued it is because people will react and say, the number is so big, that's ridiculous. It was only so much more than it was a year earlier. And so we have to be careful not to base it off the actual valuation. But I think it is the kind of business that venture capitalists and other investors understand a little bit too well for my comfort.

44:44This is what I've been waiting for. Look, I've done 1 ,500 podcasts, a ton of podcasts about health and particularly anti-aging. I've had on every anti-aging expert on the planet. And finally, gummy bears to help me with anti-aging. These are the first ever longevity gummies powered by MitoPure, a delicious, easy way to put more energy into your day and to treat yourself. The only clinically proven urolithin A gummy for strength and healthy aging from the inside out. And I've taken it as supplements, but I'm not really a supplement taker kind of person. I'd much rather just like take a bunch of gummy bears and like eat it like candy.

45:28You can't really tell how much it's working. You know, and sometimes you don't know for sure. Is it just, are you thinking this? but it does improve energy. Test showed increases muscle strength by up to 12 % after 16 weeks. These gummy bears deliver 6X more urolithin A than a glass of pomegranate juice, which by the way, I was taking a ton of pomegranates as well. So this is the number one doctor recommended urolithin A supplement. It's vegan, gluten-free, non-GMO, clean label project certified, NSF content certified, and free of major allergens and artificial ingredients. MitoPure is the only clinically proven form of urolithin A.

46:10So if you want to stay strong and energized now and as you age, then you have to try MitoPure gummies. My friends at Timeline are offering 20 % off just for my listeners. So head to timeline.com slash altature to get started. That's timeline.com slash altature. Your cells will thank you.

46:38Which is related to the discussion of bubbles. And you talk about it a little in the book, but in the late 90s, PayPal was starting up. And you also have the sense that there's a bubble that's starting to happen. And I would argue there was never a tech bubble, but it was just a financial bubble. So we had this IPO bubble in late 1999, early 2000, but the tech bubble itself sort of came true. Amazon did become the biggest seller on the planet. Google did become the biggest search engine. You know, it seems like - And the internet certainly, the internet as a whole certainly grew largely in line with the predictions of the late 90s.

47:16Right, so it seems like being it, when everybody starts saying bubble, they're probably saying it, like housing bubble occurred, the phrase housing bubble occurred several years before there was actual a financial bubble and all these kinds of mortgage-backed obligations. So it seems like you can take advantage of when people start throwing the word bubble around. I do think we've had this very strange history of these different bubbles over recent decades. They were centered on different things at different times. They were centered on the new economy in the 90s. They were centered on finance and housing in the 2000s.

47:50I think we have today, I think we have a government bubble that's centered on negative real interest rates. And it's very odd because it probably means, you know, the things that were at the core of the bubbles, you had to be careful about tech in the 90s. You've got to be very careful about housing in the last decade. And perhaps you should not be keeping your retirement savings and government bonds at this point because that seems like it's the center of the current one. I do not think we have a bubble in technology today. I think the bubbles required the involvement of the larger public. You're quite right.

48:22They went on longer than people thought. So people were talking about a tech bubble already in 97, 98. It went on for much longer than that. I think there's no tech bubble today. There are not nearly enough IPOs. The public is much less involved in this than it was in the 90s. But it is certainly this phenomenon where when people substitute other people's thinking for their own, and that's when I think you get a dangerous bubble. Housing had that characteristic in the middle of the last decade. There are probably other forms of it. I do think it's been sort of the great macroeconomic truth of our era has been these strange series of bubbles and busts that it's been important to try to avoid.

49:02But probably the opportunity there is that it's this boom and bust cycle that has made people more and more risk averse going against your sort of idea of let's create something different, something that's like a monopoly versus something that's just an incremental improvement that's a little safer. Well, certainly with respect to the internet and computer technology, there's a case you made that we are still suffering a hangover from the 90s and that after the collapse of the dot-com boom or bubble since 2002, we've had a 12-year-long boom in technology and people have not believed it all the way through.

49:43And so I do think that it's in the aftermath of these things that probably the great internet investments have all been made in the last decade. They were not in the 90s. they've been in the 2002 and on period. And so, you know, it sort of leads to two questions. You mentioned that we're probably in a government bubble. Where would you put your retirement money at this point? Quite hard to say what to do. I suspect that like the last bubble, this one still has a ways to run. So it probably still has a few more years, a few more years to go. The tag word for the, it's a more pessimistic bubble.

50:17The one in the 90s was the new economy. The 2000s was the great moderation. The 2010s is secular stagnation, which as Larry Summers has somewhat disingenuously explained to people, it means you'll have negative real rates forever and paradoxically become a reason for the stock market to go relentlessly higher. And so I think we've just started talking about the secular stagnation theme, which is the sort of strangely pessimistic way the current bubble is getting dressed up. And I think you're right. It will go on for ways longer. Probably equity markets will outperform fixed income. And I think the strange ending of this bubble will be that it will be the one where you should not be in fixed income.

50:59And every bear market in the U.S. in the last 35 years, the correct thing has been to be long fixed income. Shorting stocks is always hard. Going long fixed income has been much easier. And I think at the end of the current bull market, you do not want to be in fixed income. And so you want to be in other things. The macroeconomic way I frame it is that the two big trends that I see in this decade are a war on cash and a war on credit. The war on cash involves these negative interest rates, 0%, nominal rates, negative real rates, quantitative easing, all the central banks printing money. The war on credit involves not allowing the banks to lend all this money out that's being printed, tightened regulations about Basel III stuff, Dodd-Frank in the US.

51:49The war on cash and the war on credit, to first approximation, cancel each other out. So the government's printing a lot of money, and it's prohibiting the banks from lending it out. But the nuanced thing is I think you want to be far from cash and far from credit because that's what war has been declared on. and I think the war will go on for a long time. That's why I like venture capital. I don't know if it's an asset class for everybody, but personally, I have probably 80 % of my net worth in venture capital, startups, things of that sort, because it's very far from cash and it's very far from credit.

52:23It's not levered and it's not cash-like. I mean, maybe you could argue some, even though there hasn't been a lot of IPOs, some tech definitely is going to ride further in the next decade, some biotech possibly. So, you know, perhaps that's a way to fight the war on cash. Yeah, I like companies that are extremely opaque and not measurable at this point. Unlevered companies are ones where you have no idea what's going on. And biotech is probably the most unlevered sector. We're in a world where people probably overvalue things they can measure very precisely. And the things that are hard to measure have been undervalued.

53:03And they have outperformed for some time. Google's outperformed. Amazon is a strange company, but it certainly has outperformed in large part because people said they had no idea what its value was, and therefore they systematically underestimated it for quite a while now. So it's interesting, you know, in the beginning of the interview, you mentioned today you were looking at comparing notes on a financial technology related to the payday loan industry. And the payday loan industry, of course, fights that war against lending. Like it's a massive kind of alternative banking industry that maybe a third of America makes use of because of the difficulties in traditional banking.

53:42So do you find yourself looking at alternative banking systems? Yeah, well, we're looking at all. I think it's an interesting area to look at with the one big caveat that it is a sector where you're fighting this regulatory headwind. And that's something one should not underestimate. And it's especially problematic for startups because regulations are always disproportionately tough on smaller companies. And so I think you have an industry that's static, that needs to be rethought in one way or another. At the same time, it's also an industry that's getting regulated more and more. So it's an area we're looking at, but we're still fairly cautious about.

54:17What about with biotech? I mean, I liked it in the book, you mentioned the opposite of Moore's law, which is Eroom's law, where drugs approved per billion dollars goes in half every nine years since 1950. So biotech, even though it's sort of hard to understand, there's this kind of negative government regulation aspect that is driving up the cost of drugs approved. Yes. Yeah, so certainly biotech has been in a bad zone, I would argue, for 20 years. I think there was a boom in it in the 80s and early 90s, but it's probably been a 20-year-long period of underperformance. The question, you know, I think the regulatory question, I'm always interested in it just from a contrarian perspective because it's even more out of fashion now than, say, cleantech is, which I think is also actually worth looking at since it's crashed probably 90 % to 95 % from the highs in 2008.

55:09and biotech is even more out of fashion, I would argue, than cleantech in 2014. The regulatory story that I think is worth thinking through is, are we at a point where the FDA is going to have to be less tight? Because we've been in a world where the FDA has had an iron grip, not just on drugs in the US, but really worldwide, because you've had this worldwide deference to the FDA by all sorts of other countries. So there's always this odd thing where the U.S. is just 23 % of world GDP, but yet the U.S. FDA has somehow been the gating agency for drug approval worldwide. And there is this question whether we are going to see some real alternative markets created in China, maybe with medical devices in India.

55:55Will you start to see medical tourism? Is there going to be more regulatory arbitrage in this? And will the mere prospect of regulatory arbitrage push the FDA to be less restrictive? And even though you're dealing with incredibly tough regulations in the biotech space, the bullish case is that I don't think they can get much worse. And I think it's always, you want to look at the absolute level of the regulations, but it's the first derivative. Are they getting worse? Are they getting better? We have regulatory headwinds in finance. In biotech, I think it can't get any worse. And I think there is a case that it may get better, although it may take a while.

56:31Yeah, and also the aging population would suggest that ultimately the FDA has to approve more drugs. People are going to demand it. That's what would happen in a rational society. Of course, the worry would be that an aging population becomes even more risk-averse, even more scared, even more willing to allow regulators to do stupid things. Now, in the book, one chapter that I really liked was titled Secrets. And it's sort of like this idea that there are things that are completely unknown and that are kind of secrets to us as a society. But the individuals who uncover those secrets will be able to build monopolies around the businesses they start based on what they discover.

57:12So this kind of veers in a different direction, but you approach this again from a societal standpoint, but what individual characteristics can someone develop now to help them basically be able to uncover secrets? well i think part of it is just to have a passion for certain ideas if there's a set of things you are really interested in thinking about is you keep working at it and i think the larger point i'd like to make in this chapter is that there are a lot of secrets that exist so there are a lot of things we could figure out if we worked at it there's a self-fulfilling part of this where if you believe that there are secrets to find then you will work at them and you will be someone to find them.

57:55If you do not believe there are any secrets, if you think everything's been discovered or is impossibly hard for you to figure out, then you won't figure things out. So I think there's a big self-fulfilling prophecy aspect to this. The example I give in my book is of Giles, the Princeton mathematician who proved Fermat's last theorem. And he spent close to a decade working on this, but he believed he could prove it. And that motivated him to work on it and to ultimately prove it. And so it's hard to know ex ante whether it's possible or not. But if you didn't think it was possible for you to discover something new, then you would never be the person to discover that new thing.

58:31Right. So let's say that's step one. So let's say, for instance, I believe I could be an Olympic level javelin thrower. I'm going to start working. I don't like that example because that's too conventional. And we can probably measure your abilities and we can figure out within 30 seconds whether it's even within the ballpark. But sure. Which it's not, by the way. I can't be. But I'm just giving as an example because like take the example, the Princeton example with Fermat's theorem. He clearly knew what direction he should work in to solve this secret. Or he had an idea, a rough idea. How could people cultivate within themselves the ability to even work beyond this?

59:07step? Let's say they're optimistic and they believe they can uncover secrets or they buy into the idea that there's secrets to be uncovered. How can they still cultivate these personality characteristics to work further at it? Well, I think the starting point is that one is extremely passionate about some set of ideas or some approach to doing things. And it's best for it to be something that's, you know, if it's something where you have a lot of very talented of people working on it already, this may be more difficult. So I do think it's probably hard to discover secrets in super string theory, unless you're a first-rate mathematician or physicist.

59:47But I think most fields are not like physics. They're not like mathematics. They're actually ones where the frontier is relatively nearby, and it requires you to really approach a problem a slightly different way. And one shortcut that I've often used is to look at what are things that are conventionally believed, what are things where everyone's focused on approaching a problem in a certain way. I think an incredibly important problem to work on is finding a cure for Alzheimer's. And there's a conventional approach that I suspect is way overexplored, which is around beta amyloids, so these plaques that build up.

1:00:29And they seem to be a marker. It's not at all clear they're causally connected. There are many other approaches that do not involve that. As a starting point, if one were working on this problem, you'd try to look at something where, for some reason, people had not explored it and that was promising. And if it's something that's conventionally explored that everyone says is the way to go, that's probably very crowded. That's not a very promising one to look at. It seems like in your career, what you've done a lot is combine areas. So for instance, like take PayPal as an example. Email was a kind of well-covered area, but then the idea of doing transactions online was still very scary in the internet.

1:01:11And by combining them, you were able to develop a whole new industry. Yeah, I certainly think anything interdisciplinary in our society is quite underrated. You know, I've talked at length about the sort of education bubble and I'm sort of a critic of a lot of what's been going on with the universities in our society, much like I believe you are. But I think one of the things that's very perverse about the current university system is that it pushes people towards arcane specialization. And anything interdisciplinary is seen as very bad. And I think people avoid interdisciplinary fields in college because they end up stepping on lots of people's toes.

1:01:50And so it's always seen as politically dangerous. But I think a lot of the interesting ideas will come from the intersection of computer science and biology. This will be the next revolution in genomics or the intersection of computer science and transportation. And this will be companies like Uber or Lyft or maybe the self-driving car. And so I think these sort of intersection fields, these interdisciplinary fields are extremely fruitful areas to explore. It's interesting too, with like Uber, you have, it's not just that it's a car service, but it's a logistics software where you have this labor force.

1:02:25And then on the other side, you have a demand for this labor force. So right now they use it for cars, but they can also use it for doing your laundry or whatever. so yeah there's the complex logistics problem and then applied at least initially to this very specific you know a building a two-sided market of both drivers and passengers on a city-by-city basis so peter i have two final questions and i also want to kind of again tell you what i think of the book but the one final question is obviously in the show silicon valley the peter gregory character is nothing like you, but is clearly based on you, particularly his anti-college stance and so on.

1:03:06What did you think of that when you first saw his character on the show? Well, you know, I think it's on the whole, it's actually kind of flattering. Did they ask you? No, they never asked. They never asked. Of course not. The claim is that he has no connection with me. So, of course, they wouldn't ask. But no, I actually think the show did a, I think it was very well written. It was funny. I don't think it was that hostile to Silicon Valley. and I think it certainly gets interpreted at this time as quite positive. You know, the social network movie was much more negative in intent, but even that got seen as a positive, inspiring movie.

1:03:39It was intended to make Mark Zuckerberg look bad, but when people in Silicon Valley watched it, they saw, wow, it was impressive how hard Zuckerberg worked, how passionate he was, and that's really inspiring. And so I think we are in this cultural moment where all these things about Silicon Valley will be given a very positive valence, And I think Soul of the Convales Show is generally positive. Social network was meant to be negative, but it's like the Oliver Stone movie, Wall Street, which he meant as an attack on Wall Street, but it actually inspired all the investment bankers in the 80s. Right, right.

1:04:09That's very true, actually. A lot of people sort of looked up to Gordon Gekko despite the fact that he was a clear criminal by the end of the movie, at least in Oliver Stone's movie. They just ended the movie five minutes before the end, when everyone was celebrating before they went to jail. And Stone said he'd wanted to make it an anti-Wall Street movie, but people thought Wall Street was a good thing in the 80s and 90s and so they interpreted it positively and I think we're at a point in time in history where people are looking at Silicon Valley in that sort of way and so I think all these cultural representations tend to get interpreted in a really positive way.

1:04:41So the other question I have is so you're you and I are both ranked similar in chess you're a chess master we're around the same age how do you feel I I I know what it takes to get to that rating in chess. There was a lot of work involved when you were younger. How do you think that translated into your later success? You know, it's always hard to know exactly how it translates. I think chess is always a little bit of this unique combination of art and a science and a sport, some sort of weird intersection of those three things. I do think there are sort of chess metaphors I like. There's the capital blank metaphor that you must begin by studying the end game, that you want to think about where you're going in business.

1:05:24Whoever moves, the first mover in chess is white, and white gives you about a one-third of a pawn advantage. So you have a tiny edge by moving white by going first. But the last mover, the person who says checkmate, that's really decisive. And so I think in business as in chess, you want to think about being a first mover is a tactic, being a last mover is the goal, and that's a worthwhile thing to think about. So I think there are all these ways that it carries over. I do think it's an incredibly beautiful game. I worry that its cultural valence has gone down some as a result of computers getting better than people with Deep Blue beating Kasparov back in 1997.

1:05:59It's sort of a key turning point, but I still really enjoy playing occasionally. Yeah, no, I tend to play online probably at least 10 games a day. It's an addiction. I'm addicted to the Internet Chess Club, yeah. I helped build the Internet Chess Club back in 1992. Wow. So, I'm a little bit the source. I'm your drug dealer. So Peter Thiel, you wrote Zero to One, Notes on Startups or How to Build the Future. I like the use of the word or here because you basically tie the future to startups. Was that intentional? I'd never seen or in a subtitle. Yes, well, it's certainly a subset of How to Build the Future because the book is meant both for the narrow audience in Silicon Valley of people who are actually working on startups and then it's also meant for everybody who's concerned about future, which I think should be everybody in our society who's thoughtful because the future is something of concern to all of us.

1:06:58We're all going to live in it, and we want to make it a better future than the present, not a worse one. You know, what about, and I don't mean to veer off at this, but what about someone who's like 50 years old, he's been in a cubicle all his life or her life, and now wants to start something new? Do you think that this also applies to them? like they can learn the skill sets needed to move into the future? I think it's always possible to do something new in our society. You can always start over. You can always move to a new city, start a new career. It's often difficult at different points in time because maybe people have large mortgages, they have large debt, sort of various obligations of one sort or another.

1:07:43But I don't think there's any specific time or place where you're limited. There's certain points where maybe you have somewhat more flexibility than other points, but there's nothing automatic about it. And certainly, if you're 50 years old, you have a life expectancy of at least 30 years ahead of you. And so it would be crazy to pretend that your life is almost over. Yeah, it's very good advice. So zero to one, notes on startups or how to build the future. I honestly think this is going to be a best-selling book. It's a really great book. Peter Thiel, thanks so much for coming on the show. I really appreciate it.

1:08:20Awesome. Thank you so much for having me, James. It's been a lot of fun. Yeah, same here. Bye.

1:08:55Streaming Pluto TV for free! Stream blockbuster hits like 21 Jump Street, Ted, The Expendables, and so much more on Pluto TV. Stream now, pay never!